Extending Access to the Formal Financial System: The Banking Correspondent Business Model

Discussing the role the banking correspondent model can play in enhancing financial inclusion

This paper presents a study of the banking correspondent model to understand how it can contribute to enhance financial inclusion. Banking correspondents are non-financial commercial establishments that offer basic financial services under the name of a financial services provider, becoming access points to the formal financial system. The paper identifies and studies two different models of banking correspondents: pure and hybrid. It also provides a harmonized database with information about the number of banking correspondents by country, which helps in measuring access to the formal financial system. The database includes two types of information: the number of pure banking correspondent outlets (for 70 countries) and a classification of the e-money providers (in 73 countries). Key highlights from the paper include:

  • People who generally do not use formal financial services, due to access restrictions to more conventional banking channels especially benefit from the banking correspondent model;
  • Pure banking correspondent model is widespread in Latin America and the Caribbean due to the relatively advanced banking tradition in this region compared to other developing areas;
  • Banking correspondent model is not usual in the developed world since access through the traditional banking channels is not limited, and banking through the internet is increasingly popular.

About this Publication

By Cámara, N., Tuesta, D. & Urbiola, P.