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Agent Networks & Women Inclusion in Digital Financial Services: Case Study from Bangladesh

Akhand J Tiwari

September 28, 2016

Hotel Millennium

Jakarta

@akhandjtiwari

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Market-ledSolutionsfor financial

services

We are financial inclusionadvisory that offers practical,market-led solutions to financialinstitutions and corporationsfocussed on bringing value to thebase of the pyramid.

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‘The Agent Network Accelerator’ (ANA) Programme

40,000

Started in 2013, ANA is a four year research project in eleven major markets – Kenya, Tanzania, Uganda, Nigeria, India, Indonesia, Bangladesh and Pakistan. Expanded to Zambia, Senegal and Benin.

Designed to help the world’s leading providers overcome the cost and complexity of building sustainable cash-in/cash-out (CICO) networks across a broad geography

Structured to deliver cutting edge knowledge and global data on agent network management

Produces country reports, provider reports and powers the Helix curriculum

Over 30,000

completed

All baseline countries

completed. Wave 2 in

process

Data collected for leading providers

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42

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Agenda

Talk about the a critical element of financial inclusion – the last mile connectivity – The Agents!

Look over over-the-counter transaction

Explore gender dynamics in DFS from supply side perspective

Conclude - Trends in DFS and way forward

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Healthy and working agent networks are important for financial inclusion

Distribution to the spectrum of segments

Complete the eco-system: cash-in/ cash-out

Frontline – the face of financial services

Use-cases Interfaces

Open APIs

Machine Intelligence

Security

Partnerships

Drawing Road-maps

Identifying segments

Use of Big-data

Outreach to last mile

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Agent Networks in Bangladesh*

49%27%

6%

7%5% 6%

Market Presence**

bKash

DBBL

mCash

UCash

MYCash

Others

A surge of Digital Financial Services (DFS) providers in Bangladesh has created world class, innovative agent deployment models.

Agent Network Typology

DFS ServicesOffered

Master Agent Model Hub and Spoke

Model Shared Agent Model

Third party specialist

Account registration

Basic product offerings**

International remittance

Merchant payments

* The data presented in this presentation is taken from ANA Bangladesh Wave II study conduced by Helix. Other data sources used are likewise referenced. **Defined by number of agents that serve a providers. An agent is counted for each provider it serves.

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Non-exclusivity of agent networks is good but has some risks to look-out for…

9% 11% 13%

56%

64% 66% 66%70%

0%

25%

50%

75%

100%

1

% A

ge

nts

Zambia'15 India'14 Kenya'14 Bangladesh'16 Uganda'15 Pakistan'14 Senegal'15 Tanzania'15

Less pressure on providers Customer's access to more than one

providers’ services at one outlet

Agents squeezing commissions out of providers and money from customers

Agent’s limited ability to handle business

13% of non-exclusive agents serve a median of 4 or more providers.

Non-Exclusivity: ANA Research Countries*

Providers and Agents

*ANA surveys were conducted in 2013 in Uganda, Kenya, and Tanzania; in 2014 in Bangladesh, Kenya, Pakistan, and India; in 2015 in Zambia, Tanzania, Uganda and Senegal; and in 2016 in Bangladesh.

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Providers will need to continuously look at barriers that prevent agents to conduct more transactions...

Lack of resources to buy enoughcash/e-money

Too many agents competing forbusiness

Individual clients' demand forservice is not very regular

Credit to agents to manage liquidity?

Agent Segmentation? Product sophistication?

Top Three Barriers To Conducting More Transactions in Bangladesh

Providers and Agents

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Effective agent management – better said than done…

Agent’s Knowledge

• 30% of agents know that there is a limit to

the amount of money users can keep in

their accounts

• One out of six agents know it is possible to

send e-money to those who do not have an

account

• Just over half of agents know who

regulates mobile money in Bangladesh.

Monitoring and Support

• The agents who receive these

monitoring visits conduct 5 more

transactions than those who do not

receive visits.

• Agents who receive induction training are

more likely to be complaint with respect

to collateral display at outlets.

Compliance

OTC transactions are prevalent – over three-fourths of agents offer money transfer services and 47% assist customers in performing transactions on their handsets

Providers and Agents

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What are OTC transactions

OTC Transactions

An OTC transaction is “a transaction that the agent conducts on behalf of a customer from either the customer’s or agent’s mobile money account.”

Source: CGAP, GSMA, MicroSave Analysis on OTC

Direct deposit by an agent into the wallet of an end user (e.g. Uganda, India)

From one agent to another with identification (e.g., Pakistan and Senegal, Zambia)

From one agent to another without identification (e.g. Bangladesh)

Agent assisted transaction! (everywhere)

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All type of users like to conduct OTC

OTC Transactions

Source: InterMedia 2016

While OTC is formalised in Pakistan and Senegal, it is not uncommon in other ANA research countries such as Uganda (78%) and Zambia (67%), where it may not be formalised.

73% of mobile money users prefer asking an agent to conduct a transaction on their behalf—i.e. OTC transactions.

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Why do customers like OTC?

OTC Transactions

Can get OTC done by an agent without having to register, while there are barriers to registering -

Complex KYC requirements

Lack of Use-Cases (customer value proposition) to use wallets

Complicated user-interfaces

Behavioural constraints – fear of technology, lack of trust in the system etc. – creates status quo bias

Agents’ motivation to conduct OTC

Providers’ motivation to initial growth

Regulations

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Provider and Regulator perspectives on OTC

OTC Transactions

Shall we make efforts to stop OTC transactions?

There are risks to • Customers • Providers • Regulators

But customers prefer a hassle free experience and some really need agent assistance

So OTCs are important but it needs to be done in a way that risks are mitigated and that product diversification continues

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Where are women agents?

Women in DFS

BANGLADESH ZAMBIA UGANDA INDIA SENEGAL

Male Female

0.4%

46%

67%

9%

35%

We know* Women customers prefer interacting with female agents, Women agents are believed to have more patience with the customers, and Women are considered to be more sincere, disciplined, accountable,

responsible, and honest.

*MicroSave study with women agents in India and Bangladesh

Why we see so few of them?

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Business landscape as perceived by women agents

Women in DFS

Societal Norms

Initial Working Capital

Agent Training

Risks

Liquidity Management

Agent support

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Watch out for –

Trends in DFS and Way Forward

Government policy

• Government goods – e.g. UPI, Financial inclusion policies

• Gender-inclusive financial services

• Regulatory environment• eKYC

User centric product design

• Expanded suit of financial products

• DFS++: value chain, water, energy

Marketing/agent training and customer communication

• Behavioural designs to agent training e.g. E-Paathsaala

• Financial capability through responsible product marketing

Technology

• Fin-Techs and Big-Data• Customer interfaces• Low cost smart phones/App-

environment• Interoperable payment

infrastructure

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Thank You

Please write to akhand@microsave.net/info@microsave.net in case of queries