How to get more bang for the buck out of field agents

Will allowing business correspondents to hawk insurance products help in reviving 5-lakh strong field agents as a viable channel?  

In late November last year, the Business Correspondent Resource Council (BCRC) made a pitch to the Insurance Regulatory and Development Authority of India (Irdai) that field agents be allowed to hawk insurance products. 

While it is true the guesstimated over five-lakh strong network of business correspondents (BCs) in the country can play a big role in Irdai's push of the Bima Trinity -- Bima Vistaar, Bima Vaahaks, and Bima Sugam -- it is also reflection of a larger reality: a crying need to augment the financial viability of the channel.

“BCs remain relevant in providing banking access in remote areas where internet connectivity is poor or non-existent and hampers use of UPI (Unified Payment Interface) and IT products. Besides, the literacy levels being low, people there still find BCs useful in opening of accounts, cash withdrawals and deposits, accessing bank credit and facilitating connect with banking services,” says VS Das, former executive director (ED), Reserve Bank of India (RBI), who was in charge when it was rolled out in financial year 2006.

But Das concedes a major challenge for BCs to remain viable is getting adequate compensation and performance-based incentives to sustain the business model.

“This aspect surely needs to be reviewed and addressed suitably,” Das said.

More than 20 per cent of the agents get paid a mere Rs 3,000 in commission per month, and the attrition rate in the channel is pegged at 30 to 40 per cent.

Take UPI. The bulk of the BC channel's earnings (nearly 40 per cent) comes from “cash-in, cash out” transactions or CICO (the trade jargon for cash deposits and withdrawals).

Free UPI has meant this earnings window is not as open as before even though it is a bonus from a customer's point of view.

Then you have the Pradhan Mantri Jan Dhan Yojana (PMJRDY). With the manifold increase in those under the banking fold under the PMJRDY, the headroom for incremental growth for on-boarding customers is not the same as before.

BCRC's remedy, according to Dharanidhar Tripathy, its chief executive officer (CEO) is “BCs can act as vital intermediaries in connecting underserved populations with credit opportunities, fostering job creation and entrepreneurship. The channel must be allowed to hawk insurance and provide capital market access”.

There are other issues too. BCs do a huge amount of unpaid work for banks like meeting managers' targets for other products, organising and participating in events for them which are unrelated to BC activities, conducting recovery camps, sourcing leads, and also sourcing bancassurance and mutual fund leads from customers.

A good amount of time is also lost because there are server and other technical problems. As a result, there is loss of activity in kiosk points, leading to a reduction in the commission.

“When banks change technical service providers, the systems are not stable leading to a fall in transactions and resultant commission. These issues are below the radar,” bemoans Tripathy.

As Seema Prem, CEO of FIA Technology Services views it, the current model often forces field agents to juggle multiple roles (teller, sales agent, branch manager, customer service representative) without adequate training or support staff at their end.

This leads to burnout, increased frustration due to low commission, errors, and ultimately hinders the effectiveness of the channel.

Her suggestions: Expand beyond the bank-BC channel. Other financial regulators -- Irdai and the Securities and Exchange Board of India -- should add their own BCs leading to dedicated focus, reduced risk of mis-selling and fraud, reduced concentric risk, tripling the employment opportunities. And act as a vital link for Open Network for Digital Commerce.

That is, utilise BCs or similar setups to act as e-commerce agents, facilitating both upward and reverse linkages in local supply chains and driving economic development at the community level.

By the way, many urban and semi-urban field agents are already shifting their loyalties to Amazon, Blinkit or Swiggy. Coupled with poor remuneration, over time, there could be a gradual erosion of agents. 

Incidentally, in 2015, the RBI Committee on Medium-term Path on Financial Inclusion chaired by RBI's ED, Deepak Mohanty had highlighted that BCs need to be upgraded.

It had opined, “The competence of BCs should not be taken for granted”. The panel recommended a graded system of certification of BCs -- from basic to advanced training.

“BCs with a good track record and advanced training can be trusted with more complex financial tasks such as credit products that go beyond deposit and remittance. The BC model increasingly needs to move from cost to revenue generation to make it viable”.

In effect, what the BC industry is seeking is a follow through to the report -- on upgrading it to sell more financial products and services.

“One way is to upgrade the BC network to mimic the legacy DSA (direct selling agents),” says Sumita Kale, CEO and senior fellow, Indicus Foundation. But this calls for efforts and investment to intensify capacity-building to create more trainers and better field staff.

By December 2017, the RBI put into place a detailed framework for BC certification and training, in consultation with the Indian Banks Association (IBA).

In October 2018, the RBI identified the Indian Institute of Banking and Finance (IIBF) as the sole certifying agency for BCs. 

But an Indicus Foundation white paper (‘Certification or Inclusion: The challenge facing India's BCs' released in February 2022) held that despite all these efforts, by most-optimistic estimates more than 80 per cent of the BCs today have not been certified under this system.

“Even if we aggregate all candidates who have cleared the IIBF certification from 2009-10 till 2020-21 and assume that these are all candidates making their first attempts, the number stands at 311,960, accounting for a mere 20 per cent. Worse, there is no official information on the latest numbers of operational BCs -- a proxy for that could be the number of operational unique devices operating on the National Payments Corporation of India Aadhaar-enabled Payment System platform,” the white paper said.

“An online BC registry was set in motion by the IBA, but that information, which is not updated in real time, is not shared in the public domain even on an aggregated national basis,” notes Kale.

Whichever way you look at it, the BC channel is ripe for being reimagined.

Feature Presentation: Rajesh Alva/Rediff.com