Paper

It's Time to Address the Microsavings Challenge, Scalably

Using existing non-bank retail outlets as cash transaction points
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This paper discusses the importance of making deposit accounts available through technology-driven agent banking models that can lower the cost structure of reaching poor families where they live and work.

The paper analyzes the development of a system capable of delivering microsavings services to all, profitably. Such a system would need to balance the requirements for ubiquitous service points and economies of scale. This would be possible by combining three key elements, namely, retail distribution channels, real-time technologies and volume of transactions.

Distribution channels such as existing retail stores and technology such as mobile phone-based or card-based systems permit real time authorization of transactions and help reduce the unit capital cost per outlet. Technologies that allow electronic processing of transactions and volume of transactions such as remittances, bill collections and welfare payments help reduce the unit operating cost per transaction. Finally, such a system is premised on three key aspects:

  • Structuring the right collaborative business models across various players;
  • Understanding customer drivers of value and usage triggers;
  • Establishing appropriate enabling regulatory environment that protects customers'’ trust while not unduly inhibiting innovation.