I was recently pointed to an interesting blog entry written by Mr. Amitabh Saxena, Director of Alternative Channels at ACCION International. Swadhaar Finance, an ACCION microfinance partner, offers savings accounts to its poorer clientele by becoming a banking correspondent of ICICI Bank. Through the partnership, Swadhaar sets up small kiosks where clients can make basic transactions (e.g., balance inquiries, deposits, withdrawals). Clients needed to pay INR 200 (US $4) for smart cards to use these kiosks. Yet, Mr. Saxena and his colleagues found that of the 3,000 customers, 75-93% of the accounts had zero balance, and 63% of the customers had never made a single transaction. ICICI said that for its 120,000 customers through its banking correspondent network of 40 NGOs, this was about average. Why would this be, especially when poorer clients spend 200 rupees to open the account?
As Mr. Saxena explains
Through focus groups of Swadhaar FinAccess savings customers, we uncovered a number of reasons for this behavior. Among those who carried a balance, their decisions to open an account stemmed from their impression of the ICICI brand, and its association with “glamour” and the “middle-class.” For this group, the ICICI name also provided a sense of security – one of the most important features in promoting savings – specifically using the metaphor of the bank being a father-figure that “would help if his children [the customers] ever got in trouble.”
But what about the customers who carried no balance? Their revealing response: the smart card, complete with their name, thumbprint, and photo, acted as a identify card, and when combined with the adored ICICI logo, one that commanded respect. India does not have a national ID card. The smart card, in effect, provided them with an identity. We received comments like, “I just like to show that I have an account, it doesn’t matter if I have a balance or not” and “If you are going at night and you clash the police then you can show them this also.”
A smart card makes these poorer clients somebody, a somebody that can’t be pushed around by police. A little different use than I imagined, but it just may be worth it . . .
Click here for the full blog entry.
* Thanks to Cara Forster at ACCION’s Center for Financial Inclusion for pointing me towards this story.
2 comments:
My first reaction to this was "This is ludicrous".
But when I let the ruralist in me analyse it, I realised that it indeed is a major incentive. People are such badly in need of an identity that the monetary equivalent of the desire to flash an I-Card can easily be Rs. 200.
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