Technology Based Alternative Delivery Channels and its Impact on Financial Inclusion

Abstract

Traditionally, extension of banking services beyond the urban areas posed challenges of economic viability due to largely disbursed banking operations in rural neighbourhoods. This resulted in lower penetration of banking services in rural areas. Current developments in technology have not only re-defined the Indian banking business but have also opened up new markets, new products, new services and economically viable and efficient delivery channels for the industry. User friendly and state-of–the art technology simplify access to banking processes and facilitate enhancing Financial Inclusion (FI) across the whole spectrum of customers ranging from well developed metropolitan areas to under developed rural areas. Using secondary data, the authors analyze the customer's usage pattern of Alternative Delivery Channels (ADC) for banking operations. The usage pattern is compared with the traditional over-the-counter (OTC) transactions for banking operations. Based on this, an analysis has been done using statistical tools to establish the extent of customer's adoption and utilization of technology based ADC compared to the traditional transactions for banking operations. The analysis helps us to conclude the significance of ADC in improving the number of savings accounts.