This chapter deals with two critical aspects of the financial
inclusion strategy—the use of business correspondents
(BC) by banks and the deepening of technology-led
financial service models. BC model is a critical compo-
nent and channel within the financial services delivery
architecture and digitization of financial services while
at the same time, one that has yet to show conclusive
positive results on scale and at the macro level. The
chapter examines the evolution over time of the system
of BCs and business facilitators (BFs) and provides an
overview of the dynamics of the relationships among the
current and potential stakeholders within the system.
Thus, the interaction between banks on the one hand,
and the technology service providers (TSPs), corporate
BCs, field support agencies and BC agents or Customer
Service Points (CSPs) of various kinds is examined in
various contexts. A major theme discussed is the issue of
viability which appears to pose a challenge to the success-
ful large-scale implementation of the model. The chapter
reviews the critical literature on the working and viability
of the BC model. Also discussed are studies reporting
continuing concerns such as low remuneration levels of
agents and their high attrition rates, the deficiencies in
implementation through corporate BCs and the limited
commitment and investment by banks in the delivery of
financial services to the unbanked. Underlying these diffi-
cult relationships and modest outcomes is the technology
factor, which is found to have created its own opportu-
nities as well as challenges, institutional and technical,
in the implementation of the model. The perspective of
customers in unraveling the potential of this channel to
improve their access to financial services is also covered.
Notwithstanding the many difficulties in implemen-
tation of the BC model, a large number of innovations
have been undertaken in service delivery at the last mile.
Some of these innovations, which involve a role for
MFIs, SHGs and their federations and cooperative insti-
tutions, otherwise excluded from the scope of financial
inclusion, are instructive and potentially replicable on a
larger scale. Among these, is the use of MFIs as BCs by
banks to help crack the challenge of diversified product
delivery, particularly credit. Thus, through a return of the
partnership model, private banks and even public sector
banks, are involving not-for-profit MFIs and increasingly
3
Agents of Financial Inclusion
Business Correspondents and Technology-Led
Banking Models
