Would people in villages be willing to pay for agent-based financial services?
This Note discusses findings from a MicroSave study on the costs people incur to transact at bank branches in India and their willingness to pay for an agent-based system in their villages. Respondents were mostly poor, illiterate, and about half were day labourers. They were chosen on the basis that they had a bank account and visit bank branches regularly.
The study found many and varied reasons why poor people do not like to visit bank branches. They include:
Amount of time that has to be spent in a bank branch to make a basic transaction
Crowding of branches due to the government’s National Rural Employment Guarantee Scheme;
Distance that many have to travel to get to bank branches, which results in money spent on transport and time lost;
Illiteracy that creates significant barriers while filling transaction forms;
Cost of making the transaction.
The study found that poor people are willing to pay for agent-based banking services in their villages due to the financial and opportunity costs associated with branch-based banking. They are also quite rational about the amounts that might need to be paid.