- In Nepal only 25% customers are banked through formal channels and a large majority of close to 40% are served through informal channels like cooperatives and FINGOs, the rest are unbanked. Mainstream financial institutions are concentrated in urban areas and presence in rural and remote areas is limited. Digital Financial Services (DFS), specifically branchless banking, has the power to transform the number of unbanked people that have access to safe formal financial services in Nepal.

Over the course of 2014 MM4P commissioned a number of research on the demand for DFS and agent networks and channels to reach rural unbanked people in Nepal. This research was made post the release of the electronic banking regulation in 2012, where Nepal Rastra Bank allowed Class A, B and C institutions to create alternate channels using agent and technology, to enhance the reach in unbanked communities and rural areas. Despite a government push, the approach of the financial institutions has been slow in taking a leadership role to innovate and explore new models to reach out a large segment of population. Even for those working on financial inclusion and agent banking, the numbers are deplorable, most will never stand up, make investment and become commercially viable.

To make the studies more useful for Nepal and the service providers, a support study was done on developing value chains of various channel forms of agent that are available in the economy and could play a possible role in delivery of financial services. This study aimed at assisting financial institutions in creating a stronger value proposition for their agent network, so that it could be a dependable and efficient channel for delivering financial services in Nepal.

To learn more about this study, please read the full report: https://www.uncdf.org/en/content/potential-agents-nepal