What is Branchless Banking? What are the benefits?

Inez Bartosińska

We can observe how the world is changing, especially over the last year – due to the COVID-19 pandemic – technology superseded many traditional solutions in almost every industry. What was supposed to be impossible became very much feasible when we all had to switch to digital life if we wanted to keep our ‘normal’ routine on the agenda. At this point, like no other, branchless banking proved how much of use it can be.

What is branchless all about?

Branchless banking, precisely as it sounds, is about banking that enables regular banking services without going to an actual branch. It means that having to physically go to a financial institution once you need to make any financial transactions is far in the past. Both time and money are saved on the travels. How is all that possible?

There are many delivery channels that can be used to enable seamless branchless banking, for example, mobile applications such as Apple Pay or Google Pay, Net Banking, ATMs, or even Artificial Intelligence. With such a wide range of solutions (and new ones emerging), no wonder that branchless is often considered better than conventional banking. 

Origins of branchless banking

In some countries opening many bank branches is a complicated matter, be it for demographical, geographical, or financial reasons. A challenge to reach out to the most hardly accessible areas could be solved with the help of digital solutions. 

The studies showed that there are much more mobile users than those who own a bank account. It turned out that providing internet-accessible banking is more economically profitable than building bank branches in hard-to-reach rural areas. Thus, with digital applications offering online payments and other solutions like ATMs, a significant number of customers could be financially included.

What about countries were building up new stationery branches is not that hard? Well, as the world keeps moving forward and new tech-based solutions are emerging every minute, it is natural that the same happens with the financial industry. 

Technological development is especially important for the young generation that has already grown up in a digitized world. Neither this nor the next generations can imagine that they have to go to a bank to make a simple transfer. They want such services to be quick and easily accessible. Therefore, branchless banking is of great potential, and we will observe its evolution in the next few years.

Benefits of branchless banking

We can speak of branchless banking advantages from two perspectives: the customers and service providers. 

  • Customer perspective:

We’ve already mentioned how clients can benefit from digital banking solutions. The most important one is about seamless transactions that can be performed from any place in the world as long as you have a good internet connection. Whether you are a city businessman or a rural area locator – the way you bank can be much more convenient. 

Another advantage is that online banking services are usually easy and intuitive. What was a complicated process can now be completed with a few taps on the phone screen. Thus, even if you don’t feel too confident with digital apps, you should be able to learn in no time how to master them. 

  • Business perspective:

From the bank’s perspective, investing in cashless banking can bring a huge payoff. Branchless solutions don’t require investing in building and supplying new bank departments. Therefore, they are not so high-priced. A bank can invest saved resources in developing new products, additional digital services, or improving the existing ones. 

Moreover, branchless banking facilitates reaching out to new customers from various, sometimes hard-accessible locations. Thus, not only can a bank save money, but at the same time welcome more clients into the fold. 

Finally, as the world is moving forward – banks should too. To stay relevant in the financial market, it is essential to follow current trends and respond to new, every time more exacting needs of your clients. Investing in branchless banking solutions can keep your business ahead of the competition. 

Disadvantages of branchless banking

While cashless banking has many advantages, it is not without a flaw. 

Once entering the digital world of finance, the main risk we always encounter concerns cybersecurity. There are many options of mobile identification technologies such as a face or touch ID available, and they work perfectly with everyday money transfers. However, when it comes to managing large-scale transactions, those security precautions might not be sufficient. 

Even though banks usually implement multi-factor authentication and security regulations like PSD2, there still are risks such as data breaches, card fraud, or stolen identities. Thus, for making high-value transfers, a human-to-human interaction is required. 

Cyber security’s credibility is of concern for everyone making any online payments. Even if you transfer small amounts, hackers could steal your data and use it to thieve much more money or take a loan using your identity. Thus, it is crucial always to verify if nothing suspicious is happening when you make a transfer.

Another problem with branchless banking is technical problems. When something goes wrong, and there is some kind of outage or downtime that could prevent you from accessing your money, there is no one next to you who could resolve the problem. Of course, online chats and hotlines are available. However, this won’t provide as quick and efficient assistance as a face-to-face consultation, especially with major issues.

Branchless banking in developing countries

Branchless banking’s purpose is to increase financial inclusion, especially in hard-to-reach regions. That being said, this might be an excellent solution for developing countries to improve financial services delivery through technology. Let’s dive into the details of branchless banking in some of them.

  • India

India’s government was smart enough to see the potential of this modern banking model, and now, for quite a few years, the industry has kept developing. To promote and increase financial access, bank agents (called Business Correspondents) traveled across the cities and villages offering financial services. The BCs took care of client onboarding, making transactions, and accepting deposits. Later on, as the service grew, bank representatives could visit remote parts of the country and enable checking account balances, collecting installment payments, or even allowing withdrawals. They were able to do so thanks to a device called Micro POS. 

Currently, in India, there are few initiatives taken to improve branchless banking and reach non-accessible areas even further. For instance, each customer can get a Unique identification number that enables them to open an account or perform transactions without visiting any bank department at all. Moreover, due to new technologies such as IMPS (Immediate Payment Systems) or UPI (Unified Payment Interface), clients can make robust, real-time transactions and use their mobile devices to send and receive money. 

Taking into account all those improvements, we can see that India’s banking system is developing rapidly. In no time, all the country, including the rural area, will be provided with swift banking services. 

  • Pakistan

Being one of the fastest developing countries in the branchless banking market, Pakistan introduced its first regulations in 2008. From the very beginning, the State Bank of Pakistan knew how the implementation of this banking system should be done. Clear guidance and constant improvements guaranteed the inclusion of many players such as MNOs (Mobile Network Operators) and tech companies.

For instance, Easypaisa is a Pakistani mobile wallet founded in 2009. It enables mobile payments through the company’s agents. Telenor Microfinance Bank has over 12,000 Easypaisa agents, two-thirds of which are processing at least one transaction per day. This is just one of many banks and applications offering such services in this developing country. 

Obviously, there are risks associated with building customers’ confidence or sustaining commercial viability. However, with excellent market potential and SBP showing its commitment to making the branchless banking industry grow in Pakistan even more, we can predict its promising future. 

  • Ghana

Ghana’s banking industry was relatively developed even before mobile banking arose – a solid financial sector worked well even in the rural areas. When branchless banking appeared on the global market, the Bank of Ghana (BoG) saw its potential and in 2008 (same as Pakistan) decided to issue guidelines supporting its growth. Even though Ghana is one of the world’s fastest-growing economies, the implemented policies turned out as a setback. 

The BoG’s goal was to simplify financial inclusion by creating a system driven by banks that would be easy to access and interoperable. Unfortunately, banks had little incentive to invest, and the guidelines brought adverse effects. By 2011, it was clear that e-money results were not meeting initial expectations.

So what changed? The Bank of Ghana, knowing that the expected outcome wasn’t realized, decided to rebuild the entire idea. Engaging financial market players such as MNOs was something to begin with. The private sector responded positively to this new approach, so we should observe branchless baking development in Ghana in the following years.

Future of branchless banking

One of the reasons for branchless banking emerging in the financial market was the need to implement tech-based solutions that would enable quick, robust, and effective banking. As the whole is moving forward, the financial industry had to follow the trace. Moreover, virtual banking turns out to be much less costly than the traditional, department-based way. Even though there are 75 thousand bank branches (and counting), we can observe the branchless approach conquering the market. 

Will this tendency continue in the following years? Well, few risks could harvest branchless banking. For example, authentication methods such as the face or touch ID or biometrics have been widely exploited. Thus, they might not assure the security of digital banking. That’s one point at which branchless can’t yet supersede traditional, especially when it comes to high-value transfers. The ideal solution would be to enable customers to verify their identity in each bank branch existing, no matter where they are. 

Many governments of the developing countries introduced digital solutions in their nation’s economy successfully. Others attempt to do so. Regarding well-developed parts of the world – branchless banking will struggle to improve the system and make it more secure. 

Having considered all the pros and cons of the branchless banking model and despite its risks, we still can predict that its future in the global overview is quite promising. 


There is no doubt that virtual banking has revolutionized the financial industry, and it is going to develop even further in the future. Branchless doesn’t always mean better, but with the wide range of advantages it brings, we can be sure to find many opportunities for good use of its digital services. Moreover, mobile banking development doesn’t mean that traditional ways will disappear. On the contrary, they will complement each other. More effective and efficient banking, even in hard-to-access areas worldwide, is something to look forward to, and mobile banking is the answer.

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