This Note describes clients’ preferences for desired agent profiles in India, and looks at how this data could be used when selecting agents. It concludes that agent selection must consider many aspects key to the viability of the business, such as the capacity to scale up and the ability to manage cash. However, client preferences for agent attributes are perhaps more important than other considerations, since these will be one of the main factors driving transactions. Organisations wanting to adopt agency banking models should take cognisance of this and exercise adequate due diligence in identifying key characteristics that clients desire and selecting agents according to those traits.
Blog
Riding the M-PESA Rails: Advantages & Disadvantages
By riding on M-PESA rails, most banks, MFIs and Deposit Taking Microfinance Programs (DTMs) are looking for cost reduction, increased staff efficiency and convenience of customers, which ultimately should lead to more deposits/transactions. This Note examines if, how and where financial institutions are realising the potential of M-PESA to make their systems more efficient and their products more accessible. It concludes that financial institutions that have agreements with M-PESA are not heavily promoting the opportunity, despite the potential benefits. They are aware of the issues faced by customers as well as the back-end challenges of reconciliation and so on, and are thus cautious about large-scale rollout.
No Thrills – Dormancy in NFA Accounts
Successful Banking Correspondents Need a Compelling Product Mix
To date, the business case for BCs remains uncertain, despite the Reserve Bank of India’s (RBI’s) efforts to relax policy to encourage successful growth of BCs. Nonetheless some commentators do still see the future of financial inclusion and microfinance in India dependent on successful BC models. This Note lays out why a compelling product mix is central to a successful BC network. A client-responsive product mix is likely to create the level of activity necessary to make the BC channel sustainable for both banks and the BC network manager, as well as for individual BCs themselves … thus creating true and meaningful financial inclusion.
Innovation and Adaptation on the M-PESA Rails
This note examines some of the savings and related services offered to the low income market segment using M-PESA ‘rails’, and highlights the challenges they face. The institutions using M-PESA are working in different areas of financial services, offering savings, loans, health and life insurance, pension and investment products.
It concludes that: 1. the whole cycle of deposit and withdrawal (or indeed loan repayment) through M-PESA therefore becomes an expensive proposition for the customer; and 2. at present financial institutions appear unsure about the overall costs and benefits arising out of their partnerships with M-PESA. All are busy sorting out the operational issues due to integration challenges, and the difficulties of communicating the proposition to customers.
Comparing Business Correspondent With Informal Saving Avenues
This Note focuses on comparing informal saving avenues with “Business Correspondent” (BC) services on a variety of attributes. The dimensions for comparison have been derived from respondents’ perception of qualities that should characterise an ideal saving avenue. These primarily include trust, frequency and convenience of small deposits, benefits such as rate of return, ease of withdrawal, security of the deposits, cost incurred, understanding of the procedures for accessing a particular saving avenue, and other product offerings such as credit.