Technology Based Banking Penetration and Services:

Understanding the Awareness and Usage Issues of the Low Income Groups

Authored and Presented by:Dr. Shweta Anand, Associate Professor, SoM, Gautam Buddha University, Delhi NCR, India.

Ms. Deepika Saxena, Assistant Professor, Jagan Institute of Management Studies, Rohini, Delhi, India. (Also Off-Campus Research Student, SoM, Gautam Buddha University)

Banking initiatives towards Financial

InclusionConsumer Awareness and Usage studied under

following categories:

– Online Banking Services– SMS Banking Services– Tele Banking Services– ATM Services– Business Correspondent /

Business Facilitator Model

Mobile ATM

Mobile ATM

Need of the StudyBanks are taking numerous

technology based initiatives for banking services penetration.

But are these initiatives actually reaching the bottom of the pyramid? This aspect need to be studied.

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Objectives of the Study

– To know the level of awareness among the low income groups of the society towards financial inclusion initiatives taken by Banks.

– To know the level of usage among the low income groups of the society towards financial inclusion initiatives taken by Banks.

– Financial Inclusion initiatives by Banks were categorized under -• Online Banking Services• SMS Banking Services• Tele Banking Services• ATM Services• Business Correspondent / Business Facilitator Model

Methodology and Data Sources• Primary Data:

– Primary data was taken from respondents consist of low income group and mainly doing menial jobs such as that of security guard, peon, plumber, sweeper, watchman, electrician etc.

– With great difficulty responses were received from 50 people in Delhi/NCR by Personal Interview using Structured Questionnaire.

– The respondents were chosen on the basis of convenience sampling.

– Statistical tools are used for analyzing the result of the study.

• Secondary Data:

– Research papers published in various national and international journals, magazines, newspapers, RBI reports, websites of banks etc. are used for collecting secondary data.

Findings and Analysis

Online Banking Services:Awareness and usage among Low Income Groups

• Level of awareness: 60% (30 out of 50) respondents• Usage level: 6% (3 out of 50) respondents

– (not by themselves, but requested somebody to do banking transaction on their behalf)

– belong to the age group of 26-40 years, are employees of the companies, agencies etc. having education up to Xth standard.

• Awareness Level: 90% (40 out of 50) respondents• Usage Level: 44% (22 out of 50) respondents

for receiving sms alert on mobile from bank for amount debit/credit.

• 5 respondents who were not aware belong to the age group of more than 60 years of age.

• 28 respondents who have not been using this service is due to the trouble in filling applications, long queues and waste of time.

SMS Banking Services:Awareness and usage among low income

groups

• Awareness Level: 46% (23 out of 50) respondentsonly know that they can check balance on telephone

through customer care number provided by bank• Usage Level: 44% (22 out of 50) respondents

Tele- Banking Services:Awareness and usage among low income groups

• Awareness Level: 94% (47 out of 50) respondents• Usage Level: 78% (39 out of 50) respondents

Use ATMs for withdrawal only.

ATM Services:Awareness and usage among low income groups

• No awareness of Financial Literacy Programmes • No awareness of Credit Counseling Centres• Business Correspondent/ Business Facilitator: 50% of the

respondent are in contact with them for funds transfer.

Financial Literacy related banking Services: Awareness and usage among low income groups

Limitations of the study:• Due to very low financial literacy among

the lower income group collecting data related to their financial knowledge and behavior was a difficult task.

• They have apprehension that the data may get misused and hence avoid giving data.

Road AheadBackground: Data collection per respondent taken about an hour. Daily wage earners feel there is an opportunity cost of

the one hour wasted on data giving.

Hence, If there is a funded research an amount of Rs 50-100 can be given to each person who spends an hour in understanding the questions and in giving data.

Conclusion:

• Though the banks have taken number of initiatives for financial inclusion but these initiatives are not approaching at the bottom at the pace they should be done.

• Initiatives which are wider in spread are really working out like ATMs and Business Correspondent Model.

• The success rate of initiatives will be achieved only when the marginalized groups of the society build trust and faith in the system and this faith can be brought in them by giving them awareness.

• Financial literacy play a major role in making them understand the benefits of the inclusion into the formal financial system and convincing them to contact the business correspondents and business facilitators, common service centers to avoid the trouble of long queues, waiting time and long distance of the bank branches.

• Spreading the financial literacy will definitely bring a remarkable change in the system.