> Posted by Alexandra Rizzi, Deputy Director, the Smart Campaign

As part of the Smart Campaign’s #FintechProtects mini campaign, we’re raising awareness about responsible digital financial services, spotlighting work from the Smart Campaign and others, and engaging with industry actors on how fintech can move forward in a way that’s best for clients. Learn more and get involved at #FintechProtects.

Agent networks play an integral role in increasing financial access by helping financial service providers broaden their reach without building more branches. For an agent network to succeed, however, the client must be able to trust the agent and perform transactions with confidence. To win that trust, providers need to ensure that agents perform up to a standard that minimizes customer harms. They need to practice responsible agent management.

Rajpal Duggal, Group President, Corporate Strategy and Business Planning, Oxigen

Rajpal Duggal, Oxigen

To help shape a consensus about the contours of responsible agent management, the Smart Campaign and Accion’s Digital Solutions team carried out research in India to map the Client Protection Principles against two agent models (see Protecting Clients & Building Trust: Exploring Responsible Agent Management in India, PDF). Today, we spotlight Oxigen, one of the pioneering agent network managers in the study. Oxigen tells its client protection story through an interview with Rajpal Duggal, Group President, Corporate Strategy and Business Planning.  We are grateful to Rajpal and his team for their willingness to work with the Smart Campaign and open their practices to evaluation.

Oxigen created India’s first non-bank wallet, which plugs in to a range of platforms including Facebook, Twitter, Whatsapp and SMS to send and receive money. The wallet can be used for a variety of services including bill payments, recharges, ticketing and travel (among others). The mobile app currently has 25 million (largely middle-class) users and is accepted on 10,000 online sites.

Oxigen also has an explicit financial inclusion agenda. In 2011, Oxigen partnered with the State Bank of India (SBI) to act as SBI’s banking correspondent –providing outlets where customers can withdraw cash, save and send remittances through no-frills accounts.  Each of the agents at their customer service points (CSPs) have outfitted PCs with biometric devices that connect directly to SBI’s core banking system. Oxigen also recently partnered with RBL Bank as a business correspondent via MicroATMs at local village shops; they also provide a range of financial services including cash-in, cash-out, money transfer, savings, etc. With banking services available at less than half of the 650,000 villages in India, models like Oxigen’s have big potential.  And through proactively embracing client protection by conducting an evaluation of its own practices and embarking on a path to make improvements, Oxigen has demonstrated its commitment to responsible agent management.

Below are excerpts from the Smart Campaign’s exchange with Rajpal:

The Smart Campaign logoHow did Oxigen first become interested in the Smart Campaign and client protection?

Today Oxigen has one of the largest agent networks on behalf of SBI and RBL—with a combined reach of 9,100 agents. Simultaneously, our own internal agent network has been growing at a compounded annual growth rate of over 95 percent per year over the past five years, so that we now reach 31,400 agents handling financial services in some form. We felt that to manage this sort of scalability, we needed uniform practices among our agent networks that provide customers safety, convenience and security, as well as robust grievance redressal mechanisms. We had thought about doing this ourselves, but we faced a lot of challenges, which is when we came across the Smart Campaign. We thought instead of reinventing the wheel, we would take advantage of your expertise.

What are some of the differences in client protection risks between traditional financial institutions and business models that leverage agents?

The traditional brick-and-mortar institutions are well-organized, likely larger corporations and they actually own the business themselves. They rely less on agents and more on their own employees to deliver financial services. An agent network is a low cost model which is necessary for organizations like us because otherwise we would have had to make the agents our own employees and that would have been cost-prohibitive, and we couldn’t have scaled up the operation.

As a result of the difference in ownership level, as an agent network manager, you work harder to create trust with your clients. Clients need to have confidence that they are dealing with an agent who represents an institution that stands for client protection. If I take the example of small villages, the agents in that location might be the client’s neighbors or friends. The smaller the place, I think, the stronger the trust can be; whereas in larger the community, the more that becomes difficult. Principally, the agent requires much greater care and training to be able to deliver the trust deficit that can arise because it’s not an ownership-led model.  We have about 9,100 business correspondent (BC) agents and we are cognizant of the fact that there is need for better recognition from customers that the agent is transparent, able to help in case there is a problem, and does not overcharge. These are things we have to be much more careful of than a traditional institution because they own that network.

Oxigen was the first agent network in the world to undergo a Smart Assessment of its business model. What did you learn from the experience? Were there any changes made afterwards?

Oxigen took this step because there was a need. We were expanding very rapidly and we could not address a lot of the issues because lack of experience on good practices in customer protection. The [Smart Campaign’s] field survey covered 40 – 50 agent locations across several geographies and gave us a lot of feedback on where we might be lacking and where some more work could be done. We knew that we would not find the best of practices in all the locations. The results provided very valuable insights into the agent behavior, what his perceptions were, on how transparency was working etc. We debated internally on the findings of the study and reviewed the recommendations of the field study and have already initiated steps to act on the recommendations.

When we have new agents we know what we should do and what we should not do. For example, SBI signs agreements with each business correspondent that was provided only in English. We realized that a lot of our agents might not understand what they were signing and that this could have implications for the clients. After this study, we realized that although SBI might not have an agreement in the local language, Oxigen can give a verbal transcript/translation of what is included in the agreement. We have started doing this in several locations and have received positive feedback from agents (even if they would have still gladly signed it in English). Another recommendation was around feedback mechanisms from agents and customers. We were getting some feedback, but it wasn’t formalized. This report has brought home the point of getting feedback from customers and agents alike. Additionally, we have started a more formal feedback mechanism, which we have found very useful, and we are establishing regular regional agent meetings.

It takes committed organizations like Oxigen to start the discussion around responsible agent management, but how can we get all agent network managers on board? What are the levers of influence in India?

In India, there is the Business Correspondent Federation of India (BCFI) and members include all the Indian BCs. I think the Federation would be a powerful ally to impress upon the members that responsible agent management is good for the country, good for everybody. Oxigen being among the largest BC’s and an adopter of the Smart Campaign, can demonstrate the need for others to adopt. In addition, the public sector banks, like SBI, are another lever that can be tapped. The banks can only press the BCs, but it will fall upon the BCFI to take up this entire process. Oxigen is also keen for the industry to develop a certification system that will provide confidence to customers coming to a “Certified Agent.”