Towards a More Sustainable Livelihood for Business Correspondent Agents

Business Correspondent Agents (BCs) provide crucial support for financial service providers in India, helping serve last mile and underserved populations with basic banking services in areas bank branches can't reach. Working from their own shops or going door to door, they assist community members with bank transactions such as cash withdrawals and opening accounts. Rural populations have come to trust and depend on BC agents, whom they often refer to as “bank managers.”

Diversifying and increasing agent revenue

However, despite the recognition and trust BC agents receive, the commission they earn from product linkages and banking transactions is not enough to provide a sustainable livelihood. One of the key challenges hindering growth of BC agent networks is the low margins and profitability of working as a BC agent.  In order to continue their operations, BCs need additional sources of income.

Grameen Foundation India’s BEADS project is working on this issue, testing various approaches of diversifying and increasing revenue with the aim of strengthening the business correspondent model. We have identified assisted e-commerce as a promising revenue source for BC agents and, to explore this possibility, we conducted a Human-Centered Design (HCD) study to develop a pilot in partnership with a business correspondent network manager, Centre for Development Orientation and Training (CDOT).

Assisted e-commerce and how it works

Assisted e-commerce is basically facilitating online shopping for people who don’t have internet access or the ability to do it themselves. Customers can request products from the BC agent, who shows them options on the e-commerce platform provided by their FSP. Once the customer makes their selection, the agent completes the purchase on their behalf and arranges delivery either to the customer's home or to the BC point where the agent operates. If the product is accepted without any returns or cancellations, the BC agent receives a commission from the e-commerce provider based on the product's price.

BC agents are well positioned to offer assisted e-commerce as they are digitally literate, trusted by their community, and have access to the systems and internet connections required.  This business model represents a unique opportunity for BCs to expand their offerings and reach new customers. It can also help bring the benefits of online shopping to rural areas where access to the internet and digital literacy are limited. But is there demand for this service?

Customer demand for assistance with online shopping

Rural markets are seeing a rise in demand for quality products, driven by exposure to various brands through media and television. Many of these products are not available in local markets and must be ordered online. However, online shopping requires a level of digital literacy that many rural customers, especially women, do not have. Assisted e-commerce at BC points can help resolve this issue, offering an accessible and convenient way for rural residents to order the products they seek.

Our HCD study found that the demand for kitchen and dining products was highest, followed by beauty and grooming products, suggesting the potential for BC agents to promote in-demand products, particularly those catering to women. Migrant workers who live away from their families also indicated interest and could become valuable customers for agents as they seek assistance in sending products to their families back in their villages.

In fact, demand for products purchased online is now so high that access to one e-commerce platform is often not enough. The BC agents we talked to in our study have found that when they only have access to a single platform, they tend to face issues with price comparison, delivery reliability and customer satisfaction. The Open Network for Digital Commerce (ONDC) aims to address this problem by fostering open networks for the exchange of goods and services through digital channels, allowing customers to browse multiple e-commerce platforms and discover any seller, product or service. Operating beyond the current platform-centric model of digital commerce, ONDC can help BC agents in rural areas offer assisted e-commerce services, and at the same time, make e-commerce more inclusive and accessible for customers.

Benefits for everyone involved

For BC agents, the benefits of offering assisted e-commerce are clear: increased revenue that could allow them to make a living. But they are not the only ones who would benefit. E-commerce providers will reach new customers and see an increase in sales. Data from an assisted e-commerce experiment under the BEADS Project shows a 10 percent increase in e-commerce sales as a result of BC agents' involvement.

For their part, FSPs will be able to create a sustainable business model for BC agents, allowing them to expand their networks and continue to reach more customers. Finally, rural customers will benefit from access to a wider variety of products and services.

Revolutionizing rural commerce

Assisted e-commerce has the potential to revolutionize rural commerce and provide BC agents with a much-needed source of income.  By harnessing the power of BC agents and their trusted relationships with their communities, banks and e-commerce providers can bring the benefits of online shopping to rural areas, bridging the digital divide and empowering rural populations. The success of assisted e-commerce will depend on the ability of all stakeholders to come together to design solutions that are user-friendly, accessible and meet the needs of rural customers.