Research & Analysis

Financial Inclusion for the Rural Poor Using Agent Networks in Peru

In developing countries, poor households often lack access to formal financial products. Without a safe and secure way to save, many people rely on riskier and more expensive methods of managing their assets. Increasingly, government-implemented conditional cash transfer (CCT) programs are addressing this issue by providing CCT users with formal savings accounts through which cash transfers are disbursed.

Evidence from the national Peruvian CCT program, JUNTOS, suggests that very few users utilize their accounts to save, instead preferring to withdraw their entire cash transfer immediately once available. Users may opt for the latter in order to minimize the temporal and economic costs associated with traveling to a bank branch or ATM, costs that are especially high for those living in remote or rural areas. When faced with relatively low access costs, users may still lack adequate knowledge of or confidence in the formal financial system. This evaluation explores how installing branchless banking agents and implementing financial trust workshops impacts JUNTOS users’ attitudes towards the formal financial system and, in turn, their savings behavior within it.

In 2014, Banco de la Nación (BN) installed correspondent banking agents (brand named MultiRed Agents) in municipalities and shops throughout 30 districts of the Peruvian provinces of Puno, Cusco, Apurímac and Ayacucho. Concurrently in 2014-2015, the Instituto de Estudios Peruanos (IEP) implemented financial trust workshops in a subset of the districts with functioning agents. The final workshop consisted of a three-hour, interactive session with four key modules – trust, bank card use, MultiRed Agent use, savings – as well as a practice and contest. The workshops aimed to improve the JUNTOS users’ knowledge of, trust in, and empowerment within the formal financial system. Ultimately, the workshops and MultiRed Agent installations aimed to encourage users to reduce the frequency and amount of their withdrawals, increase the frequency and amount of their deposits, and thus accumulate savings.

This report presents findings from 1) survey data from a sample of the financial trust workshop participants 2) survey data from JUNTOS users in the control and treatment communities of the financial trust workshop intervention, and 3) BN administrative transaction data from JUNTOS users in the control and treatment districts of the MultiRed Agent intervention.

In conclusion, we found that the agent installation increases the probability of using the agent to obtain the JUNTOS payment, but that it does not lead to improved savings behavior, as measured using the bank administrative data (frequency and value of deposits/withdrawals, and account balances). Furthermore, the financial trust workshops improved the trust and knowledge of the users and similarly resulted in a greater probability of using the agent. Nevertheless, we find that the workshop also did not translate into any effects on the outcomes measured by the bank administrative data.