Driving Viability for Banks and Business Correspondents

This Note examines various enabling factors that can accelerate profitability for the banks and viability and sustainability for the Business Correspondents (BC). It states that banks, BCs and other stakeholders can become viable if they follow certain guiding principles and recommends that banks and BCs should investigate factors that will help them succeed, while also committing to changing their mindsets.

The paper states that no-frills-savings-accounts (NFAs) alone cannot satisfy the financial needs and aspirations of the excluded segment. Off-take of additional products on-top of an NFA account by each customer can start yielding positive gross margins for the bank and BC. The paper recommends that banks should:

• Enable BCs to offer a basket of bank-led products, supplemented by products that can ride on the same mobile channel;
• Consider BCs as partners with whom they can work to deliver quality financial services;
• Recognise BCs as an alternate channel to service the wider low-income segment that traditional banking finds unviable to service;
• Create facilitating environments for remittance to scale and sustain;
• Encourage competition among BCs;
• Learn from consumer businesses such as telecom that have recognised the opportunity that lies in financial inclusions.