Bridging The Gap Of Distribution Channel In Financial Inclusion After the much talked about and successful introduction of Jan Dhan Yojana, financial inclusion has become a focal point in government policies. Holistic efforts are being made by both public and private banks in remote regions of India to include the unbanked population in the banked category. However, sustenance of financial inclusion seems like a staggering task, given the vast geography of India, lack of digital literacy and supporting infrastructure. Digital technologies, hence, can improve the efficiency of the current process by taking the distribution beyond branches, direct sales and call centres.
In past few years, retail banking has aggressively adopted mobile technology as a tool for customer acquisition and retention. It is about time that rural banking and financial inclusion also witnesses the advent of technology at every step of customer interaction. Despite the internet penetration, rural India is still hovering under lack of digital literacy, but, with use of easy-to-understand methods, the barrier can be bridged.
Supplementing existing simple technology with distribution channels can offer some quick solutions by helping banks reach customers directly, enabling them smooth banking experience. PwC India along with Confederation of Indian Industry (CII) prepared a detailed report on Financial Distribution offers unique insights on the matter. Here is a quick view at some such methods that can bolster financial inclusion in India as mentioned in the report.
Biometric: With a strict adherence to KYC norms, biometric method can help banks keep a consolidated track of customer information which is centrally stored in a cloud system. Implementation of fingerprint and voice biometrics can be used to identify customer data, preventing delay in the account opening procedure. Such products are being widely offered by companies like FINO PayTech which provide branchless banking solutions via single biometric mechanism that makes enrolment, storage and verification an easy task. As a necessary method, this method also offers high security at a low cost, requiring no paperwork and providing the added convenience to customers of not having to remember a PIN.
USSD (unstructured supplementary service data): Lack of supporting infrastructure is another challenge that the industry is facing. Companies are yet to completely churn out the best of existing technologies. USSD for instance, is an excellent method to transfer money. An inbuilt facility in mobile phones, it does not require internet connection and comes free of cost. Micro financing services and mobile money transfer services like M-Pesa by Vodafone are already making the most of this facility.
Business correspondents It will take some more time for rural masses to become digitally literate and brick-mortar branches are still inaccessible in remote regions. Business correspondents deployed by banks can help locals receive hassle free services by leveraging mobile technology to deliver automated, low-cost and secure transaction. Through an electronically enabled core banking and integrated user-friendly interface, a variety of banking services can be offered suiting the customer’s needs. Retail networks of mobile service operators can also be utilised to support liquidity needs of these agents. Collaborations among MSOs and financial services companies can provide an opportunity of far-reaching penetration, as is evident in the case of M-Pesa.
Creating digital awareness: Mobile money still seems like an alien concept to a large part of rural and semiurban population who are only used to traditional means of transactions like cash and cheque. Financial companies have begun equipping their advisors with technologyenabled tools to help them sell better. Many tech companies in collaboration with financial services are offering mobile sales force management tools that make the registration process smooth. These tools are also helpful in monitoring and evaluating the portfolio and performance tracking and training delivery. Special software and standardised videos about products loaded on mobile devices make it easier for customers to understand the products better and also prevent misselling, setting registrations for mobile money high. Once glued into the process, customers can start getting more people to enroll through word of mouth feedback.
A dense distribution network that caters to all banking needs is certainly a long term strategy. But, using existing networks provides terrific opportunities to make quick entries into these markets, and financial services companies can learn from the innovative strategies adopted by companies in other geographies and industries.