Does Branchless Banking Empower the Poor?

In my last post, I introduced the town of Autazes in the Amazon basin and shared how agents (termed banking correspondents in Brazil) helped transform Autazes from a backwater to a banking hub. I visited Autazes in December 2009 as part of an agent research project conducted with the Center for Microfinance Studies at FGV (Fundação Getulio Vargas) and Planet Finance. The merchants and leaders of Autazes are thrilled with the new business and higher tax revenues that resulted indirectly from agents, but what about the rest of the community? How has the arrival of agents impacted the lives of average, low-income people living and working in Autazes?

One segment of society that has directly benefited from banking agents are older people who receive monthly pensions. Elderly people tend to be disproportionately poor and would be least likely to be able to make the long journey to the bank in the nearest city to collect their payments. Unfortunately, they are also more likely to be taken advantage of by people providing the essential service of retrieving their pensions for them. Jose Luiz Silva de Sousa, manager of the first agent in Autazes, told me about the change that occurred when some of these elderly people had direct access to their funds for the very first time: “At first, the same guys who made a business going to the city to manage cash tried to keep their business here and came in with many debit cards. However, we refused to serve them and soon the people themselves came in. The old people especially were overjoyed to feel they had control over their own finances for the first time in many years. Many were surprised to learn the actual amount of retirement benefits they received. They brought us gifts of fish and chickens since they were so grateful. One even brought me a lamb and I have it at home in my yard to this day.”

Younger, economically active people have also benefited as they have been able to take advantage of Autazes’ growing economy. One woman who has seen her prosperity grow along with that of the town is Sandra Ferreira. She is a teacher who lives in Autazes with her husband and five year old son. She used to get paid her salary through a bank in the city and would send a relative or friend who was going to town to pick up her pay. She never saved money in the bank since she worried she would not be able to access it when she needed it. Since banking agents have come to Autazes, not only does Sandra save regularly, but she and her husband have seen a big increase in the business he runs (a small bar). They have started a taxi company in addition to the bar since there is now so much activity in town. They have built a house and purchased an additional car for private use.

Sandra’s own words best describe the story of Autazes: “Before the banking agents, life was hard. Those who had money to spend, went to the city. Since the agents have come, everything here has changed.”

-Claudia McKay