Creating Financial Inclusivity: A Case-study of Banking ...

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7. Banking Correspondent Communication ArchitectureIntroduced in January 2006, the banking correspondent model in India is still in its infancy. The study ofthe impact of BC model so far clearly indicates the lack of financial literacy among the people in therural areas as the major hindrance in its successful implementation. In order to look at the adoptionissues of the BC model in India we have tried to evaluate it from the point of view of the diffusion ofinnovation theory. In the book Diffusion of Innovations, Rogers suggests a total of five categories ofadopters in order to standardize the usage of adopter categories in diffusion research. The categoriesof adopters are: innovators, early adopters, early majority, late majority, and laggards (Rogers 1962,p. 150).1. Innovators - Innovators are the first individuals to adopt an innovation. In our case thePanchayat Heads and the financially literate individuals like the teachers in the schools or thehigh level officials in post offices, hospitals will be the first ones to adopt the BC model.2. Early adopters - This is the second fastest category of individuals and has the highest degreeof opinion leadership among the other adopter categories who adopt an innovation. The SelfHelp Groups (SHGs) are most likely the early adopters for the BC model. Since the SHGsthemselves are village-based financial intermediaries their opinion will have an importantinfluence on the other people. Even though the BC model is still in its introductory stage and asof yet has only been able to gather the innovators and early adopters but looking at its growthwe can also predict the early majority, late majority and laggards.3. Early majority - Individuals in this category adopt an innovation after a varying degree of time.The forward looking youth and individuals in constant contact with the innovators and the earlyadopters form this category of adopters.4. Late Majority - Individuals in this category will adopt an innovation after the average member ofthe society. The late majority includes the working class people with low income and savingslike the farmers or those having shops etc. or in other words the common man in the ruralareas belong to this category. They may feel safer by keeping whatever they earn withthemselves rather keeping it in banks. It is only through proper communication and financialliteracy that they can be included into the mainstream.5. Laggards - Individuals in this category are the last to adopt an innovation. This includes peoplewith a very low level of income. They will have no motive behind using the BC model.
Figure 1 : Roger’s diffusion curve for measuring effectiveness of the BC ModelPanchayatHeadsFinanciallyLiteratepeople likeTeachersSelfHelpGroups(SHGs)YouthPeople incontactwith I & EALow Incomeand LowSavingsindividualslike farmersPeople withextremelylow level ofincomes8. SolutionsSolutions can be several to address the various problems. Selection of updated and efficienttechnology is a must. The system must be made more secure by incorporating both card and biometricaccess. The BC model should be capable of handling multiple products and services. The infrastructureand system should be made flexible. It should be made interoperable, which means that customerscan transact from the branch or other BCs. The technology and infrastructure should be robust andeasily upgradable. Importantly, it should be cost effective. Training of BCs and financial literacy must beemphasized.Solutions can be several to address the various problems. Selection of updated and efficienttechnology is a must. The system must be made more secure by incorporating both card and biometricaccess. The BC model should be capable of handling multiple products and services. The infrastructureand system should be made flexible. It should be made interoperable, which means that customerscan transact from the branch or other BCs. The technology and infrastructure should be robust andeasily upgradable. Importantly, it should be cost effective. Training of BCs and financial literacy must beemphasized.9. ReferencesBarman,D., Mathur, H.P. and Kalra, V. (2009) "Role of Microfinance Interventions in, FinancialInclusion: A Comparative study of microfinance models”, The Journal of Business Perspective, Vol. 13,No. 3, pp. 51-59.Beck,T., Kunt, A.D. and Peria,M. "Reaching out: Access to and use of banking services acrosscountries," Journal of Financial Economics, Elsevier, Vol. 85 No.1, pages 234-266.Bryson, J.R. and Buttle, M. (2005) "Enabling Inclusion Through Alternative Discursive Formations: TheRegional Development of Community Development Loan Funds in the United Kingdom", The ServiceIndustries Journal, Vol. 25, No. 2, pp.273-288.
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