Below are some of the key performance measures of branchless banking in India (based on many sources including CGAP articles from G Chen and K Krishnaswamy et al):
- Account Opening Fees paid by banks for No-Frill accounts, a major revenue stream, does not exist. Presently, No-Frill accounts are a loss-making proposition. Consequently, I don't see banks pushing for new no-frill accounts in their current avatar
- Custom hardware devices are provided, as POS terminals, by service providers (e.g., FINO, ALW, Eko) to their agents (e.g., merchants), in lieu of a deposit (typically INR 5000 / $115)
Number of users per agent are about 1000, which are spread over multiple villages.
- About 30% of the users are active users. Active users are defined as those who use the service (irrespective of frequency).
- Average number of transactions per user per month is about 1 (300 transactions per month per agent)
- Agents get about 0.5% as transaction fees, in addition to a fixed fee of about INR 750 ($17) per month
- A typical agent has multiple revenue streams from his/her existing business, which complement revenues from branchless banking.
- NREGA is a killer app which has kickstart branchless banking.
- SBI and Department of Posts are leading the charge in this space.
The next post discusses some of the innovations the industry needs to undertaken to make branchless banking a success endeavor.
Look forward to hearing about additional data points that describes the industry today.