Comparing Business Correspondent with Informal Saving Avenues
This paper compares informal saving avenues with Business Correspondent (BC) services on a variety of attributes. It derives the dimensions for comparison from respondents’ perception of qualities that should characterise an ideal saving avenue. They include trust, frequency and convenience of small deposits, benefits such as rate of return, ease of withdrawal, security of deposits, cost, and understanding of procedures and other product offerings such as credit.
The paper demonstrates that BCs fare better than banks because of the challenges and costs of accessing formal banking services. Findings indicate that:
- Informal savings avenues form a major part of financial services used by low income households;
- BC model is able to deliver better quality financial services than some common informal avenues;
- BC model scores well on aspects like trust, security, accessibility and flexibility, both in terms of frequency and amounts of transactions.
The paper suggests that the BC model can be used to offer other financial services like remittances, insurance and credit to the bottom of pyramid market because it links low income households to formal financial services better than informal and currently available formal channels.
