Over-the-counter branchless banking has become exceedingly commission intensive due to the increasing competition in this sector. As a result, the mobile financial service providers’ profit margins are diminishing.

That is why they are losing interest in putting efforts to create a demand for this sector, instead, they seem keener to focus on mobile wallets as an alternate delivery channel. Mobile wallets help providers escape the inevitable agent commission system and provide a relatively convenient service at lower cost.

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In Pakistan, the mobile wallet opening takes less than 5 seconds in comparison to the old system which took 15 minutes. This became possible when the State Bank of Pakistan approved the request of providers to open remote mobile wallet account via biometric verification system.

This ease in opening accounts has positively impacted the whole sector which is evident in the industry data; the market witnessed a 44% growth in a total number of mobile wallets registered in the second quarter of 2015 alone.

Nevertheless, 70% of all new accounts become inactive within 90 days of account opening.

In order to increase the mobile wallet transaction activities, some service providers are eyeing for new ways to incentivize the mobile wallet subscribers. Since last year, providers have been offering free P2P (person to person) transactions on mobile wallets and also tested bundling free P2P with free GSM airtime, text, and data on the basis of customers’ mobile wallet activity.

However, these campaigns had limited success and didn’t address the core issues of mobile wallet – the fact that in a low literacy environment it is a cumbersome device to use. To confront this issue tactfully, providers must consider developing a more user-friendly mobile wallet interface.

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Mobile financial service providers in Pakistan have based their services on the Unstructured Supplementary Service Data (USSD) menu, which works superbly where an agent is specifically trained to use a cell phone to conduct transactions for the customers. However, it becomes difficult for most of the customers when they have to carry out similar transactions on their phones by themselves.

The USSD menu has multiple layers which make it time-consuming and hard to operate. It is pivotal to offer an easy to understand interface in order to tap the un-served customers. Besides USSD menu and Interactive Voice Response (IVR), a large number of mobile financial service providers offer their services through apps as well internationally.

According to Global System of Mobile Association (GSMA), 62% of services are now available via an application, and this ratio is likely to increase as smartphone penetration rises.

The current 31% smartphone penetration is rapidly increasing in Pakistan. Smartphones offer more screen space and better technological capacity. They are user-friendly and through a right app can easily become the primary mobile financial service delivery channel.

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Mobile apps have the potential to address the limitation of USSD; like session timeouts, user error, and frustration associated with the unavailability of a nearby agent or one with enough cash to meet customer’s immediate demand.

Apart from the improved user interface, smartphones can help users in picking up the practice of using mobile wallets on their personal smart phones with ease.

It is crucial, for providers and designers, to have a customer-centric approach while designing smartphone apps. This will be possible when the designers integrate strong research elements in their app design process.

Undoubtedly, the human centered designs have proven successful in the past as we see in some cases of public transport booking apps, which are easy to install and operate.

It is only a matter of time before mobile wallet apps become available for public use; that is why developers, service providers, and regulators should continue their quest to come up with a dependable, user-friendly and affordable solution for their targeted clients.

This article is authored by Bilal Ali Qureshi, project manager in the Digital Financial Services team of Karandaaz Pakistan