Wins and Losses in the New Normal

As a working mother, the term Work From Home (WFH) has been a constant and very practical companion over the last 20 years. So I (together with many long-standing working mothers) find it difficult to suppress a smile now that Covid-19 has made the term so strongly en vogue.

Though, to give the term its proper justification, WFH has been practised throughout the ages with ‘longhouses’ in Medieval England, ‘top-shops’ during the Industrial Revolution and the notorious ‘sweatshops’ of 19th century New York City – traders, dressmakers, watchmakers, dairy producers, tanners, silk weavers and more, all had a working area that was, literally, combined with their ‘home’.

Covid-19 and the resulting lockdown in Pakistan overwhelmingly brought the WFH concept back to the fore and the telecommunication industry was no exception. One of the swiftest to take action was Jazz. The company announced a nationwide “mandatory-for-all-work-from-home” policy across its offices effective March 17 2020. The policy, at the time, was envisaged to stay in force for a fortnight i.e. until the end of March 2020. However, as the long-term impact of the pandemic and the associated lockdown started to become apparent, this was a gross miscalculation in terms of time, as organisations around the world started to struggle with business continuity, logistics and planning.

To put this struggle into perspective, Deloitte published a report in the first week of April 2020, emphasising the pandemic’s substantial impact on the global telecommunications sector. Its premise was that as more countries imposed restrictions on movement, the WFH culture was rising considerably and people were using “vastly higher amounts of data”. Deloitte’s recommendation was that the focus of telcos should be on “increasing network resiliency” and assessing how the pandemic “impacts their planned investments, particularly in 5G”.

With skyrocketing data network usage, Deloitte recounted that many telcos around the globe reported large spikes. Telecom networks in Europe witnessed spikes in connection drop rates and decreased audio quality and the EU stepped in to minimise potential data outages by requesting streaming services such as Hulu and Netflix to limit picture quality from the usual HD. Pakistan was not immune to the demand for data with the Pakistan Telecommunications Authority reporting a 15% increase in data usage across the country by the third week of March 2020.

Work productivity tools gleefully stepped up their game to aid customers and employers with WFH. Zoom and Microsoft Teams, in particular, became the favoured tools with free and reduced cost packages as well as pandemic-focused promotions to capture the newly created demand. Microsoft reported an eye-opening 775% increase in demand for its MS Teams cloud services in Italy – one of the hardest hit EU countries by the pandemic (source: ZDNet).

In the UK, telcos increased network and data capacity and started to offer unlimited minutes and provided anonymous data to health authorities to aid in tracking the spread of the virus. The Chinese government capitalised on “its vast landscape and large, highly mobile population” to screen infected individuals and used mobile communication and data exchange for tracking and controlling the outbreak.

In Pakistan, all telcos announced subsidised voice and data packages and mobile payments. The Pakistani government declared “all mobile communication and internet services as essential services”.

As governments amended business policies within their respective countries towards digital services to ensure business continuity, especially digital payments through mobile platforms, the State Bank of Pakistan (SBP) provided a singular opportunity to the telcos. With the SBP’s waiving of digital banking transaction fees to facilitate cashless, mobile and branchless transactions, an exceptional window was opened for the telcos to further their mobile wallets business as the government encouraged a move away from the use of physical bank notes to alternate, digital payment methods.

This window was described by UK-based Tellimer Research as a development which “could trigger a long-lasting shift in consumer behaviour to provide a lasting push to digital payments” specifically for the Pakistan market as a direct result of Covid-19. Tellimer identified disbursement of government relief funds for low-income workers through mobile wallets as a second trigger. Lastly, the general public’s fear of the use of banknotes in the physical transmission of the virus was also seen as a means to adopt alternate methods of payment.

Regarding the second trigger, both Easypaisa and JazzCash made significant announcements soon after the pandemic started. Easypaisa partnered with Punjab’s Zakat and Ushr Department to disburse Rs 1.5 billion to more than 170,000 beneficiaries in the province. The Minister for Zakat and Ushr Punjab, Shoukat Ali Laleka, was quoted as saying that “the early distribution of zakat funds is meant to facilitate people… digital banking technology will allow us to disburse these funds in a hassle-free and safe manner.” Similarly, JazzCash pledged Rs 1.2 billion support towards Covid-19 relief, including “short to mid-term initiatives aimed to limit the negative impact of the pandemic, primarily for the most vulnerable communities.”

These announcements brought into sharp focus the fact that branchless banking (BB) in Pakistan is influenced by what many local analysts describe as “the power of two” i.e. the real action is driven by “two players in a 10-player market”.

Although Easypaisa undoubtedly deserves the credit and foresight for developing the market for mobile wallets in Pakistan and was the forerunner in the shift in the telecom business model from ‘bit-pipe’ to ‘smart-pipe’ or ‘enabler’ (source: Informa Telecoms & Media), JazzCash has made significant gains in the last few years and is seriously challenging the market leader. As per the SBP’s Quarterly Branchless Banking Newsletter 2018, JazzCash with over 36,000 BB agents has jumped to the top position in terms of number of BB agents. The report further highlighted that JazzCash was ahead of Easypaisa in terms of value and number of transactions share at 52.4% and 41.3% respectively.

Furthermore, Deloitte predicts that the expected total annual digital payments transaction value for Pakistan will be six billion dollars for 2020. JazzCash, Easypaisa and Keenu Wallet will be the main players. Similar figures for Vietnam ($8.1 billion) and Thailand (nine billion dollars) show the increasing digital payments potential of the South Asian region post-pandemic.

Despite these positive figures, the local BB sector has not been able to shake off its many shortcomings, the most glaring of which is the fact that over half of mobile wallet accounts opened to date remain inactive. Those that are active remain focused on remittance based transactions (including government disbursement programmes like BISP and EOBI pensioners) or mobile top-ups. However, Mosharraf Zaidi (analyst and commentator) argued in the early days of the lockdown that “the Covid-19 crisis offers an unprecedented opportunity to scale up the technological innovations under consideration and tested in BISP”. His view was that BISP could work together with JazzCash, EasyPaisa and other digital payment interfaces to provide government support during the pandemic.

Regretfully, Pakistan’s retail digital transactions are still very low and funds dispersed through mobile wallets are still largely collected by the end user in the form of cash rather than utilisation of the wallet funds in a digital format.

So whilst the admirable cooperation of the SBP and the telcos in the light of the pandemic has taken Pakistan several steps in the right direction regarding digital payments, the ensuing climb remains a steep one.

Yasmin Malik is Senior Partner & Consultant at Global Management Consultants, Dubai. yasminmalik1@yahoo.com