New Report Optimistic About Branchless Banking in India

MicroSave, an organization committed to expanding the reaches of financial inclusion, released a report that was bullish on the state of electronic/mobile banking (e/m) (aka branchless banking) in India. The report effectively says that fast growing mobile penetration, very cheap mobile phones, and numerous government programs’ desires to use e/m banking have culminated in a great opportunity for India.

Over at CGAP, Greg Chen interviewed Graham Wright, one of the authors and MicroSave’s founding director to find out more. You can read the interview in its entirety here. One interesting point that Wright when asked about broadening products beyond payments was:

These anchor products offer a great opportunity for unbanked customers to experience banking, and therefore have the potential to accelerate new product adoption and thus financial inclusion. And it is quite clear from all MicroSave’s analysis that BCNMs and their agents will need to deliver a variety of products to achieve profitable and thus sustainable operations – so we can anticipate a growth in the range of products offered.

But while electronic remittances and transfer of benefits (EBT) are witnessing considerable consumer demand, the absence of a compelling value-proposition in basic no-frills savings accounts is keeping the customers, the agent network managers and the Indian banking system from realising the full potential of the agent-based banking model. NFAs are limited in functionality (no ATM cards, no cheque books etc. and in many cases not even fully integrated with banks’ core banking systems), but are often sold as full services savings accounts by over enthusiastic frontline workers. Once banks move to develop and deliver client-responsive savings products (including the much sought-after recurring or commitment deposits), we can expect to see significant uptake.

The report itself is very detailed and you can download the pdf version here.