Blog

Indian DFS landscape is changing: Insights from State of the Agent Network India, 2017 (ANA) Wave II Research

Posted on by MSC

MicroSave recently published its ‘State of the Agent Network, India 2017’ report based on our Agent Network Accelerator (ANA) Wave II research. We conducted the research in 2017, based on a nationally representative sample of 3,048 business correspondent agents. The 2017 India report proposes a significant shift from Wave I in 2015.The report focuses on the operational determinants of success in agent networks. It provides insights on agent network structure and key performance metrics, such as agent viability, quality of provider-support, and compliance and risks related to providers. The report presents changes that have happened over two years, from 2015 (when we had conducted Wave I of the research) to 2017. This blog highlights the ‘change story’ from 2015 to 2017.During this period, a number of changes have happened. New types of financial institutions, such as payments banks have emerged, support systems have improved, while product matrices have widened. Also, agent networks have managed to successfully position themselves as delivery channels for various financial and non-financial services.

Over the past few years, the story of financial inclusion in India has shifted from account opening to account usage. This change has received support from various policy moves by the government, an interoperable payments system, and the ubiquity of Aadhaar. This makes India stand out as a successful example of policy imperatives driving the agenda of financial inclusion. The following section presents key findings from ANA Wave II research including changes from the Wave I study.

1. Banking Services and Government-to-Person (G2P) Facilitation Services have Encouraged Account Usage

ANA research findings suggest that an increasing use of agent points for Cash-In and Cash-Out (CICO) transactions and remittances have led to increased transactions and subsequently, higher revenues and profits for agents. The graph below presents the median number of cash-in and cash-out transactions, as well as remittances in 2015 and 2017. During this time, cash-in transactions have grown more than three times, while cash-out and domestic remittances have grown five times. The growth in transactions, together with G2P facilitation services, have led to a robust use-case for agents across India. This has, in 2017, translated into higher monthly median revenues and profits, which doubled from their 2015 figures (USD 40 to USD 93 and USD 16 to USD 31, respectively).

2. Interoperability of Payment Infrastructure and Licensing of Payments Banks have begun to Reshape the Market.

India has embraced full system interoperability, which has enabled banks and mobile financial service operators to connect to a common platform or switch, thereby facilitating transactions. ANA findings suggest that almost two-thirds of agents conduct interoperable transactions. This trend is similar across locations, be it metro, non-metro, or rural. Approximately 70% of interoperable agents offer cash-in services, while approximately 60% offer cash-out and remittances for other banks. This also explains the reduction in the number of non-exclusive agents in India. Agents are no longer required to be associated with multiple providers to be able to serve more customers. It is widely established that interoperability offers significant benefits for the wider ecosystem. These benefits include wider adoption, higher transaction volumes, and greater velocity of money in the ecosystem.

In 2015, the Reserve Bank of India (RBI) gave “in-principle” approvals to 11 payments banks. These payment banks are able to provide all banking services with the exception of credit. New to the financial system landscape, payments banks are beginning to show their presence. However, they have some distance to travel. Agents of payments banks presently conduct a median of nine transactions compared to 33 conducted by agents of other banks. Payments bank agents earn median monthly revenues of USD 54 as compared to USD 93 earned by agents of other banks at the country-level.

3. Support systems have improved

Providers in India have institutionalised the agent induction process by providing training to agents in the first three months, followed by refresher training. There has been a significant rise in the proportion of agents that received induction and refresher training in 2017 (77% and 87% respectively) as compared to 2015 (59% and 61% respectively). From our earlier assessments, we know that trained agents are able to perform better, are more compliant, and extend better customer service. Evidence from ANA India Wave II further supports this hypothesis. Our findings indicate that trained agents conducted almost 10% more transactions on a daily basis than untrained agents.

However, regular monitoring by providers has seen a dip. With increasing transaction volumes at the agent points, providers need to ensure that monitoring remains a top priority. The findings of the ANA Wave II suggest that agents that were monitored regularly conducted four more transactions per day than those not monitored regularly. Anecdotal evidence further suggests that regular monitoring of agents builds the trust of agents in the provider.

4. Instances of money loss (fraud) have increased

Instances of agents experiencing incidences of money loss (fraud) have increased from 2% in 2015 to 22% in 2017.  New compliance concerns have also emerged from the ANA Wave II study. Among agents, 35% reported assisting  customers by entering transaction PIN or password on their behalf. Moreover, 24% of agents reported that they provide handwritten slips as proof of transaction to customers as opposed to printed receipts. Providers therefore need to incorporate fraud typology and mitigation measures into training modules for agents.

Driven by ever-changing global standards for delivery of financial services, regulators have been updating regulations and enforcing existing rules. In 2015, the Reserve Bank of India (RBI) issued a ‘Master Circular on Frauds – Classification and Reporting’. The circular has placed the primary responsibility for fraud prevention on banks. Providers in India have been upgrading their systems and incorporating recent technological advancements, such as cloud-based systems and adopted SMS or IVR-based payments to prevent instances of fraud.

Agent networks in India have proven to be not only resilient but unique. This can be attributed to policy initiatives, such as interoperable payments systems and market dynamics. While the sector has made positive strides and appears to be stabilising, risk and challenges remain. Provider must therefore address increasing incidence of fraud and compliance issues related to interoperability immediately.

To ensure agent viability, either a more efficient distribution strategy or product matrix or both would be required. Meanwhile, a few issues needs to be understood. Why is it that operating costs at agent points are the highest in India? Does it have anything to do with the multiple front-ends required for acceptance of card and Aadhaar-based transactions? Consequently, agent profitability remains a key concern in India. Agents have not yet managed to get to sustainable levels of profitability. Moreover, the likelihood of agent dormancy and dropout remain high.

In this regard, differentiated agent outlets, as advocated by MicroSave could be a potential solution to address issues of agent profitability. While sales agents would manage higher value transactions and sales of sophisticated products, service agents would do basic, everyday transactions, without requiring any sophisticated backend infrastructure.

Assessment of Direct Benefit Transfer in Fertiliser

Posted on by MSC

This study captures the research findings from the assessment of DBT in Fertilizer for the Government of India across 14 pilot districts across 11 states.

Triple Burden of Malnutrition in India – Are We Doing Enough?

Posted on by MSC

India has been grappling with the problem of malnutrition for decades now. With its persistent and chronic nature, malnutrition affects a large proportion of the population in the country. The triple burden of malnutrition in the form of stunting and wasting, anaemia, and obesity are common across women, men, and children, but is especially prevalent among women and children.

The level of public investment in the Union Budget for the financial year 2018–19 in form of subsidy on food and nutrition security has been substantial, at INR 1700 Billion (USD 25 billion). The enactment of National Food Security Act of 2013 institutionalised the importance of food and nutrition. However, the nutritional status of India’s population still remains compromised and has been a persistent problem despite measures taken by the centre and state governments. The country has witnessed significant economic growth, but its performance on nutritional indicators and hunger levels remain alarmingly poor. India ranked 100 among 119 developing countries in the Global Hunger Index of 2017. A complex range of barriers like culture, food habits, income and gender inequality, and social exclusion continue to thwart efforts to address the scourge of malnutrition.

The Government of India has rolled out a number of schemes in the past to combat this public health concern. These include Integrated Child Development Services (ICDS), National Health Mission, Janani Suraksha Yojana, Maternity Benefit scheme, Mid-Day Meal Scheme and National Nutrition Mission. However, the results have been poor. The experience from the implementation of these schemes suggests that on-ground footprint and effective community engagement are vital to address malnutrition. Further, there is a great need to design such public interventions keeping the community in focus.

Global evidence suggests a shift from a strategy of Information, Education, and Communication (IEC) to Social Behaviour Change Communication (SBCC). This is because society and its culture have a deep impact on the habits and lifestyles of potential beneficiaries. A standardised approach to tackle malnutrition at the national level is not feasible given the social, cultural, economic, and geographic diversity in the country.

There is global evidence that suggests that having field functionaries or health workers from the community has a long-lasting impact on the behaviour of the target population. There has been a surge in the activity of these workers after the Alma Ata Declaration of 1978, which sought to address the shortages of professional healthcare workers to serve the last mile.

One plausible strategy, therefore, might be to appoint community-based catalysts for change – or voluntary field functionaries. These functionaries would understand the needs and culture of the society. They could help improve the implementation of public health interventions by serving as a link between the government and beneficiaries. Health and nutrition are dependent a wide range of variables that include culture, socio-economic status, equity, access to services and information, etc. Trained functionaries on the ground at the hamlet- or village-level would help assess and understand these complex, “softer” issues and their interplay with health and nutrition and impact on it. The functionaries would also be able to devise ways to address the issues at the local level within the constraints of the resource pool provided.

India already has its share of experiences with community workers in the form of Anganwadi workers (AWW) and Accredited Social Health Activists (ASHA) under the Ministry of Women and Child Development (M/o WCD) and the Ministry of Health and Family Welfare (M/o HFW) respectively. AWW and ASHA have been entrusted to provide adequate healthcare to rural people and educate them on issues of preventive and promotional health care. However, their performance has been below expectations for a number of reasons. These relate to issues in the selection process, lack of clarity of roles, low capacities and skill-sets, excessive workload, weak supervision, low incentives, and lack of job security.

There is a need to work more closely with the community to address malnutrition. There is a need to work at the household- or hamlet-level to build their capacities to enable them to take control of their health. Volunteers from the community, especially women could spearhead movements, such as Jan Andolan1  to transform India from ‘Kuposhit Bharat2 ’ to ‘Suposhit Bharat3 ’.

Whereas ASHA and Anganwadi workers must serve a relatively large population (that is, around 200–400 families), the proposed new field functionary will be working at the hamlet-level with 10–15 families. They will have precisely defined roles and responsibilities. This will allow a more focused approach to address the complex web of issues around health and nutrition. The recently launched National Nutrition Mission may provide a conducive platform for building additional manpower at the hamlet level.

However, we cannot consider such an initiative as a solution to solve all the problems. India has suffered from the problem of weak implementation since several decades. The success of such a programme would depend largely on the following imperatives:

  • Careful selection, training and accreditation (wherever applicable) of the volunteer workers at the grassroots;
  • Convergence and linkages among various government departments for better outcomes of the public health programmes;
  • Active monitoring of manpower in the public health domain;
  • Supportive supervision for the field functionaries;
  • Provisioning of an adequate compensation structure and timely payment;
  • Meticulously planned job responsibility and performance indicators for the functionaries.

[1] Mass movement

[2] Malnourished India

[3] Well-nourished India

National Family Health Survey

Posted on by MSC

India has been grappling with the problem of malnutrition for decades now. With its persistent and chronic nature, malnutrition affects a large proportion of the population in the country. The triple burden of malnutrition in the form of stunting and wasting, anaemia, and obesity are common across women, men, and children, but is especially prevalent among women and children.

The level of public investment in the Union Budget for the financial year 2018–19 in form of subsidy on food and nutrition security has been substantial, at INR 1700 Billion (USD 25 billion). The enactment of National Food Security Act of 2013 institutionalised the importance of food and nutrition. However, the nutritional status of India’s population still remains compromised and has been a persistent problem despite measures taken by the centre and state governments. The country has witnessed significant economic growth, but its performance on nutritional indicators and hunger levels remain alarmingly poor. India ranked 100 among 119 developing countries in the Global Hunger Index of 2017. A complex range of barriers like culture, food habits, income and gender inequality, and social exclusion continue to thwart efforts to address the scourge of malnutrition.

The Government of India has rolled out a number of schemes in the past to combat this public health concern. These include Integrated Child Development Services (ICDS), National Health Mission, Janani Suraksha Yojana, Maternity Benefit scheme, Mid-Day Meal Scheme and National Nutrition Mission. However, the results have been poor. The experience from the implementation of these schemes suggests that on-ground footprint and effective community engagement are vital to address malnutrition. Further, there is a great need to design such public interventions keeping the community in focus.

Global evidence suggests a shift from a strategy of Information, Education, and Communication (IEC) to Social Behaviour Change Communication (SBCC). This is because society and its culture have a deep impact on the habits and lifestyles of potential beneficiaries. A standardised approach to tackle malnutrition at the national level is not feasible given the social, cultural, economic, and geographic diversity in the country.

There is global evidence that suggests that having field functionaries or health workers from the community has a long-lasting impact on the behaviour of the target population. There has been a surge in the activity of these workers after the Alma Ata Declaration of 1978, which sought to address the shortages of professional healthcare workers to serve the last mile.

One plausible strategy, therefore, might be to appoint community-based catalysts for change – or voluntary field functionaries. These functionaries would understand the needs and culture of the society. They could help improve the implementation of public health interventions by serving as a link between the government and beneficiaries. Health and nutrition are dependent a wide range of variables that include culture, socio-economic status, equity, access to services and information, etc. Trained functionaries on the ground at the hamlet- or village-level would help assess and understand these complex, “softer” issues and their interplay with health and nutrition and impact on it. The functionaries would also be able to devise ways to address the issues at the local level within the constraints of the resource pool provided.

India already has its share of experiences with community workers in the form of Anganwadi workers (AWW) and Accredited Social Health Activists (ASHA) under the Ministry of Women and Child Development (M/o WCD) and the Ministry of Health and Family Welfare (M/o HFW) respectively. AWW and ASHA have been entrusted to provide adequate healthcare to rural people and educate them on issues of preventive and promotional health care. However, their performance has been below expectations for a number of reasons. These relate to issues in the selection process, lack of clarity of roles, low capacities and skill-sets, excessive workload, weak supervision, low incentives, and lack of job security.

There is a need to work more closely with the community to address malnutrition. There is a need to work at the household- or hamlet-level to build their capacities to enable them to take control of their health. Volunteers from the community, especially women could spearhead movements, such as Jan Andolan1  to transform India from ‘Kuposhit Bharat2 ’ to ‘Suposhit Bharat3 ’.

Whereas ASHA and Anganwadi workers must serve a relatively large population (that is, around 200–400 families), the proposed new field functionary will be working at the hamlet-level with 10–15 families. They will have precisely defined roles and responsibilities. This will allow a more focused approach to address the complex web of issues around health and nutrition. The recently launched National Nutrition Mission may provide a conducive platform for building additional manpower at the hamlet level.

However, we cannot consider such an initiative as a solution to solve all the problems. India has suffered from the problem of weak implementation since several decades. The success of such a programme would depend largely on the following imperatives:

  • Careful selection, training and accreditation (wherever applicable) of the volunteer workers at the grassroots;
  • Convergence and linkages among various government departments for better outcomes of the public health programmes;
  • Active monitoring of manpower in the public health domain;
  • Supportive supervision for the field functionaries;
  • Provisioning of an adequate compensation structure and timely payment;
  • Meticulously planned job responsibility and performance indicators for the functionaries.

[1] Mass movement

[2] Malnourished India

[3] Well-nourished India

Long Hours for Low Pay in the ‘Formal’ Economy: the Lives of Bangladesh’s Garment Workers

Posted on by MSC

From July 2016 to August 2017 Microfinance Opportunities (MFO) conducted the Garment Worker Diaries project in three countries—Bangladesh, Cambodia, and India. In total, MFO’s local research partners collected data from 180 garment workers in each country, each week for a year.

The researchers collected data on how much the workers earned and spent each week, as well as how many hours they worked and the conditions in their factories. This blog is the first in a series of three blogs on what MFO found through its research. We begin with the findings from Bangladesh, with subsequent blogs on Cambodia and India.

DFS 101

Posted on by MSC

We’ve been training now for nearly 20 years. The Helix Institute has been the basis for the transformation of many of the leading financial institutions not just in East Africa, Southern Africa but across Asia and even into Latin America.  This video highlights the benefits of enrolling for our course in digital financial services(DFS101): Some of these benefits are; The opportunity to transform your business and to respond to the emerging challenges and opportunities that the digital financial opportunities offers us all.