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NEWS & VIEWSEN

September 2014

The Voice of Savings and Retail Banking

How to strikethe right balance,

p. 3

Contents

Editorial3 A threat to the plurality of banks

Legislative Agenda5 Big changes ahead for financial instruments accounting6 MiFID Review’s impact on ESBG: we’re not just retail banks

Business Agenda8 Reaching the unreached: technology as an important driver

for well-adapted microfinance services10 Change: a question of survival in today’s banking sector 12 Banks need to reinvent themselves based on the systemic

economy model13 The power of P2P14 Retail banking services “around the corner from people’s

dreams”: a site visit in San Salvador15 The power of data to drive the financial inclusion agenda

Knowledge Marketplace16 Commemorating the 50th anniversary of Mutual La Primera

(Bolivia)17 Latin America and Caribbean Regional Group (GRULAC)

Leaders’ Strategic Roundtable: positive annual growth andfocus on digital banking

18 WSBI Annual Statutory Meetings20 Argenta: efficient, transparent, no-nonsense and honest21 MasterCard Foundation Symposium: Clients at the Center22 WSBI speaks at Financial Inclusion Conference in Turkey23 Turn financial inclusion challenges into business opportunities,

and how mobile money can triumph over the challenges 24 State-owned banks play a prominent role in financial

inclusion26 Postal Savings Bank of China: A pioneer in sustainable

inclusive finance in rural China27 East African savings banks launch IT platform connectivity28 West Africa Regional Group considers meso-finance and

advances prepaid card29 Responsible banking practices highlighted by WSBI-IEB-LSE

master programme 30 What do young people want? Increasing financial outreach

to youth

WORLD SAVINGS DAY 30-31 OCTOBER 2014

What is World Savings Day?Find out at www.wsbi-esbg.org/Events/WSD or scan the QR code

NEWS & VIEWS

Published quarterly by WSBI-ESBG, Brussels, Belgium,and distributed to 4,000 individuals in over 90 countries,including all WSBI-ESBG members.

Responsible Editor: Chris De Noose, Managing DirectorEditors: Dirk Smet, Communications Manager, andLee Gillette, Communications AdviserDesign & Layout: Malou Doumen

World Savings and Retail Banking Institute | European Savings and Retail Banking Group aisblRue Marie-Thérèse, 11 | B-1000 BruxellesPhone + 32 2 211 11 11 | Fax + 32 2 211 11 [email protected] | www.wsbi-esbg.org

3 | News & Views SEPTEMBER 2014

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A threat to the plurality of banks

Among their responses to the financial crisis, European legislators established the BankingUnion – with the Single Supervisory Mechanism (SSM) and the Single ResolutionMechanism (SRM) as two of its main pillars – revised the rules on deposit guaranteeschemes (DGS), and passed a Directive on the recovery and resolution of struggling banks(BRRD). Can all institutions afford to comply with these measures? Do the intendedbenefits to the stability of the banking industry merit such an escalation in the banks’compliance costs?

It has never been a secret that the new European architecture for banking regulation andresolution is not free of charge. European banks are required to financially contribute toboth the ECB’s expenditures under the SSM and the resolution funds under the SRM andBRRD. More precisely, the ECB estimates its expenditure on banking supervision fromNovember 2014 through 2015 at €300 million. The target funding level for financing theSRM and BRRD is at least 1% of covered deposits of all banks. This level shall be reachedby annual bank contributions over a period of several years. Furthermore, banks have tocontribute to the financial resources of the DGS, which shall by July 2024 reach at leastthe level of 0.8% of the amount of the covered deposits.

ESBG acknowledges that – after a financial crisis with tangible effects on the real economy– investing in the stability of the banking sector and the financial markets is crucial topreventing future crises. At the same time, however, we believe that new initiatives, suchas the SSM, SRM and BRRD, could also affect the banking sector in a negative way if theyare not well balanced. Hence the difficult but essential question that European lawmakershave to ask themselves: How to strike the right balance? What extra burdens can still beconsidered reasonable for banks and where do measures start having destructive, ratherthan useful, effects? ESBG first recommends that decision-makers constantly engage ina broad dialogue with the respective stakeholders in order to gain a helpful overview ofthe industry’s serious concerns. Smoothing out mistakes afterwards is always a muchmore difficult task.

We believe proportionality plays a key role in building a more stable financial industry.In most cases, local savings and retail banks have a different risk profile than those playersthat have a tendency to be involved in more risky practices. It would therefore be hard tounderstand if savings and retail banks would be charged in the same way as certain otherbanks. Furthermore, if supervisory and resolution mechanisms (in addition to mechanismscreated by other costly legislation) turn out to be a money pit, only a limited number ofplayers will be able to afford the additional financial burdens. This in turn would threatenthe plurality of banks, and the local savings and retail banks might be among the firstwhose competitiveness (and maybe even survival) could be challenged.

Thus ESBG has participated very actively in the recent discussions with the legislative andsupervisory bodies in charge of shaping the banks’ contributions to the supervisory systemand the resolution funds, communicating the great importance of safeguarding thecompetitiveness of the European banking industry as a whole vis-à-vis other jurisdictions.For example, the annual costs of the ECB’s SSM should not be excessive – legislatorsshould keep in mind the separate costs of each Member State’s national competentauthority (NCA). In this regard, we also object to the possibility that banks will be chargedtwice. In fact, as the ECB’s supervisory activities may lead to fewer supervisory activitiesat national level for some institutions, lower fees for credit institutions at national levelwould seem more appropriate.

Chris De NooseWSBI-ESBG Managing Director


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“Appropriate” is indeed a key word. When an athlete severely injures his knee,amputation is not the answer; he undergoes surgery and then rehab to build strengthand stability. When the financial system takes a hit, overreaction is similarly uncalled for.Reform must take place, some of it painful, such as higher prudential requirements – butnot so high as to cut off the legs on which the financial system stands. One of these legs,the banking system, is already expending tremendous effort to cope with an entire set ofnew regulations. Prudential requirements and indeed any and all regulation must beproperly calibrated in order to best treat and stabilise the system. In this way, the bankingsystem can retain its strength and even be part of the cure.

The latest developments in the European banking sector can be seen as necessary anduseful steps in the right direction – up to a point. Identifying that point is a challengingtask for European lawmakers. Where to draw the line? Drawing it beyond the right point,i.e. setting up a framework that burdens the banking sector, particularly local savings andretail banks, with unnecessary and disproportionate financial commitments, would affectthese banks in a negative way. Moreover, excessive obligations could have a detrimentalimpact on the economy as a whole, especially on lending to SMEs – whose preferred legto stand on, financially speaking, is the one provided by savings and retail banks. Ourhumble advice to lawmakers: use it, don’t lose it. In standing ready to support appropriateregulatory approaches, ESBG endeavours to help lawmakers keep savings and retailbanks, and therefore the real economy, standing tall.


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The International Accounting StandardsBoard (IASB) has issued a new financialinstruments standard that introducesan expected-loss impairment model.But the standard falls short of the goalof convergence with financial instrumentsguidance being developed by the USFinancial Accounting Standards Board(FASB).

IFRS 9 Financial Instruments is the final element of the IASB’sresponse to the global financial crisis.

The IASB and the US Standard Setter FASB worked for years tomeet international calls for a converged financial instrumentsstandard, but their efforts proved unsuccessful in part becausethey were unable to agree on a model for impairment.

Under the new IASB rules for expected credit loss accounting therewill be three separate categories – performing, under-performingand non-performing loans – and loans will move between thesestages depending on changes in credit loss expectations. A loanmay, for example, be transferred to the second stage if there is asignificant increase in credit risk and to the third stage if there isobjective evidence of impairment.

A loan loss provision will be made against all loans in all thecategories, but each category will attract its own measurementprocess. The new rules also require extra, detailed disclosuresabout the expected credit losses recognised and the effect ofchanges in credit risk of financial instruments within the standard’sscope.

In its Fourth Global IFRS Banking Survey, Deloitte points to keyareas that are expected to have a greater impact than initiallyexpected. Regarding impairment Deloitte found that more thanhalf of the banks in the survey believe that the expected lossapproach will result in banks’ provisions increasing by up to 50%across all loan asset classes; 70% of banks surveyed anticipatedtheir IFRS 9 expected loss provision to be higher than currentregulatory expected loss provisions.

IFRS 9 will also bring in a new model for classification andmeasurement for financial assets and liabilities, remove thevolatility in profit or loss caused by changes in the credit risk ofliabilities measured at fair value, and a new approach to hedgefund accounting.

The final version of IFRS 9 introduces a new classification andmeasurement category of Fair Value through Other ComprehensiveIncome (FVOCI) for debt instruments that meet the followingtwo conditions:

■ Business model test: The financial asset is held within abusiness model whose objective is achieved by both collectingcontractual cash flows and selling financial assets.

■ Cash flow characteristics test: The contractual terms of thefinancial asset give rise on specified dates to cash flows thatare solely payments of principal and interest on the principalamount outstanding.

The third and final part of the new standard is the chapter ongeneral hedge accounting which was completed in November2013. Although the chapter on hedge accounting wanted to moreclosely align hedge accounting with risk management activitiesundertaken by companies when hedging their financial and non-financial risk exposures, it was not possible to include macrohedging in the chapter as it would have slowed down thepublication of IFRS 9 by several years. To avoid any further delaysto the publication the IASB decided that macro hedging would bedealt with in a separate process. Due to the creation of the newmacro hedge accounting project the IASB acknowledged thatsome preparers may prefer to move directly from using IAS 39 tothe new model for accounting for macro hedging. The IASBconsequently decided to allow an accounting policy choice toapply either the hedge accounting model in IFRS 9 or IAS 39 in itsentirety, with the additional choice to use the IAS 39 accountingfor macro hedges if applying IFRS 9 hedge accounting.

The standard has a mandatory effective date for annual periodsbeginning on or after 1 January 2018, with earlier applicationpermitted (subject to local endorsement requirements). The Standardis applied retrospectively with some exceptions (for example,most of the hedge accounting requirements apply prospectively),but entities need not restate prior periods in relation toclassification and measurement (including impairment).

The final version of IFRS 9 supersedes all previous versions of thestandard. However, for annual periods beginning before 1 January2018, an entity may elect to apply those earlier versions of IFRS 9if the entity’s relevant date of initial application is before 1 February2015.

Big changes ahead for financialinstruments accounting

Johanna Hellström


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The IFRS 9 has been many years in the making and WSBI-ESBGhave been involved from the start to ensure that its members’views are represented. Overall, WSBI-ESBG welcomes the finalstandard. Concerns regarding the restriction to the use ofamortised costs for regulated loan products due to the very limiteddefinition of eligible products were much alleviated towards theend of the project as the IASB appeared to recognise that someproducts supplied primarily by savings banks are very low-risk andin some cases even mandated and protected by the nationalauthorities but would fall outside the definitions due to specificinterest rate conditions.

The focus now must be on preparations for the introduction ofthe new standard. With many experts in the field stating thatinstitutions will require at least three years in order to preparefor the introduction of the standard and with a go-live date of1 January 2018, there is not much time left to prepare.

CONTACT

[email protected]

Some predicted calm after the storm of theEuropean Parliament elections, but thissummer has been one of the most intensefor the legal services of the Europeanbanking sector. And even before thesummer began, following the very longlegislative process that ended with theadoption of the reform of the Market inFinancial Instruments Directive (MiFID), thebanking sector was anxiously preparing

itself for the May release of the European Securities and MarketsAuthority (ESMA) consultation paper.

The sector’s preparation was addressed in the June issue of News& Views (pages 6-7), which focused mainly on the investorprotection aspects of financial markets regulation. This should notbe seen as evidence that ESBG focuses only on these aspectsbecause its members have no business in the financial markets– in fact, they have plenty – but rather because the relationshipwith our retail clients is our top priority. However, this is not theonly priority, as ESBG members are indeed important actors inthe European financial markets:

■ BPCE, our French member, has in its group Natixis, one of thetop French investment banks: it is the number one bookrunner (main underwriter or lead manager in the issuance ofnew equity, debt or securities instruments) on the convertiblebond market in France, the number two real estate leasingoperator in France, and was named Best Euro Lead Managerfor Covered Bonds in 2013.

It is also ranked 15th worldwide as an asset manager, basedon the amount of assets under management.

■ DSGV’s investment firm, DekaBank, has assets undermanagement totalling approximately €170 billion as of year-end 2013, and around four million managed securitiesaccounts. It ranks among Germany’s major securities serviceproviders and ensures access to a wide range of investmentproducts and services for retail and institutional investors.

■ Cecabank is a financial institution specialising in securitiesservices covering the entire value chain in all processes of post-trade for all types of securities and currencies, such as clearingand settlement, custody services and deposits of UCITS andpension funds. It safeguards a total of €85 billion in securitiesand settles 1.3 million transactions a year. Caixabank (ESBG’sother Spanish member) has the third-largest market share inSpain for mutual funds and invests internationally in otherfinancial institutions to help it grow.

■ ERSTE Group, a member of the Austrian Savings BanksGroup, is the number one asset manager in the EU with€49.2 billion in assets under management, and has the topposition in debt capital markets both in Austria and, with morethan 11% market share, in the EU.

The consultations launched in May by ESMA’s paper weretherefore doubly important, because they would also have animpact on ESBG members’ activities in the financial markets.

MiFID Review’s impact on ESBG:we’re not just retail banks

Rémy Moura


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In its response to the consultation, ESBG’s main concern was thetreatment of systematic internalisers (market venues whereinvestment firms can match “buy” and “sell” orders from clientsin-house), particularly its scope. ESBG is concerned that thedefinition of systematic internalisers as foreseen by ESMA wouldinclude small institutions, be difficult to anticipate when aninstitution would have to become a systematic internaliser, and beunsuitable for some instruments. In this context, ESBG proposesthe idea of a phase-in period for the thresholds to see howthe markets react before adjusting them, as well as setting thethresholds in euros rather than in per cent.

Unfortunately, the market part of the consultation, thoughimportant, had to be treated in parallel with the proposals foradditional requirements on investor protection, which ESBG fearswill have a massive impact on the continental way of offeringinvestment services to their basic clients. We are, however,confident that thanks to the numerous responses to itsconsultations that had to be submitted at the beginning ofAugust, ESMA will understand every detail of the impact thatits proposal will have on ESBG’s members and on the bankingsector of Europe.

CONTACT

[email protected]

MARK THE DATES● WSBI-ESBG Reception on occasion of IMF/World Bank Meetings: 10 October (Washington, D.C.)

● WSBI Board of Directors: 10 October (Washington, D.C.)

● Cross Regional Conference, Postal Savings Banks Forum, and World Savings Day Celebration:28-30 October (New Delhi)

● World Savings Day Celebration and Workshop: 30 October (Brussels)

● 5th GRULAC Strategic Roundtable: 19 November (Mexico City)

● 20th Latin America & Caribbean Regional Group Meeting (GRULAC), and World Savings Day Celebration:20-21 November (Mexico City)

● WSBI MENA Group Meeting on Digitalisation and Financial Inclusion: 26-27 February 2015 (Marrakech)

● ESBG Retail Banking Conference: 19 March 2015 (Brussels)

● WSBI World Congress: 17-18 September 2015 (Washington, D.C.)


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Loïc De Cannière, CEO, Incofin Investment Management

Next to providing access to finance, microfinance is also supposedto generate a positive impact on the lives of microfinance clients.However, in order to generate impact, a number of conditionsneed to be fulfilled.

A first condition for successful impact is the degree ofunderstanding of the financial products at the level of themicrofinance client. He or she needs to be fully aware of thefeatures and advantages, but also of the limitations and threatsof financial services.

A second condition is that microfinance institutions (MFIs) designand offer financial products which are well adapted to the needsof clients. At the level of product design and understanding theneeds of clients, there has been increasing attention to thenecessity of digital financial services in recent years.

For example, by developing electronic payment systems, MFIs helpmicro-entrepreneurs grow their business and offer access to verybasic financial services such as saving money. Using electronic andmobile phone systems to provide fund transfers and paymentservices also reduces transaction costs for the poor. A recent IFCstudy (see www.ifc.org: “In the Fast Lane: Innovations in DigitalFinance”, by Marcia Parada and Greta Bull) showed howinnovations in digital financial services are driving financialinclusion in Africa. The creation of mobile applications, forexample, make it possible for small-scale farmers to collectivelybargain for lower prices of inputs or todigitise and speed up the savings accountprocess.

Incofin Investment Management (IM) hasover 30 equity investments in MFIs, whichmakes it one of the largest equity investors in impact investing inthe world. As a social investor, it stimulates MFIs’ offering offinancial products which are well adapted to the needs of clients,and adjusts their offering of financial services to the poor to reach“unreached” bankable people.

This article provides two examples of innovative technology basedmicrofinance services, which have been designed based on clients’needs. The cases have been selected from the world of MFIs,in which Incofin IM is managing an equity stake.

Disbursing a loan to a new client in Phnom Penh.

A first example can be found at AMK, a leading Cambodian MFIheadquartered in Phnom Penh but operating throughout thewhole country. As of March 2014, the company was serving327,603 clients, accounting for a total outstanding gross portfolioof $83.9 million. Incofin IM became a shareholder in 2013 through“Rural Impulse Fund II” (RIF II), an investment fund focusing onrural MFIs.

Among the financial product innovations aiming to leveragetechnology are the implementation of mobile banking services,which include mobile savings, money transfers, set-up of ATMsand use of debit cards. On top of the 135 branches which itdeployed throughout the entire country, reaching 82% ofCambodian villages, AMK has also developed an agent network

to increase their clients’ access to AMKservices without having to physically go toa branch.

As of March 2104, AMK recruited 417agents, who are typically small shop

owners, located in convenient locations next to markets, or in themain street of rural villages. These agents, after being recruitedand trained by AMK, can offer two types of services: mobilesavings and money transfer. Today, in two simple steps, any personcan open a savings account at an AMK’s agent provided that thenecessary KYC checks have been performed as per the centralbank’s regulation. Once the account is active, the client can thentransact on his/her savings account without having to go to anAMK branch.

Reaching the unreached:technology as an important driver forwell-adapted microfinance services

Annapurna clients.

The mobile savings product is a revolution in terms of ruralfinancial inclusion, as it makes a formal savings product availablein rural communities. Indeed, poor households often consider theircash savings as very small and are reluctant to save at financialinstitutions. By introducing a broad agent network coupled withfinancial literacy programs, AMK believes that the poor will slowlyrealise the benefits of saving and start to save up graduallyregardless of the amount they deposit.

Meanwhile, mobile money transfer services are used by manyCambodian migrant workers and traders. Indeed, it is commonfor Cambodian household members to live in different placesdepending on job opportunities. If a family member wants to sendsums in Cambodian riel, US dollars or Thai baht to his/her family,he/she can do so by approaching an AMK agent. The agent willregister the transaction and give a code to the sender. The senderwill then be in charge of informing the recipient about the codein order for the latter to withdraw the sent money at any otherAMK agent across the country. This service is highly valued byyoung people working in urban areas and remitting money to theirfamily in rural areas for instance.

Eventually, in order to further upgrade its quality of services, AMKissues ATM cards to all its clients holding a savings account.The card can be used for deposits and withdrawals in the ten AMKATMs which AMK recently deployed in Phnom Penh and at fiveother branches. During the first quarter of 2014, more than15,400 transactions have been made via ATMs accounting for avolume of over $1.4 million. Furthermore, AMK partnered withmore than 300 shops and businesses throughout Cambodia tooffer discount prices on their products and services to AMK’sclients when showing their AMK ATM cards.

A second MFI where Incofin IM made an equity investment via RIFII is the Indian Non-Banking Financial Company Annapurna.This MFI is active in four states of India and reaches 250,000clients. It is headquartered in Bhubaneswar, the capital of Orissa,one of the most disadvantaged states of India. Annapurna makesuse of innovations and product solutions to improve customer’sregistration and activation and network management, such asfield management tools which allow a better loan assessment.

More specifically, the MFI has a mobile platform for its loan agentswho collect client information in the field via iPad-like androiddevices, using an app that records all information pertaining to aloan application and directly sending it to the main server.Important components of the process, such as credit appraisal,rating and disbursement, happen directly on these devices.This reduces the physical movement of papers and the turnaroundtime and cost of delivering credit to those living in remote ruralareas. It also captures photographs, copies of the KYCs, and GPScoordinates of the customer. The MFI can now have digitisedrecords of all the key documents in a seamless manner and theGPS coordinates help them in analysing their geographic customerconcentration. This technology is being used at 7 of 56 MFIbranches, reaching 25,000 clients.

These two examples demonstrate how a good balance betweenunderstanding clients’ needs and the use of innovative technologycan boost the financial inclusion of micro-entrepreneurs at thebottom of the pyramid. Incofin IM is proud to be able to contributeto these radical improvements.

CONTACT

[email protected]


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Banks worldwide are going through anongoing change process as a result of thecrisis, innovation in technology, new entrants,and fierce competition. WSBI Africanmembers are not escaping this trend; forthose that are not yet financial institutionsor are newcomers to the retail bankingbusiness, it is a question of survival.

Change has never been a comfortableprocess; in particular, it raises the fear of not being able to facenew situations, including the new requirements that the bankingsector’s evolution is generating. Some managers and employeessuccumb to a lack of motivation, absence from work, reductionof performance, depression, and burn out. The company suffers,leading to its disappearance if not dealt with properly.

Confronted with this situation, several WSBI African membershave asked WSBI to set up a seminar programme on changemanagement. The first seminars took place in December 2013 forCNCE in Côte d’Ivoire, and this June for Association of SavingsBanks of East Africa and West Africa members, respectively.

How to manage change has generated thousands of methods,strategies, tools and tricks. Three phases of change are usuallyidentified:

■ preparing for change;■ managing change;■ sustaining change.

In June, for ASBEA, Kenya Post Office Savings Bank, PostBankUganda and Tanzania Postal Bank, we agreed to focus on the thirdphase and to build the seminar on the following statements:

■ change is inevitable if the organisation is to perform better;■ change – if not well-communicated, participatory and

transparent – induces resentment, because staff are not sureof what comes next;

■ people need assurances in order to accept and manage theirfear of change.

WSBI’s approach was to build a positive environment, by gettingeveryone to know each other as individuals. Some participantsexpressed resistance, as they were convinced that they hadnothing to learn about their peers and colleagues.

Though, after the exercise, they all agreed that they knew muchless than they had thought, and acknowledged that knowing eachother better was critical to starting a change process. Some evenconsidered it the most instructive part of the seminar!

The day continued with a session called “If you can dream it, youcan do it” – the famous Walt Disney quotation. Participants wereasked to dream what their institution will achieve in five years’time. Dreaming the future and building positive prospects for thebank were very encouraging and helped participants to think interms of solutions with a positive mindset rather than thinking interms of problems, which might be very discouraging whileproviding justifications for not changing under a “poor me”banner. This exercise changed their views, removed doubtsand scepticism, emphasised opportunities and potential.Participants also had to come up with proposals to realise theirdreams, which made them think that sustainable growth andsuccess were in their reach. Some also realised that their dreamfor the bank was very much in line with the strategy developedby the management committee! This was a moment of greatawareness: that the management and the employees were in facton the same wavelength and that they can therefore openly andgenuinely work hand in hand towards a common objective!

The second day was dedicated to better understanding behavioursin the face of change and adopting the right approach in order toencourage people to move on. The focus was on how to createand generate positive attitudes in order to induce change.

The swinging change curve was a powerful tool to understandwhere one stands on the path towards change: Are you stilldenying change? Or radically opposed? Or ready for a change?Are you still trying to preserve your comfort zone or are youembracing a radical change that will involve transforming yourviews and adopting new values? It is important to know whereone stands and where the team members are regarding change,in order to adapt one’s behaviours and successfully help people tocope with change down the road.

One of the solutions raised by participants was to appoint a“mentor” in order to accompany the person who resists change,by making him or her understand that change is a process,that he is not excluded and is an indispensable component of theorganisation. One of the biggest fears in periods of change is tobe incapable of facing up to what is requested. Reassuring theperson about his skills and importance within the organisation iscritical to maintain motivation and involvement.

Change: a question of survivalin today’s banking sector

Laurie Dufays


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Encouraging the person to communicate his feelings is part of thisprocess, as well as starting with the basics and progressing stepby step with the team’s encouragement. So communication,reassuring, training and mentoring are powerful instruments inchange periods.

The second part of the day focused on the universal needs thateveryone has and needs to fulfil in order to remain motivated:certainty, relevance, inclusion, growth, meaning and autonomy.Participants were invited to list the uncertainties they face andthe solutions they proposed to cope with them.

The main uncertainties were:

■ new regulatory environment;■ restructuring of the bank;■ migration from plastic cards to chips;■ growing competition, notably from telecommunication

companies; ■ increase of cost of living.

Regular and transparent communicationregarding sensitive issues, training, and setting upadapted procedures to address changes wereamong the solutions that were proposed.

Leadership traits that motivate people and make them changewere also analysed. The conclusion was that successful leadersare those who can give significance or meaning to their action,act with authenticity, show competence in their field, and connectwith people.

“Attitudes change everything” and changing starts with you asthis is the only thing you control.

The third day focused on management and communication andhow to use communication to move people and to make changehappen.

The session “Communicating and relaying the strategy” featureda way to value achievements, presenting the results to be achievedand highlighting their benefits, while reassuring people that theywill receive support throughout the process was the occasionto review the art of feedback and remind participants thatfeedback should always start with a positive comment, evenwhen the message thereafter might be negative.

This recommendation was integrated in a role play on “relayingthe strategy” and they all appreciated the positive result of startingwith a positive comment as it put the interlocutor in a constructivemood, ready to take new steps.

The rest of the afternoon was spent with a large team buildingexercise, called “the Odyssey”, on how to communicate in orderto achieve a common objective. The lessons learned were: dare toshare your knowledge with people, be humble, accept that youdo not have all the information, enjoy the fact that others mighthave some information that will ultimately improve the outcomesof your work, open your door, avoid working in silos, acceptothers’ views, make sure that everybody is included. In sum, aloneyou may go faster, but together you will go farther.

Relaying the strategy and providing good feedback are alsointeresting management tools for the teams’ management andthe follow up of action plans and the results.

The seminar concluded with a quotationfrom Gandhi: “Be the change you want to seehappen”.

Change being an ongoing process, WSBI hasbeen requested to follow up and continue

enriching the change management programme: West Africancountries are interested, in particular, in managing fears, knowingthat a way to deal with them is to set new realistic and achievableobjectives. The next two seminars before the end of the year willtherefore be on managing fears and managing objectives,respectively.

CONTACT

[email protected]

“Be the change

you want to see

happen”


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Banks are going through a profound redefinition of their businessmodel as a result of the new legal and supervisory environmentimposed on them as a result of the crisis.

The separation of retail and trading activities will lead to thereduction of their revenue sources while the adaptation costs tothe new legal and supervisory schemes are seriously impactingtheir profit structure. Also, the rules in terms of risk managementlimit banks’ scope of credit activities and therefore their revenues.

Less revenue from credit and trading, plus increased structuralcosts, beg the question of how banks, particularly retail banks, willmaintain their profit margin. Considering new customers’expectations vis-à-vis their banks of ethical and trustworthybehaviour, banks see themselves facing the challenge of doingmore, and doing it differently, with less.

Accenture, in its “Banking 2016” report, suggests that the nextgeneration of banking models should be based on an “IntelligentMultichannel” bank, a “Socially Engaging” bank and a“Financial/Non-Financial Digital Ecosystem” bank. All retail banksare taking this path, so the question is what other added valuecould a bank deliver and how can it do so in a way that makes areal difference.

The systemic economy model proposes some answers to thisquestion. But what does this model consist of? Last September atthe ESBG International Summer Forum in Volterra, Italy, Michel deKemmeter, entrepreneur and founder of UniverseCity, highlightedthe features that are necessary for a company to be part of thesystemic economy: the desire to contribute to the common goodand measure your value not only through figures but also througha human dimension; and understanding your company’s strengthsand offering them to the benefit of your stakeholders, notablythrough the power of collective intelligence. The systemic model’sultimate aim is to build a new ecosystem based on morecooperation for the common good of society and where all actorsbenefit from the strengths and potentials of its members.

You might have noticed how close this model is to the savingsbanks’ model. In addition, the motto of the systemic economyis that you can do more with more, which sounds much morepositive than the usual depressing “do more with less”!

This, in particular, did not escape Fedecrédito and its CEOArmando Rosales, who was in Volterra last year and decided toinvite Mr de Kemmeter to conduct a training seminar in June inEl Salvador for his management committee. The objective wastwofold: develop a better collaborative framework between theinstitutions that compose the Fedecrédito’s system; attract,hire and retain the best people. During two-and-a-half daysparticipants reviewed Fedecrédito’s values, redefined its businessbased on these values, agreed on its strengths, revisited itsliabilities by identifying potential remedies, and screened thewhole Salvadorian economy for new stakeholders who sharesimilar values and business activities. One critical moment ofthe seminar was when participants analysed how a bank’sbusiness can contribute to 12 vital functions: health, housing,food (agriculture), education, mobility, energy, culture, valuemeasurement, governance, investment, communication (sociallinks), entrepreneurship. Screening their strengths, potentialand values, Fedecrédito eventually identified a new business inthe housing sector: building ecological “green” houses for low-income segments – which would mobilise their partners (othersavings banks in their system), extend their scope of businessstakeholders, contribute to the common good and generaterevenues. The interesting point is that the green house project willalso entail training local individuals to build green houses, settingup community services for the green houses, and developingregional employment, which might also reduce the flow ofimmigrants in search of new opportunities outside the country.

Thus new added value can be generated by setting up a systemiceconomic project while responding to the new expectations raisedby the crisis, working in a more cooperative way, minding otherpartners’ well-being in all aspects, and maintaining awareness ofthe long-term consequences of one’s actions.

If other organisations are interested in designing a new businessecosystem and benefiting from new synergies, contact LaurieDufays.

CONTACT

[email protected]

Banks need to reinvent themselvesbased on the systemic economy model


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As a follow up to the workshop on “ThePower of Data” (see this issue, page 15)during the WSBI annual meeting in SanSalvador, the workshop on “The Power ofP2P” took place just before the GeneralAssembly on 4 July.

José María Méndez Álvarez-Cedrón,General Manager at ConfederaciónEspaňola de Cajas de Ahorros (CECA) and

Cecabank (Spain), moderated the session and affirmed thatdigitalisation has come to stay in the banking sector, so it isimportant for banks to be prepared, as it will ultimately leave noactivity untouched. Nowhere are the implications morepronounced than in the internet and mobile space. These trulyempower individuals. Payments being a combination of theexchange of money and information, both traditionally driven bythe same issuer or acquirer, the mobile enables an environmentwhere money is acquirer-driven whilst information is issuer-driven.This calls for a new approach to marketing banking products andservices to individuals as well as small enterprises.

The workshop panellists presented three main “building” blocks:

■ The first is market research data, with a focus on infrastructure,m-banking penetration in Latin America and the Caribbean,user-preferred channels, the power of technology and thestrategy and future of P2P. Raúl Morales Reséndiz, PaymentsSystems and Financial Inclusion Coordinator at CEMLA (Centerfor Latin American Monetary Studies), based his presentationon a study of transactions in 18 centralbanks in the region and the resultsshowed that one-third of transactionsare between people (P2P). The studyconcluded that the future of P2Pshould be based on functionality anduser convenience, interoperability,standardisation and harmonisationof payment systems that promotea stable, competitive and inclusivefinancial system, without losing sight ofprotecting customer data and privacyat all times.

■ The second building block is regulatoryperspective: exploring what is permissibleand the vision moving forward in thecentral bank’s view.

Sonia Gomez, Financial System Manager at Banco Central deReserva de El Salvador, showcased future challenges to centralbanks in the region, including monitoring the efficiency andsafety of retail payments systems, transparency, and the ultimatebenefits to the population in terms of financial inclusion.

■ The third building block is the practitioner/service provider’sperspective. Ernesto Pacheco, Digital Banking Manager atFedecrédito (El Salvador), and Joan Rosás Xicota, Director inInternational Financial Institutions at CaixaBank (Spain),offered insights into their product experience with respect toP2P mobile services and person-to-small business services.

In addition, Fedecrédito presented the advantages of its newlylaunched “FedeMovil” service, which increases the sustainabilityof offering financial services to the low-income population andincreasing household savings as a result of the radical reductionin fees, whilst offering a convenient platform for the network’sclientele accessible 24/7.

Finally, CaixaBank delivered a presentation on the use ofinnovation to stay close to the consumer, supported by amultichannel relationship model that moves towards sales- andrelationship-oriented channels that ultimately create a customiseduser experience while adapting its digital relationship to themobility of the user and also the employee.

CONTACT

[email protected]

The power of P2P

Aimée Suarez


In the framework of WSBI’s GeneralAssembly meetings on 3-4 July, WSBImember and Doubling Savings AccountsProgramme participant Fedecrédito invitedmembers to see part of the new agentnetwork channel it had been implementingwith the support of the programme overthe past two years. The new agent networkis a success story when it comes to regionalcoverage and the provision of a new service

facility mainly used by the low-income population living in peri-urban and rural communities for payments of electricity, gas andtelephone bills, but also as a nearby channel to receive remittancesand repay loans. The agent network, called “Fedepunto Vecino”,is the first of its kind in the country and fulfils a pioneering role inlinking the unbanked to the formal financial sector in El Salvador.

Participants from 18 countries visited an agent, a shop that goesby the name of Porther, whose agency serves as a decongestionvehicle for the neighbouring branch where freed up teller capacitycan now be used to offer a wider range of products to customers.The local population of San Marcos has massively started usingthe agent, benefitting from early and late opening hours whichallows them to pay their utilities, receive remittances and buygroceries all during the same visit, without having to take off work.The agent’s turnover has tripled in the past 18 months; she’samplified her product range and is now starting to offer trainingworkshops to her new customer base, diversifying the agent intoa centre for community learning and action.

Site visit participants had the opportunity to talk to both the agentand the branch manager, the first being a very active entrepreneurin the community, the second being a former leader of thenational liberation front during the country’s civil war. Benefittingfrom the trust which strong local leaders enjoy amongst the poorand unbanked has been a key element for success for this newfinancial service channel in a country where extortions are a dailyreality. Converting payments into a truly digital financial serviceand further decreasing the risk and costs for handling a bignumber of cash payments is a remaining challenge whichFedecrédito and WSBI are working together to face, and wheremobile banking and a new card product will bring new featuresinto the mix of the service offer.

Agents in El Salvador, as anywhere else, are being set up to servedifferent purposes. Porther’s agency is one of the 5% which serveto decongest the neighbouring branch, allowing for more tailoredservices to the customer at extended service hours. The main 95%of agents serve to bank the unbanked in villages and close theproximity gap for the rural population. As of today, Fedecrédito’sregional footprint has tripled to 405 service points of which morethan 175 are agents with a monthly transaction volume of at least100,000 transactions. There’s no doubt that agent banking hasbrought financial services closer to the people, but concernsremain whether it really does improve financial inclusion2 andconsequently brings WSBI members closer to meeting theircommitment in the Marrakech Declaration, which promotes anaccount for everyone.

Maria Luisa Portillo in her shop called “Porther”, which serves as

a Fedepunto Vecino agent.

A cross-regional panel comprised of WSBI members from BSNMalaysia, Tanzania Postal Bank and BCS Colombia put themorning visit to the agent into context and discussed the abovein the light of agent models set up by the panellists’ owninstitutions. Particular reference was made to the impact ofdemographics and population density, the challenges faced whenmanaging liquidity and the importance of proximity for achievingbusiness model viability. A subsequent discussion with theaudience highlighted the need for improved incentive schemesand a better understanding for those user groups where agentsmight have the biggest impact in meeting customer needs orwhere mobile money and linkage banking with, for example,savings groups provides a better opportunity to bridge the gap.

CONTACT

[email protected]

Retail banking services “aroundthe corner from people’s dreams”1:a site visit in San Salvador

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Weselina Angelow

1 Derived from the official slogan Fedecrédito uses to promote the new services: “Hacer tus operaciones financieras desde tu celular/corresponsal está... a la vuelta de tus sueños!’’2 See http://www.cgap.org/blog/do-agents-improve-financial-inclusion-evidence-brazil (CGAP Blog from 3 April 2014).


In the morning before the WSBI GeneralAssembly in El Salvador, a lively workshoptook place under the title of “The Power ofData”. The background to the workshopwas the global financial inclusion agendaand the four factors that are comingtogether to set the stage for dramatic leapsin financial inclusion, justifying optimismthat the World Bank’s 2020 goal of fullfinancial access is achievable (see the

December 2013 News & Views page 23, “Financial Inclusion2020”). One of these factors is that today’s opportunities areattracting providers to innovation and new entry.

One area of innovation arises as a consequence of the increasedavailability of data generated through electronic transactionsand the greater sophistication of data analytic techniques.Companies are emerging that analyse data from new sources innew ways, making it possible to lend to clients that lack financialhistories and forecast the propensity of existing customers andnew markets to save. Such innovation can trigger major leaps inthe numbers of people served and help develop the range andusefulness of products. It can also help cash-based households totrack their spending and save towards specific goals.

The panellists at the workshop presented two main themes:how non-traditional data can be analysed and used by banksand mobile network operators (MNO) in countries where accessto traditional data is scarce; and how data can be employed tochange customer behaviour.

Cignifi CEO Jonathan Hakim presented a project,in which his company had worked with WSBI andWSBI member HFC Bank Ghana and MNO AirtelGhana, that demonstrated the feasibility of Call DataRecords (CDR) being employed effectively indeveloping behaviour and propensity models that canbe employed by banks in marketing their savings andlife insurance products, as well as provide data thatassists banks in refining their segmentation models.

Felipe Tibocha Cala, Juntos Finanzas Regional Director for LatinAmerica, presented a project that his company had carried out inColombia, acting on data to boost the usage of mobile banking,increase response rates, decrease inactivity in mobile bankingaccounts, and increase average savings balances. Based on dataanalysis, Juntos develops personalised text messages for each userrather than fixed scripts.

Jacobo Menajovsky of World Data Analytics and a consultant toCGAP spoke more broadly about how “big data” might beapplied to delivery to drive down delivery costs, risks, and supportmore targeted products for the financially excluded.

Discussion between panellists then went on to examine howadvanced and predictive analytics can be a game changer forfinancial inclusion and explored the minimum requirements forbusinesses and partners to start using data and advanced analyticsto support business decisions.

CONTACT

[email protected]

The power of datato drive the financial inclusion agenda

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Ian Radcliffe


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Mr Zambrana, could you briefly introduce the institution yourepresent?

Mutual La Primera was founded on 20 June 1964 and beganoperating with a clear set of objectives, in particular with thespecific aim of giving the country a new perspective for savingsand economic growth. Prior to founding MLP, savings weremanaged by commercial banks, which channelled them into otherareas. Aware of this situation, the public sector also took theinitiative to create an institution for financing housing, but thiswas unsuccessful and failed. The private sector also made severalattempts to establish an institution that could provide mortgageloans for housing, but it also failed to meet the funding needs forsocial housing. Following these attempts, MLP was significantlystrengthened until its capitalisation was greater than many ofthe banks and funds in the national financial system.

As MLP celebrates 50 years of existence, can you describevery briefly the Bolivian financial sector, and how yourinstitution has evolved in the past half century?

Mutual La Primera is currently the largest institution in the Bolivianmutual system. Its assets account for more than 50% of all themutuals combined. It also has more capital than other mutualsand banking institutions in the national financial system.

One of MLP’s main objectives is to support Bolivianhouseholds, the savings sector and small businesses.What products and services have you developed to helplow-income households and micro, small and medium-sizedcompanies? Do you offer specific products for customersfrom low-income segments?

Mutual La Primera grants housing loans to low income borrowerswith a deposit of 20% of the value of the property, with thelowest interest rates in the system, similar to those set by law.There are products for small and medium sized companies thatallow MLP to support borrowers with independent enterprises iftheir business complies with various basic requirements, enablingnew sources of work to be created.

What are the main features of the MLP social responsibilityprogramme, which cooperates with the most disadvantagedsegments of the population?

For several years the institution, authorised by the board ofdirectors, has carried out programmes to support those sectorswith the greatest needs, such as financing shelters, hospitals forstreet children, psychiatric centres, etc., including equipment fornew facilities. Approximately $2 million has been allocatedthrough this corporate social responsibility programme, with theapproval of the general assemblies to projects that support themost disadvantaged segments of society. This social responsibilitywork is ongoing thanks to the continuous support of theinstitution, which allocates a percentage of its profits.

In your view, what has been the key for the developmentof MLP? And what are MLP’s strategic priorities goingforward?

Mutual La Primera is a pioneer in Bolivia, created as a financialinstitution to provide services to finance housing. There arecurrently eight mutual societies in Bolivia’s mutual system thatshare this objective. The institution’s current growth is primarilybased on management continuity and the transparency andhonesty of its members, who have developed and strengthenedits asset base.

Mutual La Primera currently accounts for around 50% of alldeposits and lending in the Mutual Savings and Credit System,with above-average financial indicators for the system, both nowand historically. Strategies have been defined for the future of MLPmainly based on prudent growth and good practices in financialintermediation. Another pillar of the growth strategy is based oncontinuous improvement and optimisation of customer serviceprocesses.

How did MLP face the structural changes in the financialsector in Bolivia in recent years and what are the MLPbanking model’s future perspectives?

A new financial services act has been passed in Bolivia, whichinvolves the reform of all financial institutions in the system,through which the mutuals will be converted into financialhousing institutions. This change will allow share certificates to beissued to their members in a process that was launched pursuantto current regulations and legislation.

Commemorating the 50th anniversaryof Mutual La Primera (Bolivia)Interview with MLP President Humberto Zambrana

Latin America and CaribbeanRegional Group (GRULAC)Leaders’ Strategic Roundtable:positive annual growth and focuson digital banking

As a spin-off of the WSBI annual meetings in San Salvador this year, Fedecréditoalso hosted the fourth GRULAC Leaders’ Strategic Roundtable on 2 July. The mainpurpose of the meeting was to organise the regional group activities for the upcomingmonths in the framework of the newly created working group (WG) on innovationfor financial inclusion, as well as fine-tuning the draft programme of the 20th GRULACannual assembly.

One of the major outcomes of the roundtable was the recognition of the relevanceof digital banking to members’ financial inclusion endeavours. Therefore, memberswill focus on digital banking as the kick-off topic at the GRULAC WG.

Roundtable discussions also covered GRULAC members’ key figures, including annualgrowth rates of between 8%-12%. Similarly, the figures illustrate a continuousincrease in number of customers for the majority of members, paired with steadygrowth in number of branches (approximately 3%). The data reflects members aregrowing at a high average rate in all facets and are specialised in deposits and loanstargeted to individuals, businesses and local authorities, which indicates their relevance

in supporting the real economy ofthe countries in which membersare present.

Furthermore, the 20th WSBIGRULAC Regional Meeting on20-21 November 2014 in MexicoCity, as per invitation of WSBI’smember Banco de AhorroNacional y Servicios Financieros(BANSEFI), and in collaborationwith the Center for Latin

American Monetary Studies (CEMLA), will focus on “Customers at the center ofthe financial inclusion strategy” and address the following topics:

■ Latin American retail banking market trends;■ customers in the driver’s seat of choosing their provider and the consequences

for the market;■ solutions, product innovation and business models;■ financial inclusion in practical retail banking terms.

Additionally during the regional meeting, GRULAC members will hold a special celebrationto commemorate the 90th anniversary of both WSBI and World Savings Day.

CONTACT

[email protected]


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The structural changes currently plannedinclude asset and liability rate controlsimplemented by law that are designed toreduce the financial profit margin andincentives for underwriting loan portfolios.This rate control has shown that MLP hasfinancial spreads similar to those proposedby the government. This is thanks to itsefficient financial management, since thelending rates it offered prior to the newregulations were even lower than thoseproposed, and the average rates paid bythe institution to its depositors were higherthan those established in the rate controllaws. MLP therefore expects higher growthin the future thanks to its current financialefficiency, which can only be achieved witha board of directors, management teamand personnel that are committed to theinstitution and to maintaining a prudentbalance between risk and return.

What does your membership in theWSBI network contribute to yourinstitution?

The ongoing and up-to-date informationfrom WSBI about important events thatoccur is very important in keeping usinformed and we rely on this for analysisand forecasting. It is also vitally importantthat Mutual La Primera is technicallyand institutionally supported by such aprestigious and important organisationas WSBI.

www.mutual-laprimera.com

CONTACT

[email protected]

San Salvador roundtable


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WSBI Annual Statutory MeetingsFedecrédito, San Salvador, 3-4 July 2014


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ESBG members are all European retail andsavings banks rooted in their markets andregions. They all develop a responsiblelong-term business orientation within theirorganisations. The banks’ employees makethe difference. They are all experts in thecomplex financial field with profit primarilybeing a means to sustainability.

This vision is also Argenta’s. It is a retail-focused bank and insurance group based

in Antwerp, Belgium. Antwerp is one of the main European portcities, an enjoyable city with many historic buildings, museums,cultural and multicultural events. Argenta is a relatively youngcompany. Founded as a savings bank in 1956, it now is a famousbrand with a green apple in its logo. Argenta also uses a well-known slogan: “Een appeltje voor de dorst”, which basically tellsthe client to save up for a rainy day.

Argenta is mainly active in Belgium and the Netherlands. It offersa full range of banking and insurance products and services,focused on families and individuals, and aims to offer fair productsat a fair price.

Argenta was founded in 1956 by Karel VanRompuy. He was the chairman until 2009, andsadly passed away in 2013. The majority of theshares, about 86%, is still in the hands of thefamily’s owner. This next generation ofshareholders has recently launched a FamilyGovernance Initiative, in order to consolidate its future asArgenta’s controlling shareholder. Argenta is not listed; it isindependent of other financial groups. The other major shareholderis Argen-Co, issuer of cooperative capital held by 65,000 cooperativeshareholders, all Argenta clients and branch managers, with 13.7%participation in the group. This shareholder also focuses on long-term value creation within Argenta.

Argenta’s historical roots lie in Flanders. In every village, there is abranch run by one of 500 tied agents. One-fifth of them aresecond or even third generation family offices, illustrating thelong-term orientation of Argenta’s bank and insurance services.In the French-speaking part of Belgium, Argenta is developingat a more modest pace. Over the years, the group grew to becomethe fifth-largest Belgian bank, even with a market orientationexclusively towards private households.

Its long-term orientation and strong cultural values are typical ofa family company. Argenta has a culture characterised by familyvalues, simplicity, integrity, transparency, a no-nonsense approach,hard work, sobriety, modesty, humility and honesty. The founderhimself led the company and lived his personal life according tothese values.

Alongside financial strength and customer appreciation, Argentahas been consistently profitable as a result of its low-cost businessmodel and low-risk profile. Argenta’s cost-income ratio is currentlyat 39% (excluding bank levies), compared to the Belgian averageof 55%. Efficient methodology is key: every young managementtrainee in the company is trained in this methodology, ensuring aprofessional process orientation and a business culture aimed atquality against low cost. Argenta’s remuneration policy is onewithout variable income. The group believes a bonus is notnecessary to develop or retain talented employees.

Argenta at this moment serves 1.6 million clients, all privatehouseholds. The offering comprises products in payments, savings,investment services, life, property, casualty and health insurance,mortgages and consumer loans. There is a strong focus on

customer appreciation confirmed by independentcustomer organisations, with a Net PromoterScore in excess of 53 (Bain consultants, 2013).The group’s total funds under management arenow at €37.5 billion.

In 1997, Argenta entered the Dutch mortgageand savings market through selected mortgage

franchisees in the Netherlands. Over the last two years, it realiseda market share in new mortgage production of 5% in theNetherlands. This commercial success is based on a highly efficientbusiness model. Argenta grew autonomously, without acquiringportfolios or companies. We believe in outsourcing and long-termpartnerships, creating a high level of agility and strategic flexibility.

Argenta is characterised by organic growth, strong capitalisationand funding, and very strong liquidity.

During the financial crisis, Argenta proved to be strong andfinancially resilient. Unlike six of the largest Benelux banks,the group did not need any state backing. Argenta’s businessand governance model turned out to be superior throughoutthe liquidity and credit crisis (2008-2013).

Argenta: efficient, transparent,no-nonsense and honest

Johan Heller,Director and Chairmanof Executive Committee

MasterCard FoundationSymposium: Clients atthe Center

WSBI was delighted to be invited to participateat this year’s MasterCard Foundation Symposiumin Turin on 16-18 July. The event was the secondin a series of five annual symposia hosted byThe MasterCard Foundation and the BoulderInstitute of Microfinance that brought togethermore than 250 practitioners and experts from

the world’s financial inclusion community with an overall objective to quicken the paceof innovation in financial products, services and delivery systems, and to do so in away that benefits more people at a larger scale than seen until now.

This year’s symposium theme was “Clients at the Center”. The MasterCard FoundationPresident and CEO, Reeta Roy, and President of the Boulder Institute of Microfinance,Bob Christen, set the stage. Ms Roy laid out a challenge to the audience ofpractitioners, influencers and thinkers, urging the sector to “dare to trust the peoplewe serve.” Mr Christen noted that while it’s important for the sector to take stock ofits successes, it’s vital that we consider that “poor clients may want and needsomething more than we offer.”

Session topics then addressed issues such as the challenges that firms face in becomingclient-centric providers, and how to use knowledge about customer needs in a costeffective manner to influence product design and delivery channel strategies,and shared case studies on how financial institutions made the journey towardsclient-centricity.

In a session entitled “Why are we needed in the first place?”, moderated by MatthewBishop of The Economist, bKash’s Kamal Quadir, WSBI’s Stephen Peachey andthe International Finance Corporation’s Greta Bull talked about the complexities ofthe potential impact of new players in financial service provision and the need to takestock of revolutions in how institutions see their role.

WSBI’s Ian Radcliffe and Stephen Peachey also delivered an “Affinity Group” session– a round table that brought together practitioners to share and exchange views onsome of the lessons learned from the WSBI Doubling Savings Accounts programmeand to discuss the challenges in delivering at scale, with special attention on the topicof dormancy, which is estimated to be up to 80% of all accounts in emerging anddeveloping countries globally.

At the end of the three-day event, participants expressed eagerness and appetite formore case study examples as more of the principles of client-centricity are put intoaction. Throughout, participants demonstrated a relentless passion for connecting tothe big picture: financial inclusion must be in service of giving the poor a greater stakein their own lives and the broader economy.

CONTACT

[email protected]


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Currently, Argenta’s core tier 1 ratio is atalmost 17%, liquidity coverage LCR isabove 250%, and leverage is above 4.Its capital strength is driven primarily byprofit retention from operational activities.Furthermore, the family shareholderreinvests 95% of its dividend into thecompany, thus ensuring growth capabilityin a sustainable manner. Argenta’s ratingwas upgraded from B+++ to A- (long-termrating) by Standard & Poor’s in 2014.

An important strategic challenge forArgenta is the fast digitisation of retailservices. This will change banking andinsurance companies in their core. Branchmanagers and commercial employees willhave to improve further on theirknowledge and competencies. Their talentand willingness to become professionalfinancial advisors will be the decisive factorfor commercial success in the decade tocome. This digitisation does not only havean impact on commerce. It will alsodemand an intensive professionalisation ofArgenta’s ICT and information securityservices.

A second challenge is the tsunami of bankregulation and bank levies. Parallel to allkinds of micro prudential controls andsystemic financial risk controls, consumerprotection is reaching an all-time high.Honest banking is therefore of the utmostimportance, but at the same time, the levelof bureaucracy is breaching the limits ofpractical understanding.

Argenta is proud to be a member of ESBG,a European family of banks with a long-termvalue orientation. Rooted, retail-focusedand responsible.

www.argenta.be


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The objectives of the 3-4 June conference in Istanbul were tofacilitate the discussion on financial inclusion among stakeholdersin Turkey, support Turkey in designing financial inclusion policies,inform policymakers about successful international experiencesand help Turkey prepare for the G20 presidency in 2015.

The two-day conference focused on several topics includingpotential G20 2015 themes related to financial inclusion and SMEfinance; financial inclusion strategies; increasing access, usage andquality of financial services for individuals and MSMEs; women’saccess to financial services; Islamic finance; and alternative deliverychannels for increasing financial inclusion.

During the first day, Gaiv M. Tata (Director, Financial Inclusion andInfrastructure Practice, World Bank) and Margaret Miller (SeniorEconomist, World Bank) provided an overview of financialinclusion globally. They spoke about three main topics:

■ motivation, definition, global momentum and measurementof financial inclusion;

■ 2014 Global Financial Development Report on FinancialInclusion;

■ extending financial access and inclusion going forward andWorld Bank Group’s contribution.

Anna Zelentsova (Ministry of Finance, Russian Federation and Co-chair of the G20 Global Partnership for Financial Inclusion)provided views on the G20 Development Agenda and sharedRussia’s experience. Klaus Prochaska (Senior Policy Analyst andKnowledge Manager in Alliance for Financial Inclusion) shared bestpractices for financial inclusion strategies and Brian Pomeroy (ex-Chair of the Financial Inclusion Taskforce, UK) shared the UKexperience.

WSBI contributed to the sessions on “Increasing Usage of FinancialServices”, specifically on a panel that focused on the role ofdeposits and saving accounts to improve financial inclusion andreduce poverty. Recent empirical evidence on the impact offinancial inclusion on economic development and poverty showsthat access and usage of saving and payments have the largestpositive impact on poor and underserved segments. The sessiondiscussed the relationship between savings and financial inclusion,how to improve use of accounts to save more, successful policymeasures, and understanding the economics of accounts for low-income households and the importance of having the privatesector fully on board. The panellists were Joao Pedro Azevedo(Senior Economist, PREM, World Bank), Monika Hempel (EuropeanCentral Bank) and Ian Radcliffe (Director, WSBI). Specifically, WSBIintroduced country cases, global comparisons, best practices andinternational standards.

Another session on the first day covered the relationship betweenIslamic finance and financial inclusion. The second day of theconference mainly focused on the issues in Turkey andinternational best practices around these issues. The topics weregender and financial inclusion, consumer protection and financialliteracy, MSMEs and alternative delivery channels and how theycan be used in the Turkey context.

CONTACT

[email protected]

WSBI speaks at Financial InclusionConference in Turkey


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About 90 participants from more than20 countries attended the 20th WSBI Asia-Pacific Regional Group Meeting on“Turning financial inclusion challenges intobusiness opportunities” and the workshopon “Mobile banking as good as mobilemoney”, which were co-organised byLienViet Postbank and took place in Hanoion 21-23 May.

The meeting and workshop featured exchanges of ideas andinnovative best practices based on presentations from themembers as well as external guest speakers. In addition tomembers from the Asia-Pacific region, the event was also attendedby WSBI members from a number of African countries as well asfrom El Salvador, which served to enrich the exchanges.

Discussions highlighted that challenges faced by the bankingsector arise from new and often non-financial market players,advancing technical innovation as well as the rising need formulti-channel and customer-centred service. It is also confirmedthat financial inclusion, i.e. reaching the “non-banked”, is nolonger considered to be a CSR issue but is recognised as a businessopportunity that must be approached as such. In this respect,WSBI members can build on their long history of being regional andresponsible providers of access to financeand should focus on communicating thisto stakeholders, including the generalpublic and regulators. The importance ofproportional regulation and diversifiedbusiness models must also be stressed inthis context.

Innovative case studies were shared onhow to reach customers in geographicallydistant regions as well as the traditionallyunbanked by means of refining customersegmentation and diversifying the productand service offer. This can also be donein cooperation with external partners,including the establishment of ATMnetworks, using branchless banking anddeveloping remittance linked products.

The workshop specifically looked at how WSBI member banks’mobile and e-payment offer could be adjusted to face thechallenges of the financial services landscape in different parts ofthe world, and benchmarked international best practices ine-payment strategies. Mobile banking will be a “game changer”and it will revolutionise the customer-bank relationship. Indeed,the challenge for banks of financial inclusion in a mobile bankingworld is whether your customer will include you (the bank) inhis/her financial future.

Members also pointed to several major challenges: the lack ofinfrastructure, high implementation costs and the challenge toraise awareness and communicate well in order to mobilisesavings, financial education and financial inclusion. It was stressedthat WSBI members should seize all opportunities offered byavailable technology, partnerships and innovation to strengthentheir market position. WSBI can support this effort by facilitatingexchanges of best practices and cross-border business cooperationas well as providing consultancy and training for capacity building.

CONTACT

[email protected]

Turn financial inclusion challengesinto business opportunities, and how mobilemoney can triumph over the challenges

Mina Zhang


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Improving access to financial services for the world’s poor, to alarge extent, hinges on the actions of state-owned banks (SOBs),often the primary (or only) provider of these crucial functions inmany parts of the world. During a panel session at the 2014 AsiaMicrofinance Forum, WSBI and its members, namely, BankSimpanan Nasional (BSN) Malaysia, National Bank for Agricultureand Rural Development (NABARD) India, and the Postal SavingsBank of China (PSBC) shared their insightful views on how SOBsdevelop partnerships with financial institutions and leverage newtechnology to reduce their costs, thus providing financial inclusionin commercially viable way.

This session was moderated by FionaJoyce, WSBI Deputy Director and Headof Institutional Relations, with speakersPuan Nilammasri Ja’afar, Senior VicePresident and Head of Microfinance atBank Simpanan Nasional (BSN) Malaysia,D.V. Deshpande, Chief General Managerat National Bank for Agriculture andRural Development (NABARD) India,and Shao Zhibao, Vice-President of thePostal Savings Bank of China (PSBC).Each member presented its specific case.

BSN

Bank Simpanan Nasional was established in 1974 under aMalaysian Act of Parliament to promote and mobilise savingamong the poor. Financial inclusion is the driving agenda of BSNand the bank is mandated to provide financial services to thecommunity. As of today, BSN has 6,800 employees, 401 brancheswith 100% national coverage, 5,300 agents, 59 microfinancecentres, 85 Islamic branches and 8.5 million customers.

BSN started its agent banking in 2012, a system in whichcustomers do not need to show up at the brick and mortar branchto access services but are instead provided with services by abranchless agent operating in their community. The set-up cost ofa single brick and mortar branch is the same as the set-up cost for100 agent bankers. The innovative approach has enabled BSN toreach 99% coverage at sub-district level instead of 43%.

BSN’s microfinance programme, launched in 2007, aims to providefinancing facilities to viable micro-enterprises, the self-employedand individuals in a simple and convenient manner, i.e. with nocollateral, minimum documentation and fast loan approval anddisbursement times.

This overcomes the dilemma that the majority of Malaysianmicro-enterprises have: relying on financing from informalchannels due to their inability to provide collateral and the highcost of transactions compared to the size of small loans. To dateBSN has disbursed over $250 million (RM 800 million) to 39,000customers and the agent network has carried out over 11.5 milliontransactions for an amount of $309 million (RM 990 million).The BSN microfinance programme is, however, more than justloans. It also includes savings access, insurance/Takaful (Islamicinsurance) protection as well as advisory services including capacitybuilding and skills training in cooperation with governmentagencies. The ultimate aim is to create a positive impact in thecommunity and to elevate these companies to the next level ofsmall and medium-sized enterprises (SME).

As a next step, BSN intends to increase its access points formicrofinance loan applications, as well as to cross-sell othermicrofinance customer products and develop further microfinanceloan collection and distribution centres.

NABARD

National Bank for Agriculture and Rural Development (NABARD)India initiated “self-help groups” (SHGs), which have coveredsome 95 million households, linking many women to a bank forthe first time. There are also Joint Liability Groups (JLGs), whichinvolve share croppers and oral leases. So far, 529,000 such groupshave been established and have accessed $14 billion (INR 46billion) in loans. SOBs in India such as NABARD have providedsupport to microfinance institutions (MFIs) in India in order to helpthem increase their credit outreach.

The Reserve Bank of India (RBI, Indian central bank) expectsSOBs to approach financial inclusion as a business opportunity.The government has however created two funds that areadministered by NABARD and destined to strengthen the demandside through financial literacy and capacity building to support ICTsolutions in banks on the supply side.

Whereas technology requires some initial capital investment aswell as customer segmentation efforts, it is cheaper in the longterm and serves to increase the outreach of financial inclusion toa larger number of persons at a low cost. Technology does havelimitations, however, including connectivity problems. Nonetheless,technology has always been at the core of financial inclusion andis its driving force.

State-owned banks play a prominentrole in financial inclusion

WSBI Deputy Director

and Head of Institutional

Relations Fiona Joyce.


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This would be accentuated in future with the development ofmobile banking, also based on the large number of mobile phoneusers in India – some 74% of the population today.

Asian SOBs hold a very important role in financial inclusion – andfinancial inclusion is not philanthropy but an important businessopportunity.

PSBC

According to Postal Savings Bank of China (PSBC), financialinclusion should be provided to the general public both on timeand conveniently so that it can serve all communities includingsome “weaker segments” and provide better support to thedevelopment of the real economy in China. Financial inclusionmust be commercially viable and sustainable and it differs frompure philanthropy or charitable programs.

Large SOBs shall take the leading role in inclusive finance, as theyhave their inherent advantages such as capital strength, maturemanagement, large talent base, advanced technology, largecustomer base, wide range of products and services and largedistribution network. As SOBs, they should accomplish the socialresponsibility of promoting financial inclusion and should play aleading role in serving the local real economy, advancing greendevelopment and promoting social harmony. The promotion offinancial and social inclusion is also a responsible contribution tothe development strategy of the nation.

In China, there are more than 51 million micro-enterprises,but only a small number of these – some 20% – have access toloans from financial institutions. This large number of unbankedmicro- and small and medium-sized enterprises (SMEs) representsa large untapped business opportunity.

PSBC has considered inclusion a top priority since its establishmentin 2007 and takes full advantage of its vast urban and ruralnetwork. PSBC also enjoys huge capital reserves and a stronggrass-roots team that allows it to explore effective ways to developfinancial inclusion. It is deeply rooted in rural areas, with a vastand comprehensive network in both cities and rural areas. It worksto support the business development of micro-enterprises andimproves the financial service offer available to them by innovatingproducts and services, upgrading business models, andestablishing branches dedicated to micro-enterprises. The practiceof PSBC in financial inclusion has totally changed the traditionalperception that big banks can only handle big businesses, whilesmall banks are positioned better to handle small customers.

Creating a platform for the exchange of financial inclusionexperiences in different countries so as to work towardsdiminishing the differences in understanding financial inclusionbest practices, creating a conducive financial environment forfurthering financial inclusion by strengthening the role ofgovernment in terms of policy guidance and incentives,accelerating the building of social credit schemes and innovatingin building an inclusive financial services system, and innovatingfinancial inclusion business models are key success factors for thedevelopment of financial inclusion.

CONTACT

[email protected]


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While China’s “big 4” commercial banks havedominated the country’s retail banking market interms of customer numbers, their outreach in ruralareas in terms of product range and service channelshave been insufficient. Postal Savings Bank of China,established in 2007, has become the country’s fifthlargest bank and has been filling the access to financegap for farmers and micro-entrepreneurs in rural China.

In China, corporations and state-owned companieseasily access financing, but most banks are reluctantto provide loans to farmers, micro-entrepreneurs andSMEs because they lack collateral. PSBC, however,having chosen to serve these customers, prioritisessustainability over profit maximization and is China’spioneer in financial inclusion and social responsibility.

When it comes to serving the rural population, PSBC has fivedistinct advantages over the “big 4” commercial banks.

First of all, PSBC has a dominant position in rural areas, with39,707 outlets, over 70% of which are in towns and villages.On top of using existing post office facilities, PSBC set up “Sannong”financial service centres and microcredit advisory service centres.(The name means “three nong” in reference to agriculture, “nongye”,farmers, “nongmin”, and villages, “nongcun”.) These provide fast,high-quality service to microenterprises and farmers. PSBC can alsobetter understand the needs of the rural population and enlargeits outreach in rural areas by taking advantage of the servicecentres’ closeness to local communities and their capacity toidentify customers. To help rural people have convenient accessto basic financial services, PSBC has also developed cash withdrawservice points in rural villages. In 2013, PSBC’s 108,700 servicepoints handled over 6 million transactions amounting to almostRMB 1.5 billion (almost €175 million).

Second, PSBC has a strong commitment to developing microcreditbusinesses and supporting farmers’ businesses. Microcredit isPSBC’s long-term core business: as of 2013, it served over 7.5million microcredit business beneficiaries, handling over 13 milliontransactions amounting to over RMB 811 billion (over €94 billion).

Third, PSBC is able to develop tailored microcredit productsaccording to different characteristics of the agriculture industry.

Loan officers are from the local communities they serve and caneasily communicate with farmers in the local language andunderstand their needs and business plans.

Fourth, PSBC has explored specific skills in microcredit andsuccessfully overcome the challenges of microfinance, innovatingits business model to support the development of micro-enterprises. It scientifically designs products, establishes specialisedinstitutions, promotes product innovation, emphasises businessmodel upgrading, and combines “finance” with “intelligence”.All these efforts have helped PSBC become a multi-level and wide-ranging microfinance provider.

Finally, in 2009, PSBC established a strategy for training new talent.It identifies young, local graduates who are not only interestedin and adept at microfinance, but who understand the situationin rural areas and the needs of farmers. Meanwhile, at PSBC head -quarters, a risk-control IT system monitors each loan disbursement.

The Chinese government recognises PSBC’s achievements: itscrucial strategic position in financial inclusion and enormouscontributions to inclusive financial services. The experience of PSBCin inclusive finance illustrates the strong business case forproviding low-cost financial services in rural areas.

CONTACTS

Liu Ziyang, [email protected] [email protected]

Postal Savings Bank of China:A pioneer in sustainable inclusivefinance in rural China


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The Association of Savings Banks of EastAfrica (ASBEA) gathered on 17 June inNairobi to launch the connectivity of theirrespective IT platforms, enabling them tobetter serve their clients in their respectivemarkets.

The meeting was chaired by Esther Koimett,Investment Secretary, Kenya Ministry ofFinance, and a representative of Henry

Rotich, Cabinet Secretary of the National Treasury. Participantsincluded Angelina Wapakhabulo and Batlda Burian, respectively theHigh Commissioners of Republic of Uganda and United Republicof Tanzania; Fred Kapondi, Board Chairman of Kenya Post OfficeSavings Bank (KPOSB); and the CEOs of three ASBEA members:Dr Nyambura Koigi (KPOSB), Stephen Mukweli (PostBank Uganda)and Sabasaba Moshingi (Tanzania Postal Bank). Fatoumata Camararepresented WSBI Managing Director Chris De Noose.

Dr Koigi recalled that the ASBEA was created in line with the WSBIscope of mission and vision to promote savings financial servicesfor all in East Africa and beyond, to establish networks andaffiliations between members and other savings banks in EastAfrica, on the African continent and around the world, and finallyto promote partnerships with development actors.

An interconnected platformis a concrete and significantachievement which willenable ASBEA members toenlarge their range ofservices to many more EastAfricans while increasingtheir business profit. WSBI isparticularly pleased towitness ASBEA membersembracing the pace ofchanges in the banking environment, as the former has beencontinuously encouraging in its various platforms of businesscooperation.

Ms Koimett expressed her pride and contentment as bothrepresentative of the Kenyan government and former KPOSB CEOto see IT convergence and full integration among the threemember banks in East Africa.

In addition, High Commissioners Wapakhabulo and Burianexpressed the support of their respective governments for theinterconnection.

On 18 June, ASBEA members held their annual statutory meeting,to take stock of the activities conducted in 2013-2014 and adoptthe upcoming year’s strategic plan about the strengthening anddevelopment of members’ organisational structures and services.Another objective of the ASBEA annual meeting is to facilitatethe exchange of information, expertise and training betweenmembers and other savings banks in East Africa, their partnersand affiliates around the world.

The meeting was chaired by board of trustees members Dr Koigi,Mr Mukweli and Mr Moshingi, and participants included the memberbanks’ senior management which constitutes the executivecommittees in charge of managing the businesses of the ASBEA.

The discussions mainly covered approval of the Annual Report ofthe Board of Trustees, adoption of the Audited Accounts of theAssociation, and review of the ASBEA budget for the upcoming year.

Finally, Mr Moshingi was appointed chairperson of the ASBEABoard of Trustees for 2014-2015.

CONTACT

[email protected]

East African savings bankslaunch IT platform connectivity

Fatoumata Camara

Participants including WSBI Adviser Fatoumata Camara, the three

ASBEA member CEOs, High Commissioners Batilda Burian (Tanzania) and

Angelina Wapakhabulo (Uganda), Kenya Ministry of Finance Investment

Secretary Esther Koimett and colleague.

L-R: PBU CEO Stephen Mukweli,

KPOSB CEO Dr Nyambura Koigi,

TPB CEO Sabasaba Moshingi.


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WSBI West African members met in Ouagadougou at the kindinvitation of SONAPOST (Société Nationale des Postes du BurkinaFaso) for their annual statutory meeting to take stock of activitiesconducted in 2013-2014.

The meeting was chaired by Burkina Faso Minister of Developmentof Digital Economy and Posts Jean Koulidiaty, and participantsincluded a representative of the Burkina Faso Ministry of Finance,the president of the market regulation authority, and managingdirectors of the member institutions and other banks. FatoumataCamara represented WSBI Managing Director Chris De Noose.

CNCE (Côte d’Ivoire) Managing Director and WSBI West AfricanRegional Group President Mamah Diabagaté said the group wascreated with WSBI’s mission and vision in mind: representing anddefending members’ interests vis-à-vis regional regulatory andpolitical authorities; increasing the visibility of savings and retailbanks as a key activity in the finance sector as a whole; providingnecessary tools for building organisational, individual and sectorialcapabilities; enabling members to adapt to new contextualrequirements and play significant roles in the financial system; andbeing a platform for joint initiatives and cross-border projectsincluding exchange of experience and good practices in order toidentify viable business models for low-income segments.The group’s overall objective is to reinforce the market position ofits member banks.

WSBI presented an advocacy document for a more favourableapproach to the sustainability of savings banks. While it’s easy forbig and small companies (the latter thanks to microfinance) in poorcountries to tap markets for funding, it’s much more difficult formedium-sized companies. Filling this “missing middle” hasbecome known as “meso-finance” (the Greek “meso” meaning“middle”).

Thus WSBI’s advocacy document calls for an appropriate status formeso-finance via adapted capitalisation and prudential ratios totake into account the specificity of its members as financial servicesproviders to the mass market and also to encourage innovationin products and delivery channels to improve financial inclusion.Minister Koulidiaty welcomed the advocacy presentation and expressedthe support of Burkina Faso’s government for joint initiatives todrive the development of WSBI members in West Africa.

West African members adopted the necessary decision related tothe features of their common prepaid card and established acommittee, including their respective heads of operations and MIS,to implement the SIRA card (“sira” means “road” in Mandingo),expected to be launched on 14 September in collaboration withthe West African Economic and Monetary Union InterbankMonetary Group (French initialism GIM UEMOA).

Participants also decided to intensify promotion of their successfulachievement and awareness-building by, for instance, requestingother WAEMO countries to host the next meetings, formalisingcooperation with WSBI regarding capacity building programs, andusing internal resources for the position study needed to conductefficient lobbying activities.

In addition to the West Africa Regional Group meeting, SONAPOSTlaunched, in partnership with UBA (United Bank of Africa), anautomatic teller machine. According to SONAPOST ManagingDirector Salam Sanfo, this is yet another accomplishment in a seriesthat includes the launch of the prepaid card. WSBI expressed itssupport and encouragement of such an initiative, which willcontribute to the financial inclusion of more and more Burkinabe.

CONTACT

[email protected]

West Africa Regional Groupconsiders meso-finance and advancesprepaid card


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The year-end paper of the Master in Responsible Banking was theoccasion for those who participated to share their banks’ experienceand research in responsible banking practices. High quality paperswere produced by staff members of BancoEstado in Chile, BankaKombetare Tregtare (BKT) in Albania, and People’s Own SavingsBank (POSB) in Zimbabwe. The three papers focus on how theinstitutions contribute to financial inclusion and apply responsiblebanking practices to achieve higher social and financial access ina sustainable manner.

The highest marks went to Fernando Ochoa, BancoEstado’s ChiefEconomist, for his paper “Measurement of BancoEstado SocialDividend and Contribution to Financial Inclusion”. Mr Ochoadesigned a statistical composite index that allows BancoEstado toassess the evolution of its aggregate contribution to financialinclusion in Chile. As a complement to that composite index, theauthor estimated the economic added value and social dividendgenerated by BancoEstado – replicating to a large extent a similarstudy carried out by WSBI-ESBG in 2009. The main highlight ofMr Ochoa’s study is that the bank’s cluster of branches as a wholewas able to generate important pre-tax profits and had the capacityto fully cover its direct costs and corresponding share on totalregional/central overheads. Thus the study shows that favouringfinancial inclusion through a social approach can be sustainable!

BKT’s experience in responsible banking is highlighted in papersby Nervida Djepaxhija and Klaida Eminaj. The bank, which set upits first branch in 1925, represents the oldest financial institutionin Albania, is the market leader in quality, management and serviceinnovation, and has the expertise to support and expand itsclientele. BKT follows the business principle of “creating partner -ships with its stakeholders, by serving them responsibly, fairly andethically”. This must be aimed at having a positive impact on theindividual, society, and economy. Having a look at BKT’s vast varietyof projects, one can easily see its drive to actively live its mission“to provide people with peace of mind, convenience, and possibilityin banking”. With this mission firmly in mind, and following theirresponsible lending approach, BKT has developed several productsin order to comply with customers’ expectations, meet theirrequirements, and help them sustain a financial equilibrium.

All in all, BKT is a flagship of the successful integration of socialand responsible business principles in its corporate strategy, whichensures its ongoing success after being awarded “The Best Bankin Albania” several years in a row by Euromoney and The Banker.

The third paper addresses the master’s first lectures on responsiblebanking and the principles that relate to financial inclusion. POSBCEO Kandlela Admore describes his bank’s new project to increaseits contribution to financial inclusion. An in-depth market studypoints out that 40% of the population is financially excluded, 40%depend on informal income sources, and only 24% are bankedwith formal institutions. Financial exclusion is particularly high inrural areas, while formal and non-bank products seem to focus onindividuals in urban areas who receive a regular salary. How doesPOSB respond to the needs of the population in urban and ruralareas? The project has identified six key initiatives that are criticalto fostering financial inclusion, and created implementationguidelines and identified resources for each initiative. Theseinitiatives are directly related to the development of adapted creditapproaches and methodologies, the creation of a micro-financedepartment and specific support to innovative businesspartnerships, notably with the post, in a way that ensures qualityand consistency of service across the country. Knowing that POSBalready enjoys synergistic links with mobile network operators,information technology solutions for financial inclusion will alsobe on the list of initiatives. Their success will be measured regularlyin terms of their impact on financial, customer, and internalprocesses, and on learning and growth perspectives.

Other papers focus on antifraud policies and corporategovernance and can be consulted on demand. For moreinformation, do not hesitate to contact the WSBI.

CONTACT

[email protected]

Responsible banking practiceshighlighted by WSBI-IEB-LSE masterprogramme

Master participants.


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Children and young people are the future’s economic actors.As heads of households, employees and contributors to theircommunities, they will take financial decisions that will ultimatelyhave an impact on the stability of world economies. As a result,they need to be prepared to take on this role and responsibilitywhich entails that they start dealing with financial matters as earlyas possible, supported by both their family and their school.

This approach to enabling young people to manage their moneyand resist over-indebtedness needs the support of public andprivate stakeholders. To start with, it is up to national authorities toenable the systematic and structural platforms for understandingfinancial realities and opportunities and for allowing young peopleto experience them in the field. It also involves the creation oflegal, regulatory, social and cultural environments to facilitatethe financial engagement of children and youth. Along withinternational organisations, and national states, financial providershave a role to play, and for savings banks this role is part of theirmission. This is also the meaning of the WSBI MarrakechDeclaration: “An Account for Everyone”, which can only happenthrough the combination of financial education and financialinclusion of low-income segments, starting with young people.

WSBI supports the financial education of youths at school,accompanied by an appropriate offer of financial products andservices adapted to the different age segments within the youthpopulation. This view is largely disseminated by internationalorganisations such as the OECD, the United Nations, and Childand Youth Finance International (CYFI). The last emphasises thatcomplementing financial education with social education orlivelihood education positively affects a youth’s feeling of controlover his actions, decisions, and the likelihood of getting a job.

Therefore, financial education can go far beyond financialindependence when rightly coupled with social education, whichcan impart a sense of responsibility, of being able to take one’s lifein one’s own hands, of utility and value – of, in sum, a life fully lived.

In the field, however, young people are not easy to reach!Relationships between them and formal financial service providersare generally weak. Savings products offered to them are oftensubsidised and their sustainability therefore questioned;meanwhile, parents remain necessary actors for opening accountsand conducting transactions in the name of minors. The questionis therefore: By the time they come of age will the habit of savingbe instilled and will they use the accounts opened for them bytheir parents, or will they simply open another account in a moremodern and market-known bank.

Considering the above, if provided with the opportunity to savevia formal services, will youth in developing and emergingcountries participate? The challenge for banks is to encourageyoung consumers to come up with new insights about a productoffer – one that the bank can realistically provide – that fits withthe money flows youth and young adults manage on a day-to-daybasis. Eventually, it will be necessary for the bank to integrate thefact that this day-to-day amount of money will evolve over thecourse of consumers’ lives.

But who exactly are these young people, and what are the specificneeds they face at different stages of their lives? What banks cando to accompany young people, meet their challenges andmotivate them to use their accounts will be at the heart of theone-day Cross regional conference: Increasing financialoutreach to youth, 28 October in New Delhi.

What do young people want?Increasing financial outreach to youth

20 November 2014

Latin American Regional Group MeetingMexico City

Topics will include the role of financial education and how bankscan improve their offer through diversification of delivery channelsand establishing new partnerships with stakeholders.

The main objective of the conference will be to address youthfinancial inclusion and how banks address this challenge. It will bethe occasion to explore the necessary conditions for improvingbanks’ financial inclusion policies and the factors responsible forchanges through the presentations of concrete case studiesand good practices. The conference is also a unique platformto meet other WSBI members from other continents, extendone’s professional network, generate productive exchanges ofknowledge and experience, and ultimately induce productivechange.

The conference targets bank decision-makers and operationalmanagers who can influence the strategy of their institutionsand have an impact on operational policies. The programme willalso be of interest to regulators in charge of financial andeducational matters.

The conference will be hosted by National Savings Institute of Indiaand inaugurated by senior officers of the Indian Ministries ofFinance and Communication. Participants will exchange a broadrange of views and present national cases from Sri Lanka,Thailand, Colombia and Kenya – to name just a few – byinstitutions such as WSBI, CYFI, and others.

CONTACT

[email protected]


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BANKERS HELPING BANKERS

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