Individual or Institutional BCs: The Client's Perspective
This note discusses client perceptions of individual and institutional business correspondents (BCs). It analyzes the relative merits of using an individual BC agent versus a business correspondent network manager (BCNM), based on parameters that include trust and customer relationship, quality of service delivery, consumer protection and cash availability.
Banks appoint individuals directly from the community as BC agents in the first approach. The second approach involves appointing firms or organizations to manage agents. BC agents are then employees or contractors of the BCNM. Findings include:
- BCNMs in India deliver better on most of the parameters in the study because they are focused on the success of the overall system;
- Clients may find that the local bank branch does not have the motivation or the resources to provide dedicated teams to provide superior service in the case of individual BCs;
- This is especially true in India where banks prefer to outsource their financial inclusion activities.
The paper concludes that both individual and institutional agents have their own relative advantages, although these advantages are not absolute. Execution is the key, and either model can suffer if implementation on the ground is not effective.
