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Where Are Women Agents in Indian DFS?

Posted on by MSC

Background

In India, over 100 agent network managers (ANMs) are delivering digital financial services (DFS). Till March 2015, more than 600,000 agents were associated with ANMs in India, covering 92% of the country’s villages. There is, however, wide gender disparity amongst agents in India. For instance, according to a CGAP report, in 2012, only 15% of DFS agents were women. This had further declined to 13% by 2013, and to a low of 9% by 2015, according to the ANA India Country Report of MicroSave’s The Helix Institute of Digital Finance.

In our previous blog, we mentioned that female agents create a reassuring environment for transactions – for both men and women. Thus, DFS providers might want to focus on female agents for acquiring more women customers and provide better customer experience to them. The blog presents key insights from the gender analysis conducted using MicroSave’s Market Insights for Innovations and Design (MI4ID) approach to understand variables influencing the achievement of a more balanced representation of female agents.

1. A female’s decision to become a banking agent is largely dependent on approval of her family, particularly her husband

For most women, their key decision maker is their father before marriage, and husband after marriage. As a result of this dependence on male family members, men are the major decision-makers of whether women become DFS agents or not. Most women become aware of the potential remuneration from acting as an agent as a result of interaction with the bank or provider’s staff responsible for agent recruitment and on-boarding. This income, together with the likely impact of the agency business on their familial responsibilities, is then discussed with family members.

2. The social acceptance of  a female working as a banking agent is a key factor in determining her success in the agency business

To a large extent, the acceptance (as well as success) of female agents is dependent on social perceptions, which play a much more influential role for them, compared to their male counterparts. For instance, our research shows that most customers generally perceive male agents to be faster, more knowledgeable, updated (about product features), and less prone to commit errors in DFS business. Discussions with providers’ field staff show that they hold similar opinions. However, these may vary according to regional socio-cultural perceptions. A study conducted in the states of Rajasthan and Uttar Pradesh concluded that some other factors may be more pertinent.

On the basis of their (or others’) past experiences with aanganwadi, panchayat and self-help groups, extrinsic motivating factors, such as higher visibility, relationships and trust within society, play a larger role in motivating women to become agents. Also, it was usually observed that these female agents actually leveraged their past relationship with the bank and/or panchayat not only to become an agent, but also to get required support. However, in cases where women agents have no past association with the bank and/or panchayat, male agents continue to get better support from providers.

3. Familial responsibilities and societal norms limit the operational capabilities of women agents

Female agents with less/limited support from family members are expected to fulfil their household responsibilities before managing their DFS business. As a result, their operating hours are often shorter than those of their male counterparts. Female agents are also often limited by social norms in servicing customers in their own village, and requiring a male chaperone to visit the bank. In a few cases, family members also prohibit women agents from providing doorstep services to their customers, due to security concerns.

Due to these restricted operating hours and confined mobility, female agents often have a limited customer base. In addition, lack of/limited marketing support from providers(particularly for women) results in lower awareness amongst potential customers, thereby impacting the remuneration and motivation of women agents. Male agents, in contrast, are involved in extensive promotional activity, such as door-to-door campaigns, leveraging relationship with bank staff by using them to attract customers, etc. The restricted mobility also impacts frequency of liquidity rebalancing by women agents, who prefer to carry “more” cash and rebalance “only” during need.

4. Women agents have lower levels of engagement with banks compared to their male counterparts

Most male agents are also at an advantage in terms of their relationship with bank officials. This is primarily due to their ability to manage additional responsibilities (such as business facilitator, loan recovery agent, etc.) for the linked branch manager. As a result of this relationship, male agents not only get differentiated and enhanced bank support for DFS business, but are also (as a result) likely to earn more than their female counterparts.

Implications for DFS providers

DFS providers can use these insights and address the issue of lower representation of women agents in DFS business at two critical stages of their journey. First, at the entry phase, when a female enters DFS business; and second, as agents continue in DFS business. For this, providers would be required to:

1. Identify and provide reliable and tailored information for female agents as part of the recruitment and on-boarding process. This will provide potential agents and their families with sufficient information to take an informed decision on whether to become an agent or not.

2. Influence male family members to support female agents Males are the key decision takers for females intending to become agents. As a result, providers should engage with them directly, providing them with reliable information, and encouraging them to motivate female household members to become agents. Similarly, providers should work to ensure that males understand the importance of supporting female agents in their work, and how this can enhance their household income – thus securing the necessary family support for women agents.

3. Help female agents to enrol more customers As noted above, familial responsibilities and social norms act as major limitations to the operations of women agents. Due to these impediments, such women agents have reduced operational hours and limited mobility, and also lower customer base. In addition to encouraging male family members to support women in their agency business, providers will need to support them in acquiring more customers by enhancing ground level awareness, educating customers about various product and service offerings, and organising mass enrolment drives near agent’s locality.

Endline Assessment of DBT Pilots in TPDS: Some Success and Few Issues

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As part of the Government of India’s pilots of Direct Benefit Transfer (DBT) for Targeted Public Distribution System (TPDS), MSC conducted three progress assessments. The assessments were conducted as follows: 1. Baseline: August 2015; 2. Mid-line assessment October 2015; and 3. Final in January 2016.

It was clear that the progress was chequered and a number of areas need to be streamlined before the pilot could be scaled up and implemented elsewhere. Our final assessment once again shows mixed results across the key indicators; 1) beneficiary awareness; 2) access to banking; 3) use of subsidy amount; 4) access to markets; 5) subsidy sufficiency; 6) grievance redressal.

As and when DBT in TPDS is to be scaled up, the following should be looked into: 1) DBT amount to be market linked; 2) access to markets and banking is ensured; 3) intimation to beneficiaries of subsidy transfer; 4) DBT to female account holders to avoid diversions.

Andhra Pradesh’s Public Distribution System: A Trailblazer

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The automation of the Public Distribution Systemis an ambitious attempt to combat the diversion of food grains intended for low-income households. Among the states that have embarked on this process, Andhra Pradesh (AP) stands out as a pioneer, having achieved impressive cost savings. This Note discusses best practices that will be useful to other state governments addressing similar challenges. This system was quite expensiveand totals to 1,556 million (USD 23 mn) for 28,295 FPSs. However, the resultant savings, which in MicroSave’s estimate, are around 2,250 million (USD 33 mn) per annum have made it a worthwhile investment. The best practices adopted by AP make it a case worthy of emulation by other states. Prioritising both transparency and efficiency, these initiatives ensure that the poor households have access to their entitlements, are not inconvenienced, and save the government huge amounts by checking the diversion of stocks and plugging leakages in the delivery channel. The scheme is also in line with the central government’s Biometrically Authenticated Physical Offtake (BAPO) principle to minimise exclusions.

Agency Banking: How Female Agents Make a Difference

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Bilkis Banu sits along with a few of her customers in the veranda of her house and talks to us about the close bond that she shares with them. She was signed up as an agent to offer door-to-door cash deposit and withdrawal services for UCO Bank in February 2012 in Khormachali, a small village in Hooghly district of West Bengal. In her community, women traditionally do not have much say in society and many men are mired in alcohol and gambling. “We have come a long way from the days when these women would hesitate to even talk to anyone associated with a bank”, opines Bilkis.

The women customers are vociferous in their support: “We confide in didi (Bilkis) about our household distress. We save with her in absolute trust that our husbands will not come to know about our savings. They can’t harass us then to ‘snatch away’ our money”.

Recent MicroSave field studies using the Market Insights for Innovations and Design (MI4ID) approach in Hooghly and 24 Paraganas districts of West Bengal reveal that customer experience does vary, depending on whether the agent is a male or a female

The key insights from our study offer a glimpse of how gender can impact customer experience. These findings also offer important insights for agent network managers.

1. Women agents enhance the communication and comfort level for women customers

Rural communities in India are mostly gender-segregated societies. We learnt that men prefer their wives to transact with woman agents at outlets, particularly when it requires any form of physical interaction between customer and agent – for example, taking the fingerprints of the customer. Similarly, women customers do not like male agents visiting their households to offer doorstep banking services. There is also global evidence of this phenomenon, as many women report that their families may be uncomfortable with their interacting with male agents in other spheres of their lives, such as mobile usage. Thus, women customers feel more comfortable at a female agent’s outlet, as compared to a male agent’s outlet.

2. Women agents tend to build a “comfortable” transaction environment for their clients

All customers feel that female agents have more patience and are more willing to spend time to address queries or explain the features of a new product. Women customers are willing to share their family’s financial requirements and needs more openly with female agents, and thus are able to receive appropriate financial advice from a trusted (female) source. Women customers perceive male agents to be less approachable, and feel that their queries may be perceived as naïve and/or that they may be put in an embarrassing situation. Women customers even reported being turned down, or having their queries ignored, by male agents.

3. Agency business of woman agents is considered an auxiliary source of income for households

Since women are perceived to be more of household custodians than bread-winners, income earned by female agents is considered a supplementary source of income. Many female agents do not receive adequate financial support to run their agency business effectively, since males control family finances.   We observed that most female agents operate out of their houses with minimal branding in the form of display boards or other marketing collateral. On the other hand, their male counterparts are clearly branded and carry out extensive promotional activities.  In our next blog, we discuss why female agents in India also have limited operating hours, and how this acts as an impediment to their DFS business

4. Male agents tend to receive more comprehensive support from the provider3

From the research, it was clear that the female agents were perceived to be less (or less able to be) enterprising than their male counterparts by a majority of their customers. Women agents, who are often not allowed to travel alone outside their village, require help and support from male family members to fulfil some of their business responsibilities. It is easier for male agents to build informal rapport and liaise with bank officials, who, in India, are predominantly male. Service areas assigned to male agents, too, are often larger compared to those allocated to female agents. These factors widen the gap between the agents of separate genders to effectively serve customers on a profitable basis.

Implications for Agent Banking

These insights highlight that female agents add to better customer experience.

It may make sense to on-board women agents while starting the agency business in hitherto untapped areas. This is because, to a large extent, women are considered to be more sincere, disciplined, accountable, responsible, honest, and easy to manage. Furthermore, they are able to build lasting relationships and better bonds with female customers. However,  MicroSave’s research into preferences for agents also noted that in areas with security issues, men are preferred.

Particular emphasis should be given to gaining women customers, since the access that women have to formal financial services has been at a lower level than that of men. In rural communities, women often have to resort to saving in secret to prevent male family members from accessing these funds. Women customers may initially need some hand-holding to start transacting regularly.

Women agents are more likely to continue with the agency business, once they start. Male agents tend to migrate to more lucrative economic activity, either within the same area or further away, often leaving the agency business  dormant, either temporarily or permanently. Women agents may address this key issue of agent dormancy, as the income is seen as supplementary rather than core to the household finances

However, providers must be aware that women agents need support, given the inherent challenges that their social position creates for them (see insight #4 above). However, this can build up and capitalise on the natural advantages that women have in rural communities. Similar to women agents in other agency-led businesses, enhanced capacity building and specific training sessions should be devised in order to allow women agents to serve their customers to the fullest, ultimately improving business for the provider. Providers may also introduce different models of liquidity management which may be convenient to women agents – the roving liquidity managers that are so common in Bangladesh may provide an important opportunity in more densely populated areas.

There is a clear opportunity for providers to engage and include more women agents like Bilkis Banu, and make it easier for first-time women customers to adapt to more formal financial channels.

In our next blog, we present findings of another section of this study with a focus on highlighting various enablers and hurdles for women DFS agents in India.

1Elder sister in Hindi

2Afridi, F, Mukhopadhyay, A and Sahoo, S (2015). Female labour force participation and child education in India. ISI E&P unit

3Bank, telco or third party providing the digital financial service

 

Predictions for Regulators of Digital Financial Services

Posted on by MSC

It is always dangerous to make predictions in an industry which is expanding and evolving rapidly, so it is with trepidation that I now do so. However, the predictions below are based on market insights and observations from working many years within the mass retail financial sectors and in Digital Financial Services (DFS).

1. DFS will drive financial inclusion strategies, new information requirements, and increase the importance of consumer protection: The power of DFS to provide basic payment services has been powerfully demonstrated in East Africa, and the first time created a realistic expectation of a world in which everyone has access to payment instruments – subject to the caveat of affordable pricing. This ubiquity is a powerful driver for national financial inclusion strategies. However, whilst the ‘pure access dynamic’ is being tackled, the ‘quality of service dynamic’ remains to be addressed. The ubiquity of DFS combined with the drive for financial inclusion will create new information requirements. However, the very fact that third parties are necessarily a part of complex agency arrangements, means that quality of service cannot be guaranteed and the potential for malpractice exists. These factors will drive focus on consumer protection across the DFS space.

2. Increased supervision of Mobile Money Operators: To date, many central banks have been collecting data on mobile money operations, but are yet to actively supervise all the players in the industry. There are many potential reasons for this; to suggest a few – the capacity of the regulator, the rapid evolution of the industry, the dual regulatory jurisdiction of mobile money operators between central banks, and Communications Commissions. However, there are increasingly powerful push factors which, in my view, make increased supervision of mobile money operators inevitable:

i. The publicity around frauds, some of which have been very significant, and have been related to the internal workings of mobile money operators

ii. The furore around KYC which led to a record fine for MTN Nigeria

iii. The spiralling volume and value of transactions through digital channels

iv. New emphasis on consumer protection

v. The need to develop risk management frameworks for mobile money (which can then be audited)

vi. The increased sophistication of mobile money information systems.

3. The registration and potential regulation of FinTech companies and updation of National Payments Acts: The payments world is now buzzing with FinTech, whether this is in terms of cryptocurrency, or products that ride over the top of mobile phone-based operating systems. As part of this, an increasing range of FinTech-based companies will be required to be registered and/or regulated. National Payments Acts will be updated much more quickly to accommodate different categories of payment actors and to provide a defined legal space in which they operate.

4. There will be a significant focus on risk management frameworks for digital financial services: MicroSave, through its Agent Network Accelerator studies in Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Senegal, Tanzania, Uganda and Zambia have shown the growing significance of fraud, at all levels of the DFS ecosystem. This implies a much greater focus on the development of robust risk management frameworks within the digital financial services industry, and, as a corollary, the strengthening of the back offices of mobile money operators of all types.

5. Regulation of channel pricing verses product pricing: To encourage competition, interconnection or interchange fees will be monitored and in some markets controlled. So, for example, a telecommunications company will have a maximum fee that it can charge competing companies for use of its USSD gateway. However, there is the potential that increased use of Internet-based protocols and over-the-top transactions will make a current focus on channel pricing irrelevant over time.

6. Non-exclusivity will actually mean non-exclusivity: There is, in some DFS markets, a difference between the principle and the practice of non-exclusivity of agents. Exclusivity will continue to fade, and pressure will be applied by central banks for this to happen. However, the extent and time that this will take will be significantly influenced by the political economy, specifically the influence of large corporations in specific markets.

7. Interoperability will extend, but will imply standardising interconnectivity: Regulators generally profess a desire for interoperability. However, interoperability operates at different levels. Firstly, it operates at account to account level, from one wallet to another; secondly, it can operate at agent level – possibly through shared agents; thirdly, it can operate at the level of merchant acceptance – the ability of merchants to accept multiple payments, without having to deal with multiple acquirers or issuers; lastly, it can operate as full financial and payment system interoperability.  The work of the Better Than Cash Alliance (BTCA) shows that whilst interoperability is a trend which is widely desired, its actual practice and adoption will be market specific.  However, a factor which makes interoperability much more difficult is the ability of institutions to interconnect; interconnectivity implies the free flow of information in standard formats, either through the adoption of ISO8583 or through the use of Application Programmable Interfaces (APIs).

8. Central banks will rely increasingly on shared intelligence: The rapid evolution of the industry, and, increasingly, cross-border transactions, implies that central banks must seek to share ideas and intelligence and to evolve practices much more quickly than has been the case to date. Initiatives such as the Alliance for Financial Inclusion with working groups for central bankers across many areas related to digital financial inclusion, will be especially important.

9. Central banks need appropriate support: Many central banks clearly need support in adapting their responses to supervision, in risk management, and in understanding the rapidly-evolving digital finance marketplace. They have a limited core of staff members who understand mobile money and these staff are often over-stretched.

10. Government policy will start to significantly influence payment system architecture: This point is perhaps harder to see initially, but nevertheless is worthy of the status of a prediction as it is a fundamental driver of change. Government have their own objectives, which can be supported by the national payment system architecture. Typically, governments want to bring transactions into the tax net. They want to make payments efficiently and effectively to a large number of people. They need and want to enforce both KYC/AML. They want to avoid making payments to ‘ghost’ employees/beneficiaries. They want to expand access to national savings instruments, such as Treasury Bills and Treasury Bonds. The juggernaut of government policy will bring together joint initiatives between Ministries of Finance and central banks. We’re seeing the power of government policy influencing payment system architecture in India through the Aadhaar digital national identity and PMJDY financial inclusion programmes, as well as the National Payment Corporation of India’s Immediate Payment System and Unified Payment Interface. As demonstrated by the India case, government policy will be a significant driver of the introduction of National Identification Cards; in countries currently without these, biometrics will be used to create unique identifiers.

MicroSave’s extensive work with central banks, Ministries and payment services providers across Africa and Asia, clearly indicates that we are at an inflection point characterised by complexity, opportunity and risk. How we respond to these in the next five years will determine the access to, and impact of, digital financial services for the mass market.

Understanding Gender Dynamics in Agent Banking

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MicroSave used its Market Insights for Innovations and Design (MI4ID) approach to conduct a series of studies in different parts of India. These studies sought to understand gender aspects of agent banking. The first part of this blog series highlights key findings aimed at understanding the differences in customer experience at an agent outlet based on customer gender. This research was conducted in the rural areas of Varanasi and Unnao, located in eastern part of Uttar Pradesh (UP).

Key insights

a. Male family members are key influencers of financial decisions by women 

In northern India’s rural areas, men have the key responsibility of earning a living for the household, while women are primarily expected to stay home and handle household responsibilities. Decision-making on larger expenditures in the household is collective, involving male and female adults; while smaller, household-related expenditure decisions are made by women.  Women are largely financially dependent on men and are far more inclined to save than men, often putting small amounts aside from the household budget. Males’ savings accrue from the receipt of lump sums of income – from the sale of animals or crops, or from monthly salary receipts.  Consequently, women will usually save small amounts frequently with the agents; whereas men tend to save less frequently, but in larger amounts.

Women customers will seek advice and approval from male and other family members prior to making any financial decision or availing a service at any agent outlet. This is not unique to the Indian market as S. Narain notes in the ‘Access to Finance’ World Bank report. In South Africa, a woman is required to obtain her husband’s signature in order to open and use a bank account. Similar biases were observed in Democratic Republic of Congo, Namibia, Rwanda, and Uganda. A number of banks in Pakistan require a husband or a male family member to co-sign a loan for a woman.

“My husband said that I should open an account at the counter, so I did” – A female customer in rural Varanasi

b. Agent behaviour differs with respect to gender of customers

Female customers should be treated well to keep agency business sustainable: A key concern for agents is the sustainability and profitability of their business. This is largely dependent on frequency and regularity of transactions. As pointed out by Women’s World Banking, agents understand that women are more likely to save and hence serving them well can increase agent commissions. Agents interviewed indicated that, given the choice, they would rather serve female customers.

According to the “Digital Financial Solutions to Advance Women’s Economic Participation” report, women face cultural, social and systemic barriers that limit demand for, and use of, digital financial services. These include lack of identification documents, low literacy levels, lower technology adoption levels, and social and cultural sanctions that limit the free movement of women. Agents opine that social norms restrict females and they will treat female customers preferentially to encourage use of financial services. MicroSave observed, in some instances, that the agent would not only offer a seat to female customers ― as opposed to a male customer waiting to be served ― but also allow the waiting female customers to ‘jump’ the queue. Female customers interviewed confirmed having received this kind of preferential treatment.

“Women visit my counter frequently to transact: this encourages me to serve them better.”  – An agent in rural Unnao

It is worthwhile to note that, in India, social norms differ across geographies and these findings are limited to two districts of the most populous state of India, Uttar Pradesh. It is possible that agent behaviour may differ in another region because of different social norms.

Agents perceive women customers as more manageable. Women’s lack of familiarity with financial products and services makes them less demanding, and more agreeable. Men are more inquisitive about different financial products and services, and more insistent to have their queries resolved by agents.

c. Male customers expect to get preferential treatment from agents

In the rural geographies of India, men generally enjoy a higher social status than women, due to a variety of complex social reasons. In this social system, males expect to get preferential treatment at the agent counter, including being served before any women in the queue. Sometimes, if men are denied preferential treatment, they are irritable and  dissatisfied with the agent.

“At times, male customers are hard to deal with, as they try to override the queue and also argue over petty issues, such as delay due to over-crowding or systemic delays.” – An agent in rural Varanasi

Implications for agent banking

Agent networks need to be developed and managed to accommodate existing perceptions, beliefs, and social norms. As highlighted above, in different ways, both male and female customers offer a huge potential for growth in the development of digital financial services. The Government needs to adopt and promote a financial customer protection framework to ensure that new female customers are treated fairly and have sufficient financial skills to enhance understanding (and trust) in digital financial services with a view to large-scale adoption.

For a service provider, these insights will help design financial products and services that respond to gender aspects. Digital financial services can offer women greater privacy, confidentiality, and control over their finances. According to a report by UNCDF and GPFI, giving women more financial autonomy can have a positive impact on an entire household. Agent support can motivate female customers to use financial services despite the prohibitive social norms (as discussed in the next blog: “Agency Banking: Male vs. Female Agents”). Moreover, customer service is the key to surviving in a competitive market.

The social status of rural women often limits their ability to travel beyond the confines of the village. Men have more financial autonomy and higher levels of exposure to financial products and services, as they travel out of the village more often than women.  Thus, marketing and communication messages and delivery channels for products targeted at the rural female segment need to address this reality.

Now that we have looked into the gender aspects in agency banking, the next blog in this series will discuss how an agent’s gender impacts customer experience.