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The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps towards helping their clients lift themselves out of poverty.
In this interview with Ian Radcliffe, director of World Savings Banks Institute, talks to DSK Rao from the Microcredit Summit Campaign about how the poor can benefit from technology. Ian also talks about how MFIs can benefit from advances in technology to serve the needs of poor people living in remote areas. Below is a summary of the key points from the interview.
The World Savings Bank Institute (WSBI) is a trade association that represents the interests of savings and retail banks in 90 countries around the world. The types of member banks range from very large banks, such as Wells Fargo, to very small banks in rural areas in developing countries. WSBI focuses on institutional relations, business platform, and training and consultancy.
The poor have been saving for decades if not centuries. They’ve been doing it through local savings cooperatives, and savings clubs, and things like that. In fact, the poor are, in some ways, probably more sophisticated in financial dealings than people from wealthier countries because they’re forced to by their need. They’re quite creative and I think this has really come out with some of the diaries works that has been done in many countries.
— Ian Radcliffe
Using technology to promote savings among the poor:
Member banks of WSBI in developing countries have been gravitating more towards using technology, simply because it is becoming more accessible and part of the global trend. With more research and technology available, WSBI’s member banks have been able to find that countries that are truly living in poverty with people living below a $1 a day can only afford to put in about 60 cents a month in terms of bank charges. This means that to be able to afford banking services, people living in poverty need low prices. Through technology is how banks are able to get the outreach beyond urban areas but also into rural areas in a way that is feasible.
The WSBI has done studies to see how populations cluster and where people gather. For example, in East Africa there are dense populations in Kampala and other urban cities, but in Southwest Africa populations become more loosely spread in rural areas. WSBI conducted research to see how far people are actually willing to walk to deposit money. In their research WSBI found that the maximum distance that people will walk is about 2 km. They found that there were not many agents in the 2km radius that people are able to get to easily. However, their research also found that when people started to receive money through mobile phones people were willing to walk more to receive that money. Therefore, in Kenya, because of the way people cluster there, mobile networks are able to reach about 85% of the population, including those living in remote areas, compared to without mobile networks banking services only reached 60% of the population.
Check out the “Going Digital” infographic to see this concept visualized.
The future of technology and mobile phones:
Radcliffe believes that we are just at the beginning of the next stage of mobile banking. First, he pictures mobile banking going to scale. He says that the sector is still in the process of raising awareness that one can actually price aggressively low to make it affordable and feasible for poor people and one can actually make more revenue by doing so. Mobile technology is giving the sector the opportunity to go to scale and have a strong outreach. Radcliffe foresees having a central bank in the urban areas which then partners with MFIs in the more rural areas which then has their networks with agents and mobile networks, forming a sort of ecosystem. This will allow the sector to have a better and stronger outreach.
- Watch the entire interview with Ian Radcliffe.
- Check out where WSBI is mentioned in the report.
- Learn more about the power of digital technology.
- Attend the 17th Microcredit Summit in Mexico this September 3-5.