Remittances through M-Banking Customer Perspectives: Observations from India
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Transcript of Remittances through M-Banking Customer Perspectives: Observations from India
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MicroSave Market-led solutions for financial services
MicroSave Market-led solutions for financial services
Remittances through M-Banking: Customer Perspectives Observations from India
Manoj Sharma, Director, MicroSave Mumbai, 29 March 2012
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The Opportunity Inherent in Domestic Remittances
• Strong existing demand and volume: MicroSave research shows migrants sends monthly amounts between Rs.1,000 to Rs.3,000
3%
45%
15%
14%
9%
7%
1%
7%
up to Fortnightly
Monthly
Once in Two months
Quarterly
As Needed
Semi-Annually
Annually
NA
Frequency of remitting1
6%
26%
26%
8%
9%
5%
Upto 1000
1001-2000
2001-3000
3001-4000
4001-5000
5001-6000
Remittance Amount Sent
2 Source: MicroSave research on remittances in India (Punjab-Bihar/UP corridor): http://www.microsave.org/research_paper/understanding-remittance-networks-in-punjab-and-uttar-pradesh
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Current Remittance Channels
3
• Increasingly, migrants use bank accounts to transfer money home. • Increasing financial inclusion changing the face of informal channels. Tappawalas and courier
services use bank accounts to move money between places giving rise to bank couriers. • However, high levels of dissatisfaction exists with current channels of usage.
71%
5%
3%
8%
12%
1%
Remittance Channels Surat/Gandhidham
Bank
Bank Courier
Carried by selfor others
CourierServices
Tappawalla
Post Office
53%
12%
6% 5%
8% 15% 1%
Remittance Channel Ludhiana/Panipat
Bank
Friend/ Relative -carry Money toSourceCarry Money Self
Post Office
Courier
Bank Courier
NA
Source: MicroSave research on remittances in India (Punjab-Bihar/UP and Gujarat/Bihar/Orissa corridor): http://www.microsave.org/research_paper/understanding-remittance-networks-in-punjab-and-uttar-pradesh http://www.microsave.org/research_paper/understanding-remittance-networks-in-gujarat-orissa-and-bihar
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Remittance Channel Preferences
4
Remittance Delivery Channel Value Proposition Weakness
Banks Instant Delivery , Safe, Cheap Time-consuming, Difficult for recipient, Far Away
Bank Courier Instant Delivery, Safe Not in own bank a/c
Hawala/ Tappawalla Doorstep Delivery, Convenient High Cost, Unsafe
Post Office Safety, Doorstep Delivery Delays, outdated
Carried by friend/ self Trust, doorstep delivery Can take time, robbery
• However, this number hides the large hindrances remitters face in using banks including: • Long lines and lengthy processing
time • Difficulty of opening bank account • Inconvenience • Lack of doorstep delivery
• Not surprisingly, formal and informal have completely opposite strengths and weaknesses
0
0.5
1
1.5
2
2.5
3Trust
Delivery Time
ProcessingTime
Cost
Proximity
Staff Behaviour
Remittance Channel Preferences
Formal Informal
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Can BCs Bridge This Gap?
44%
33%
28%
23%
23%
21%
18%
3%
Lower Cost
Proximity
Time Saving
Quick & EasyProcess
Trust & Safety
Never used;unable to tell
Accessibility
Savings
BC Model: Likes BC Model Likes
• Doorstep delivery, particularly important for recipients, less savvy with banking transactions
• Cheaper services
• Saved Time
• Trust and safety
• But experience and repeated transactions needed to build trust.
Source: MicroSave research on remittances in India (Punjab-Bihar/UP and Gujarat/Bihar/Orissa corridor):
http://www.microsave.org/research_paper/understanding-remittance-networks-in-punjab-and-uttar-pradesh
http://www.microsave.org/research_paper/understanding-remittance-networks-in-gujarat-orissa-and-bihar
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Initial Successes in Mobile-Enabled Remittances
0
50
100
150
200
250
300
350
Rs. -
Rs. 200
Rs. 400
Rs. 600
Rs. 800
Rs. 1,000
Rs. 1,200
Rs. 1,400
Rs. 1,600
Rs. 1,800
Aug Sep Oct Nov Dec Jan Feb Mar
Growth in Tatkaal Transactions
Vol of Tatkaal Transactions (in millions of Rs.)
# of Tatkaal Transactions (in thousands)
• Tatkaal shows phenomenal growth; Agents in Delhi report daily deposits of over Rs.80 million.
• Achieved largely via word of mouth marketing
6
Reasons for Choosing Tatkaal
• Customers cite the time saved not waiting in long bank queues as the most important Tatkaal benefit.
• They also appreciate more flexible hours and better service than bank branches currently offer.
Source: MicroSave research on “Graduating SBI Tatkal customers”: http://www.microsave.org/briefing_notes/india-focus-note-79-graduating-sbi-tatkal-customers
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Highlights
• Formal and informal channels of remittance co-exist Formal: bank, post office, increasing BC services Informal: courier/tatkal, friend, self, and tappawala (for Orissa only)
• Good business opportunity Close to 70% remitters send up to Rs.5,000 per month
• No one channel matches remitter/recipient requirements Bank, the most trusted channel does not provide doorstep delivery, high processing
time Courier, which delivers money at the doorstep, charges high fees and is not safe Post office, which delivers money at doorstep, delays delivery, expensive
• Using a BC model for remittances works Delivers the money close to source makes customer happy Although trust is there as agent attached to bank, there is a scepticism on how agent
will work Experience with the channel provides much needed trust, so the model has to start
and show that it works Customers willing to pay more than bank charges for better service
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