Scenarios for branchless banking in 2020

Abstract

The growing use of branchless banking channels over the coming years is inevitable in most countries. But it's far less certain whether large numbers of the unbanked poor will use these alternative channels for financial services beyond payments, such as savings and credit. Consultative Group to Assist the Poor (CGAP) and Department for International Development (DFID) undertook a six-month scenario-building project in which almost 200 experts from more than 30 countries helped answer the question 'How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020?' Notwithstanding recent hype, branchless banking for the poor is at an early stage of development. It is conceivable that a majority of those who today do not have access to formal financial services may have access to electronic payment instruments by the end of the next decade. Wiring electronic payment highways is a worthwhile goal for the decade. But it is not sufficient. To ensure that poor people use branchless banking and to create opportunities that could help alleviate poverty, both governments and providers should track adoption patterns closely and understand customer needs. Private sector players should recalibrate their return expectations: achieving robust, scalable branchless business models will take time, most likely longer than expected. Government activism can be a powerful force for encouraging wider and broader reach of branchless services if regulators successively enable innovation by making markets for financial services competitive through stages of development. In addition, governments can promote financial inclusion by ensuring that their own welfare and salary payments are delivered via branchless channels.