Innovations in Financial Service Delivery: Scope and Challenges
This paper focuses on issues in financial service delivery to the less banked, base of the pyramid (BOP) clients. It analyzes types of innovations that currently exist in the financial service delivery landscape, factors that facilitate development and dissemination of these innovations.
The paper explores if innovations in service delivery, particularly, branchless banking and use of technology, expand access to the less banked poor and remote areas as well as their outcomes on the lives of the less banked. Findings include:
- Innovations observed today include re-engineered delivery mechanisms from the financial service providers in the last two generations. Mobile vans with advanced ICTs and card based mechanisms used during the second generation are now improved to attract a wide variety of clients;
- Mobile phone banking and information based technologies to deliver financial services is not for everyone. Technology should be easy to understand and use, and cheaper to acquire;
- Service providers and regulators need to engage in constructive dialogue to build client confidence.
The paper concludes that adequate telecommunication and banking infrastructure play a major role in reaching sufficient scale and cost efficiency to reach the BOP. A conducive, enabling regulatory environment is also crucial.
