#tbt: Digital services to reach the unreachable at the 2013 Summit

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Speakers in the “Reaching Deeper and Lowering Costs: The Path ahead for Digital Services” plenary session at the 2013 Partnerships against Poverty Summit in Manila, Philippines. We learned how mobile devices can help provide better options to those who are reliant upon riskier, costlier options.

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Highlighting technology innovations in the microfinance sector, the plenary session “Reaching Deeper and Lowering Costs: The Path ahead for Digital Services” at the 2013 Partnerships against Poverty Summit was moderated by our very own Sabina Rogers, filling in for Karen Dávila, noted Philippine broadcast journalist.

It was a fun session, using visual aids to represent certain aspects of a value chain for delivering mobile and financial services. A house represented the client and the start of the digital transaction value chain; then images showed the mobile interface for conducting transactions; a sari-sari represented an agent kiosk; a net represented both communications networks as well as financial networks; and a bank stood in for a variety of types of financial institutions.

Speakers were asked to make use of the array to help them illustrate where the companies and organizations the represented fit into the value chain.

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Gordon Cooper, Head of Emerging Market Solutions, APCEMEA, VISA, and Raj Singh-Khaira, Vice President, RM & Consumer Services, FINO PayTech

Nadeem Hussein of Tameer Microfinance Bank (Pakistan) led off the discussion demonstrating how Tameer had a role in supporting a number of points along the value chain overall from understanding the consumer landscape to developing mobile transaction interfaces including working with agents, and all as a financial institution.

Raj Singh-Khaira of FINO PayTech (India) and focused on the need for institutions like his to diversify their involvement in a number of ways along the value chain because “the market is not mature enough for us to be just this one component…the agent kiosk in this example.” He pointed to the wide array of services FINO provides to achieve this diversity including a number of types of savings products, insurance, and some loans.

FINO serves over 67 million clients and employs more than 50,000 agents. Technology is important to help reach this kind of scale as opposed to manual transactions. He also mentioned the ability to better track and secure transactions through the use of digital means of transacting.

The role of VISA was presented by Gordon Cooper. “Visa is a Network, a network service provider. It’s all about interoperability,” cited Cooper; continuing, he described a project VISA launched several years ago which focused on finding one key way VISA could contribute to increasing access to formal financial services for low income individuals.

The result: launching mVISA in Rwanda, a mobile transactions platform (see this video). He focused on the necessity of interoperability, which refers to the ability of one financial service provider’s platform to link up with others’ platforms in order to enable customers on different networks or in different financial systems to transact. Increasing interoperability as a means to support wider access will be one major focus for VISA in the digital area.

Napoleon Nazareno of Smart Communications, one of the largest mobile network operators working in the Philippines, echoed Khaira. Smart is not isolated to only providing mobile phone connectivity, but also goes beyond to touch on all aspects of the value chain. Beginning more than a decade ago, Smart launched a small mobile banking service platform. By partnering with financial service providers over the years, this has now grown into a full-fledged mobile microfinance service platform.

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Ian Radcliffe, Director, WSBI-ESBG

Ian Radcliffe of WSBI illustrated their role in supporting the actors involved in the value chain as direct service providers. Their core activity is advocacy, but apart from that, they also deliver training and consultancy services to providers.

He highlighted an initiative begun about four years ago, to understand what it would it take to double the number of savings accounts among poor people. This launched the WSBI savings account program, which is now working with banks in 10 countries to develop and improve agent banking models and mobile banking models now, too.

Nazareno summarized the session nicely at one point during the presentations, pointing to the power of digital channels for reaching the financially exclude citing recent national survey in the Philippines.

He said, “80% of the households in the Philippines don’t have a bank account. On the other hand, 90% of Filipinos have a cell phone,” which highlights the viability of using mobile devices to provide financial services to those who would otherwise remain excluded. Mobile devices can help provide better options to those who are reliant upon riskier, costlier options, and, ultimately, ones that would stand in the way of their journey out of poverty.

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A participant at the 2013 Summit was having a great time.

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Watch the full video of this plenary

#tbt: Affordable Transactions for the Poor

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Photo courtesy of Jeffrey Ashe

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We are pleased to bring you this #ThrowbackThursday blog post, which was originally published in Resilience: The State of the Microcredit Summit Campaign Report, 2014, under the chapter “Mobile Network Operators Can Build Systems that Reach the Poorest and Most Remote.” The section excerpted below describes how important mobile technology and digital financial services are for reducing the cost of doing business with the poor and hard-to-reach — both for the provider and the client. Read also Ian Radcliffe’s blog post from Tuesday in which he describes WSBI’s progress achieved so far toward a related Campaign Commitment.


Transaction costs pose a significant challenge to those seeking to provide financial services to people transacting in very small amounts or living in remote areas. The cost of providing the service often exceeds the price that the client can afford to pay. People living in poverty must manage daily transactions with incomes that are small, inconsistent, and often unpredictable.

Ian Radcliffe, of the World Savings Bank Institute (WSBI) reported its research that calculates that people living in poverty can only afford to pay about USD 0.60 a month for financial transactions, an amount far lower than the cost to employ staff to manage the transactions. Moving transactions to mobile platforms can drastically reduce many of these costs.


An interview with Ian Radcliffe, Director of World Savings Bank Institute. Download a transcript of the video [PDF].

Low-income clients have shown the ability to adopt new technology when it provides them with essential services at much lower cost or with much easier accessibility than the alternative. A study by William Jack and Tavneet Suri of the M-PESA mobile payment system in Kenya describes how their system grew from its launch in 2007 to cover 70 percent of the Kenyan population today. The study stated that “while M-PESA use was originally limited to the wealthiest groups, it is slowly being adopted by a broader share of the population,” including those in the bottom quartile of household expenditure. [1] Compared to the option of receiving money from relatives far away only on their sporadic visits home, or through a USD 5 bus ride into the city, low-income people in rural areas quickly found out how to get access to a mobile phone, receive a funds transfer on it, and travel to the nearest agent to turn the digital funds into cash.

In addition, access to mobile payments can play a key role in reducing vulnerability and building resilience. Jack and Suri studied low-income families in rural Kenya who experienced economic shocks. Those with access to M-PESA received a greater number of remittances and more money from friends and family than those who did not have access to M-PESA. Access to mobile money gave them the ability to tap into a larger network and weather the economic crisis.


[1] William Jack and Tavneet Suri, 2011, “Mobile Money: The Economics of M-PESA,” http://www9.georgetown.edu/faculty/wgj/papers/Jack_Suri-Economics-of-M-PESA.pdf.

WSBI’s journey in making small-scale savings work

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Mobile banking service, Popote, in Tanzania, allows savings banks clients to access their account information anywhere. Photo courtesy of WSBI

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>>Authored by Ian Radcliffe, Director, WSBI-ESBG, Belgium

WSBI has long been a supporter of the Microcredit Summit Campaign and its goal of helping 100 million families lift themselves out of extreme poverty. As an organisation that represents the interests of approximately 6,000 savings and retail banking institutions across 80 countries, advancing financial access and financial usage for everyone is core to our members’ missions.

In fact, it is part of a heritage that can be traced back to our members’ roots that in some cases go back to the late 18th and early 19th centuries in promoting self-help among poor communities. And, since it has nowadays become broadly accepted that financial inclusion brings material economic and societal benefits including lifting people out of poverty, the Microcredit Summit Campaign’s mission is entirely congruent with WSBI and its members’ values.

Our Commitment to the Microcredit Summit Campaign was announced during the 2013 Microcredit Summit in the Philippines and renewed again at last year’s Summit in Mexico. Our commitment focuses on two elements:

  1. Identifying successful inclusive finance strategies for youth markets.
  2. Holding events with our partners and member banks to share knowledge about pricing research and the implications on offering savings products for the poor.

Both Commitments have been pursued under the auspices of WSBI’s major financial inclusion program that started in 2008 and that will come to an end later this year. The program’s aim was to significantly increase the number of savings accounts among the poor, working with savings and retail banks primarily in 10 countries [1]. We were developing new business models and distribution channels and, in many cases, taking advantage of mobile technology.

At the end of this particular journey, we are delighted that six of the banks that sustained projects throughout the life of the program doubled savings accounts, and their growth continues. They have developed business models based on lower-income populations and in so doing, these six banks have undergone significant internal cultural shifts, leading to strengthened identities by clarifying their market positioning. One bank even managed to turn a 75 percent dormant customer base into a 75 percent active one with almost all improvement coming from modest-turnover, low-balance savings accounts.

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Making small-scale savings work in a digitized world
September 23, 2015
Four Seasons Hotel | Washington, D.C.
8:15 AM to 2 PM
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The banks’ projects were inevitably supported by a great deal of research and analysis performed by WSBI (including the youth research referred to in our Campaign Commitment), which is available on our website. And, apart from project implementation, the core goals of the program included articulating and disseminating lessons learned to a variety of stakeholders, which is where the Campaign Commitment of holding events with partners and member banks comes in.

On September 23rd, WSBI will run its final major event under this program: a workshop in Washington, D.C., entitled Making small-scale savings work in a digitized world.” We will showcase the successes and challenges faced by the banks that participated with us in our journey. Panel sessions and debates will address how banks and their projects have evolved to adapt to changing environments and competitive pressures. We will explore how strategies, institutional cultures, and practices have adapted as a consequence of program lessons. We will also examine what remains to be done and how the banks and others see the way forward.

The accumulated learning on display at “Making small-scale savings work in a digitized world” will be of clear interest to savings and retail banks, policymakers, and other practitioners involved in the financial inclusion world. The program and registration may be found here; participation is free and we really encourage anyone interested to join us at this workshop.

As we all work together in progressing our journey towards full financial inclusion, WSBI remains committed to continuing its work in this field, as witnessed by its commitment to the Universal Financial Access 2020 goal announced at the World Bank Group’s 2015 Spring Meetings. We are actively forging new partnerships aimed at addressing critical legal and regulatory reforms needed to facilitate WSBI members’ activities in improving financial access. We will continue to support the development of financial infrastructures that are tailored to individual environments. We will draw on the wealth of experience generated by our savings program to support savings and retail banks by way of advisory services aimed at overcoming technical or capacity shortcomings and promoting cultural or behavioral change. And finally, more than ever these days, we will support banks in adapting to the digitized world in which we all now exist to stimulate innovation so as to reach out to new customers, in particular those who currently have little or no access to financial services.

Footnote

[1] Mainly Burkina Faso, El Salvador, Indonesia, Kenya, Lesotho, Morocco, South Africa, Tanzania, Uganda, and Vietnam. Initiatives have also been pursued during 2015 in Ghana and Sri Lanka.


Related reading

Ian Radcliffe Discusses “Using Technology to Make Savings Accessible for People in Poverty”

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Read the report today!

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. 


World Savings Bank Institute (WSBI)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:

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Ian Radcliffe speaking at the 2013 Summit.

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.


Register for the 17th Microcredit Summit today!

Join us in Mexico for the 17th Microcredit Summit this September 3-5 where savings will take an important place in the agenda.

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.


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