Banking the Poor through Everyday Stores

This paper reviews opportunities and strategic choices facing banks considering branchless banking options.

Technology and the spread of real-time mobile communications networks permit financial service providers to delegate last mile cash management and customer servicing functions to third-party retail outlets. Financial service providers in developing countries can dramatically increase their physical footprint and transform the basic economics of low-balance savings by making basic deposit, withdrawal, and payment functions available securely through retail shops that exist in every village and neighborhood. The paper states that:

• Branchless banking would enable a more systematic approach to formal financial inclusion of millions of families in developing countries;
• Banks can use current technology and need not depend on a costly direct distribution model and products for a limited market segment;
• If retail banks continue to service only the non-poor, they risk missing out on a sizeable market of potential new customers.

Banks can, therefore, reach out to the poor and avoid opening costly branches by embedding their services within normal retail channels that already serve the poor.