Do Agents Improve Financial Inclusion? Evidence from a National Survey in Brazil

This paper, using data from a national survey in Brazil, discusses the benefits of agent banking in bringing formal financial services to underserved populations. It suggests that availability of correspondents is not enough for increasing financial inclusion but, improved security, reliability, and customer service must also be emphasized in agent network development. Key findings include:

• Agents generate significant efficiency gains by bringing bill pay and person-to-person transfer services closer to people in developing countries;
• Extensive network of access points for facilitating daily transactions has made accessing existing accounts and paying bills easier and faster;
• Correspondents are more likely to be poor, less educated, employed in the informal sector, and female. About 4% of clients have opened an account and 6% of respondents have accessed credit at a correspondent;
• Poor are more likely to use correspondents as they are proximate and not because they provide good services. Branches are still preferred for financial services when available;
• Coverage does not necessarily lead to transformative access - it is possible for clients to make formal payments while still lacking a bank account, as is the case for 32 million Brazilian households.