India has been innovating in digital financial services with a view to reaching its most marginalised people easily. For instance, social welfare amounts get transferred directly to bank accounts (instead of cash or in-hand services). Government-led payments platforms allow fund transfers by scanning QR codes or using a simple alphanumeric ID. Newer innovations keep coming up.
But when intended beneficiaries face issues accessing these services, they also struggle with poor consumer protection and grievance redress mechanisms. These experiences increase their mistrust in new solutions and affect their uptake.
5 Reasons for Grievance Redress Mechanisms
Gram Vaani and the National Institute of Public Finance and Policy (NIPFP) conducted research in 2020-21 to understand the accessibility, effectiveness and inclusivity of available grievance redress mechanisms in India’s fintech banking services. The research was led by a survey on Gram Vaani’s Mobile Vaani community media platforms in rural and semi-urban areas in five states of India, reaching over 900 people. 80% were aged 18-35 and nearly half had a monthly income below INR 5,000 (USD 67).
Here is what we learnt.
1. Disappointing Banking Experiences
Virtual / digital transactions may be widely available, but cash still remains central to financial transactions for many – and this means a visit to the bank or the ATM. However, 35% of respondents shared that they do not get treated respectfully by banking officials, making visits to the bank something to be feared or best avoided. 30% said that they struggled with withdrawing cash from the bank or the ATM.
2. Users Do Not Raise Grievances
Despite the pervasive issues with banking services, 69% of the respondents did not raise their grievances. For 20%, it was because they did not know how to do so.
Indian regulatory authorities have put in place a two-layered grievance redressal system for financial services. At the first layer, consumers can raise issues with the financial service provider. If that does not work, they can raise it with an Ombudsman appointed by the Reserve Bank of India, and further take it up in civil courts and consumer forums.
However, awareness and usage of these channels, especially among marginalised and rural communities, is minimal. A 2019-20 report of says that only 10% of the complaints received by the Banking Ombudsman Services came from rural areas. Most complaints were registered online, indicating that the uptake of this facility is largely restricted to digitally-equipped community members.
Other respondents shared that they did not complain because the bank official may delay their work in the future or that previous complaints were ignored, so there was not much point anyway.
3. Digital Solutions Can Exclude Women Users
To reach women users of banking services, we followed up with survey respondents who answered the survey through Gram Vaani’s women-centric platforms. In a few cases, men members in the family picked up the calls. In most of the other cases, women who answered the call, handed the phone over to a male family member, when we asked about their grievances with respect to banking services.
Financial services are not rooted in women’s ground realities and sociocultural and economic norms. Digital solutions may not work in the near future given the gendered access to mobile phones and overall low digital literacy among women in India.
4. Limited Financial Literacy Skills
Many survey respondents conveyed about their complaints related to welfare benefits, assuming they had not received the benefits due to banking issues. But when we followed up, we realized that many of them could not gather the complexity of benefit delivery in their bank accounts. Nearly 15% of the complaints were not to do with banking issues.
The access channels, language of the forms and technicalities involved in launching the grievances are highly technical. This makes the grievance redress mechanisms inaccessible for people with low financial literacy, especially when financial tools and services rapidly change.
5. Limited Digital Literacy Skills
Mobile Vaani volunteers, trained by NIPFP on banking-related grievance redress, contacted 235 survey respondents who wanted assistance in raising complaints. But many of them declined to continue the process for fear of repercussions, so volunteers began grievance redress procedures for only a third of these respondents. We identified two issues here:
Even for a trained and digitally literate person – like the Mobile Vaani volunteers – registering complaints is a cumbersome process requiring strong smartphone/internet skills and a sound understanding of financial terminologies to correctly interpret the forms.
The complainant also needs to have the time to go through this process, own a mobile phone to receive an OTP on a registered mobile number, be able to describe the details of their grievance, etc. Our earlier work on India’s social welfare delivery has shown that most people find these systems and processes complex to navigate without external help, necessitating civil society to step in.
Worse, very few of these respondents heard back from the authorities to whom they complained with the assistance of Mobile Vaani.
We Need Accessible Grievance Redress Mechanisms
Our survey findings and follow up on grievance redress indicate that users need easily accessible information about the processes. That means:
- Platforms where people can raise grievances confidentially, without fear of adverse reactions
- Voice-based interfaces should be encouraged for grievance registration to include more users who can’t file written complaints
- The grievance redress mechanisms should be evaluated to see their accessibility to women and other genders.
The financial world is going digital. But it will continue to be non-inclusive if we do not cater to unique needs of communities that are not yet digital and help bridge this gap. This will increase users’ trust and uptake of such services.
By Rohan Katepallewar and Vani Viswanathan with contribution from Shoaib Rehman & Matiur Rehman of Gram Vaani Community Media, India
Very interesting findings and clearly articulated. At Loop we are building a solution to Close the Digital Divide where people can feedback through voice recordings. Happy to chat and share learning with interested parties.
Alex