On 1 December 2009, CGAP invited us to debate the 2020 branchless banking scenarios in their technology blog. We submitted the following question, maybe you also have your opinion. So post here or there!
One of the most important issues in branchless banking is to align the interests of the poor, the agent and the bank (or financial partner). So far, discussions have focused on the principal-agent relationship between the agent and the bank, that is a one-sided agent model. Achieving sustainable financial inclusion may require a two-sided – or multi-sided – agent approach, with the same agent not only acting for a bank but also for a group of low-income people, and by so-doing better aligning the various parties’ interests. Do such agents exist? We think so: some agents may enjoy the trust of the poor, be very close to them, offer affordable services while simultaneously benefiting from a joint-venture with one or several banks (or other financial entities) and deliver many activist governments’ benefits. One of these multi-sided agents is called the post office, with three striking cases in Brazil, India and China. So why don’t we pay more attention to multi-sided agents that can better internalize and align the interests of different parties?
Interestingly, this approach was partially introduced in one of the CGAP scenarios related to Self Helf Groups. In our opinion, the more a platform (be it mobile telephony or/and postal operator) has aligned interests with the Self Helf Group, the better it will internalize these interests when dealing with the other side of the platform, i.e. the bank and/or financial partners. Post offices, through their local presence and proximity to Self Helf Groups members, are often trusted institutions and have universal service obligations (USO) that may ease the alignement of interests between them and Self Helf Groups.