coronavirus

WSBI statement on Covid-19

The financial industry faces an unprecedented challenge that may last for quite some time due to the coronavirus pandemic, states a letter for policymakers worldwide from savings and retail banking association WSBI.

Signed by its President Isidro Fainé and Managing Director Chris De Noose, the letter says focus starts with saving as many lives as possible, eradicating the coronavirus pandemic and ensuring that the so-called “real economy” suffers as little as possible from vast Covid-19-caused economic damage.

Support measures done so far by governments can help SMEs, WSBI writes, expecially the the self-employed and individuals, as well as larger, heavily affected industries such as the services sector at large, in particular manufacturing, transport and tourism.

“Economic, financial, fiscal and social measures need to be designed and implemented straightaway, the letter states, adding “international cooperation is of utmost importance. The world needs to face the coronavirus crisis with decisive actions in a united and well-coordinated manner.”

​Committed to people, communities, SMEs and beyond

Savings and retail banks fully commit to supporting their customers, the letter states, be it individual people, families, SMEs, institutions, young people, the elderly and society in general who live in urban as well as in rural areas. “We aim to figure out the best, sustainable solutions. Locally rooted savings and retail banks have a crucial stabilising function in times of crisis with their infrastructure, closer relationship with customers and continuous lending.” WSBI member banks help SMEs and other companies overcome liquidity bottlenecks and provide stability. “For this to succeed,” WSBI added, “everything possible should be done in regulatory and macroprudential terms to maintain the liquidity and credit supply.”

On firmer footing since crisis

Playing an essential part of the solution, savings and retail banks see major financial reforms during the past decade have made their banks safer, more stable and more resilient in the face of shocks. Facing the coronavirus on stronger footing, their inclusive and socially committed approach to banking remains vital and steadfast during challenging times like these, they note.

WSBI added: “Clients of savings and retail banks can continue to rely on their banks as partners that do their utmost to mitigate the effects of this critical situation. Now, more than ever, we will stand strong to provide confidence, comfort and trust when customers and communities need it most.”

Policy ideas to give banks enough flexibility

WSBI members welcome the measures already taken by authorities, and proposes ideas to give banks “enough flexibility to continue supporting their customers. Some steps already taken need additional guidance and extended scope to achieve their objectives.” They include:

  • temporarily relax the rules when it comes to capital and liquidity buffers
  • increase monitoring, develop contingency plans and provide additional support for the most hard-hit sectors – tourism, transportation and the hospitality industry – by easing the tax burden for certain much-affected firms in vulnerable regions.
  • a plan to recover economic activity and production of goods and services and to stimulate consumption to prevent the economy from recession.
  • public authorities should free up additional capital and provide loan guarantees
  • flexibility on the asset quality assessment of loans by supervisors when public moratoria on payments have been implemented. This would also strengthen banks in temporarily supporting solvent clients facing liquidity difficulties.
  • IFRS 9 accounting standard implementation for the recognition of loan loss provisions should take into account the disruptive Covid-19 crisis. It is crucial that banks are granted enough manoeuvring room to modify the payment schedule of the affected borrowers without affecting their accounting provisions nor their solvency; that is, avoiding the increase in non-performing assets that would derive from the current regulations.

​Global coordination, relief measures much needed

At national and regional level, much can be done through coordination among policymakers, keeping neighbors in mind. At a global level, need exists for G20 to prioritise global financial stability, a sustainable and swift recovery and a balanced development as common goals. The recent G7 leaders’ commitment to do ‘whatever is necessary’ to support the global economy, a very well received first step, but future decisions regarding interpretation, adjustments, and tailoring of regulations must be properly coordinated at global level via the Financial Stability Board, the Basel Committee, the International Organization of Securities Commissions and the International Association of Insurance Supervisors. The IMF has also underlined the need for global coordination in its recent paper on policy.

What happens next

WSBI suggests in its statement that regulatory authorities ask themselves if new regulatory requirements that are planned to be implemented in 2020-2022 are critical, or, if there is a possibility, that they can be delayed by 1-2 years, depending on how the crisis further develops. Even if only a part of the upcoming regulation could be delayed this would certainly help banks, and other players, to focus their resources on critical immediate action.

Once the emergency has been overcome and the situation is stable, it may be useful to carry out an impact assessment in order to see what measures should be taken to ensure that the global economy is still growing.

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Covid-19: European banking, insurance social partners statement 2

Joint statement of the European social partners in the banking and insurance sectors on the Covid-19 emergency crisis.

The European social partners in the financial services sector – UNI Europa Finance, the Banking Committee for European Social Affairs of the European Banking Federation (EBF BCESA), the European Savings and Retail Banking Group (ESBG), the European Association of Cooperative Banks (EACB), Insurance Europe, the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), and the European Federation of Insurance Intermediaries (BIPAR) – would like to express their sincere sympathy to everyone directly suffering because of the Covid-19 pandemic and to profoundly thank all those risking their own health to save lives. As social partners, we are fully committed to ensuring that the European banking and insurance sectors continue to assist their customers and support European economic activities to the best of our abilities during this unprecedented pandemic crisis.

This requires close and intense coordination with public authorities and for the European institutions, regulatory and supervisory authorities and the financial services sector to work together to try to neutralise as much as possible and to the best of our abilities the effects of Covid-19 on the economy. Important measures have already been taken to help the banking sector in supporting the economy. As this is a rapidly evolving situation, the social partners call on the public authorities to stand ready to take further action and use the necessary flexibility at their disposal to overcome the present difficulties. 

Employees and employers in the European banking and insurance sectors, as well as insurance and financial intermediaries, are doing their utmost to offer essential services to the public within the limits imposed by public authorities, and will continue to do so throughout the crisis as best they can. The European social partners in the financial services sector thank all employees in the banking and insurance sectors who are working to alleviate the effects of this crisis. 

Across the sector, all the European social partners agree that the health and safety of our employees, our customers and the general public are absolutely paramount, and that every effort and contribution should be made to help contain the spread and impact of Covid-19. 

To this end: 

• All the actors in the European financial services sector follow strictly the recommendations and rules of public authorities and health agencies in relation to Covid-19.  

• Companies in the sector have organised for the vast majority of their employees to work remotely whenever and wherever possible to reduce their exposure to the virus and limit its spread.  

• The European social partners in the financial services sector ask for their customers’ forbearance when they are requested, in line with the public measures decided at national level, to limit physical visits to branches, agencies and offices as well as face-to-face meetings. All the actors in the sector have reorganised their operations to remain at the service of customers through telephone, email and other communication technologies and tools, or, when necessary and when allowed and always in line with the rules and guidance of public authorities and health agencies, through face-to-face contact.

• During this Covid-19 crisis, all employees at their workplace, especially those who continue in their public-facing roles, need to be given appropriate protection in terms of both equipment and infrastructure on the basis of the relevant rules and guidance of the appropriate public authorities and health agencies, to minimise the risk of contagion as far as possible. This is in the best interests of customers and the general public.

Social Dialogue at all possible levels can provide a good context for finding suitable solutions for this exceptional situation and experience shows that it contributes to reach the high-level buy-in needed for successful implementation.  

Europe must show responsibility, solidarity and efficiency in facing this emergency by protecting all its affected citizens, workers and businesses. The European social partners in the financial services sector remain committed to protecting companies and the employees in the banking and insurance sectors and supporting European citizens and economic activities to the best of their abilities during this extraordinary crisis period. 

 

Signatories:

Michael Budolfsen President, UNI Europa Finance 

​Jens Thau Chairman, EBF BCESA 

Chris De Noose Managing Director, ESBG 

Hervé Guider Managing Director, EACB 

Andreas Brandstetter President, Insurance Europe 

Grzegorz Buczkowski President, AMICE 

Juan Ramón Plá Chairman, BIPAR 

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by Ruth

COVID-19: European banking, insurance social partners statement

​​​Joint statement of the European social partners in the banking and insurance sectors on the Covid-19 emergency crisis

The European social partners in the financial services sector – UNI Europa Finance, the Banking Committee for European Social Affairs of the European Banking Federation (EBF BCESA), the European Savings and Retail Banking Group (ESBG), the European Association of Cooperative Banks (EACB), Insurance Europe, the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), and the European Federation of Insurance Intermediaries (BIPAR) – would like to express their sincere sympathy to everyone directly suffering because of the Covid-19 pandemic and to profoundly thank all those risking their own health to save lives. As social partners, we are fully committed to ensuring that the European banking and insurance sectors continue to assist their customers and support European economic activities to the best of our abilities during this unprecedented pandemic crisis.

This requires close and intense coordination with public authorities and for the European institutions, regulatory and supervisory authorities and the financial services sector to work together to try to neutralise as much as possible and to the best of our abilities the effects of Covid-19 on the economy. Important measures have already been taken to help the banking sector in supporting the economy. As this is a rapidly evolving situation, the social partners call on the public authorities to stand ready to take further action and use the necessary flexibility at their disposal to overcome the present difficulties.

Employees and employers in the European banking and insurance sectors, as well as insurance and financial intermediaries, are doing their utmost to offer essential services to the public within the limits imposed by public authorities, and will continue to do so throughout the crisis as best they can. The European social partners in the financial services sector thank all employees in the banking and insurance sectors who are working to alleviate the effects of this crisis.

Across the sector, all the European social partners agree that the health and safety of our employees, our customers and the general public are absolutely paramount, and that every effort and contribution should be made to help contain the spread and impact of Covid-19.

To this end:

  • All the actors in the European financial services sector follow strictly the recommendations and rules of public authorities and health agencies in relation to Covid-19.
  • Companies in the sector have organised for the vast majority of their employees to work remotely whenever and wherever possible to reduce their exposure to the virus and limit its spread.
  • The European social partners in the financial services sector ask for their customers’ forbearance when they are requested, in line with the public measures decided at national level, to limit physical visits to branches, agencies and offices as well as face-to-face meetings. All the actors in the sector have reorganised their operations to remain at the service of customers through telephone, email and other communication technologies and tools, or, when necessary and when allowed and always in line with the rules and guidance of public authorities and health agencies, through face-to-face contact.
  • During this Covid-19 crisis, all employees at their workplace, especially those who continue in their public-facing roles, need to be given appropriate protection in terms of both equipment and infrastructure on the basis of the relevant rules and guidance of the appropriate public authorities and health agencies, to minimise the risk of contagion as far as possible. This is in the best interests of customers and the general public.

Social Dialogue at all possible levels can provide a good context for finding suitable solutions for this exceptional situation and experience shows that it contributes to reach the high-level buy-in needed for successful implementation.

Europe must show responsibility, solidarity and efficiency in facing this emergency by protecting all its affected citizens, workers and businesses. The European social partners in the financial services sector remain committed to protecting companies and the employees in the banking and insurance sectors and supporting European citizens and economic activities to the best of their abilities during this extraordinary crisis period.

Signatories:

Michael Budolfsen President, UNI Europa Finance
​Jens Thau Chairman, EBF BCESA
Chris De Noose Managing Director, ESBG
Hervé Guider Managing Director, EACB
Andreas Brandstetter President, Insurance Europe
Grzegorz Buczkowski President, AMICE|Juan Ramón Plá Chairman, BIPAR

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Joint statement of the European Social Partners in the Banking and Insurance Sectors on the COVID-19 Emergency Crisis

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ESBG: Covid-19 statement

United efforts to overcome the crisis are indispensable.

The following text is a letter sent today by ESBG to EU policymakers. The letter includes an annex with proposals to consider as they further address financial sector issues brought on by the pandemic. See annex at bottom of page.

BRUSSELS, 25 March 2020​

Dear Madam, Dear Sir:

In 2020, banks will have to face their biggest challenge for many years due to Covid-19. The past decade since the crisis has seen major financial reforms, making banks safer, more stable, and more resilient in the face of shocks. But a health pandemic was not on the cards and banks need to work together with authorities to avoid any collapse in the economic system.

Our savings and retail banks are fully committed to supporting their customers when they are struggling – individuals, families, small and medium-sized companies (SMEs), institutions, young people, the elderly and society in general, in urban and also rural areas. We aim to figure out the best, sustainable solutions. Locally-rooted savings and retail banks have a crucial stabilising function in times of crisis with their infrastructure, contact management and continuous lending. They help SMEs and other companies overcome liquidity bottlenecks and provide stability. For this to succeed, everything possible should be done in regulatory and macroprudential terms to maintain the liquidity and credit supply.

What is most important is that the so-called “real economy” suffers as little as possible. In particular, SMEs are facing extraordinarily challenging times. They must not be left alone in this time of crisis. We welcome the very strong support measures offered in many countries to help them, as well as to larger, heavily affected industries, such as transport and tourism. It is clear that all stakeholders from the public and private sectors will need to work together to overcome this difficult period. Economic, financial, fiscal and social measures need to be designed and implemented as soon as possible. What is more, this is a moment in which European cooperation is of utmost importance. Europe needs to face the coronavirus crisis in a united and well-coordinated manner.

In the current coronavirus crisis, banks are an essential part of the solution, not the problem. ESBG members’ inclusive and socially-committed approach to banking is vital, and it will not change in challenging moments. Clients of savings and retail banks can continue to rely on their banks as partners that do their utmost to mitigate the effects of this crisis situation. Now more than ever, we will stand strong to provide confidence, comfort and trust when customers and communities need it most.

What has been done so far?

ESBG members welcome the initiatives being taken in Europe in order to support the economy at this difficult time. Actions such as reducing counter-cyclical buffers, enabling the use of capital and liquidity buffers, as well as fiscal and budgetary changes are part of the flexibility needed. We consider liquidity contributions and bridging loans from governments as indispensable right now. Help from the public side creates trust, supports companies in securing their existence and ensures employment and income for the people concerned. The more successful this is, the less need there will be for stabilisation of overall economic demand.

The ECB has already stated it will ease some regulatory requirements including the conditions for targeted longer-term refinancing operations (TLTRO), which is a great bank lending support to those affected most by the spread of the coronavirus. Furthermore, the ECB announced plans for extra asset purchases, which is another very useful measure to support the real economy (and the public sector). ESBG members also appreciate that the ECB Banking Supervision provides temporary capital and operational relief in reaction to coronavirus as well as additional flexibility regarding the treatment of non-performing loans to ensure banks can continue to fulfil their role to fund the real economy.

The European Supervisory Authorities have also taken commendable actions to help alleviate the immediate operational burden for banks, in particular the European Banking Authority’s decision to postpone the stress tests until 2021 will allow banks to focus on and ensure continuity of their core operations, including support for their customers.

Finally, we think that it is unavoidable that the EU spends money in order to increase the financial firepower. At its meeting mid-March, we understand that the 19 Eurozone members have decided fiscal measures of about 1% of the GDP for 2020 and the provision of liquidity facilities of at least 10% of the GDP to support the economy, which is a welcome step in the right direction.

All of this is much needed, in our opinion, and will help support economic activity, employment, and price stability. In an annex to this letter, we are sharing with you some additional measures which would be important to be implemented to help savings and retail banks fulfil their role in this economically challenging period.

​What happens next?

Regulatory authorities should question themselves if new regulatory requirements that are planned to be implemented in 2020-2022 are critical or if there is a possibility that they can be delayed by 1-2 years or more, depending on how the crisis further develops. This would allow supervised entities to focus on the coming challenges caused by the Covid-19 crisis and act accordingly (review strategies, adapting procedures, policies, maybe even IT systems, enforce controls) and creating enough flexibility within their workforce planning to act on foreseeable and non-foreseeable upcoming issues. Even if only a part of the upcoming regulation could be delayed this will certainly help banks, and other players, to focus their resources on critical immediate action.

What’s more, the current crisis is adding to many workloads and shifting priorities. ESBG member banks are currently focusing most of their resources on assuring a normal and smooth continuation of their activities, in order not to interrupt serving companies, in particular SMEs, and households. In order to respond adequately to public consultations currently under way by different authorities, such as the European Commission and the EBA, ESBG members call for prolonged deadlines in order to give us the time to carefully gather our feedback. This would help make sure authorities’ expectations in terms of quality and quantity will be met. In this context, we noted that the Basel Committee already announced that it would be suspending consultation on all policy initiatives and postponing all outstanding jurisdictional assessments for the time being. European institutions could take inspiration from this announcement.

Once the emergency is stable, it may be useful to carry out an impact assessment in order to see what measures should be taken to ensure that the global economy is still growing.

Together, it is possible to reduce the effects of Covid-19 on the economy. But measures need to be taken now, at the same time, instead of gradually. By acting immediately, we may manage to endure this crisis better than the one before. The economy must recover as quickly as possible after the pandemic. Capital levels and labour force potential must be maintained during the crisis. They form the basis for the economy’s recovery.

We remain at your disposal in case you would like to discuss these points in greater detail. It is of utmost importance that a good dialogue between public authorities as well as the industry is maintained in these challenging times. We look forward to seeing how different regions will continue to respond, and the impact it will have on financial stability, and we stand ready to help navigate through the crisis, supporting particularly the most vulnerable actors of the economy, such as SMEs and households.

Best regards,

​Helmut Schleweis
President, ESBG​​

​Chris De Noose
Managing Director, ESBG

Annex to the ESBG statement on Covid-19: United efforts to overcome the crisis are indispensable.

Savings and retail banks believe that some additional measures would be appropriate at this time, in order to give banks enough flexibility to continue supporting their customers. Some measures already taken need additional guidance and an extended scope to achieve its objective. Please find below a list of proposals:

ECB:

Regarding conditions established to have access to TLTRO III facilities, the benchmark period for the eligible net lending should be backdated to 1 March 2020 (instead of 1 April 2020 as it was announced). Many companies are already requesting credit lines during this month due to the Covid-19 crisis.

Increase multiplier for the 2-tiered interest rate of the over fulfilment of the Minimum Reserve requirement.

Introduce a Repo facility with QE investments with a tenor of at least 35 days (ideally on an evergreen basis).

Allow (in cooperation with the EBA) for an immediate non-deduction (capitalisation) of software assets (both purchased and developed internally) as foreseen in CRR 2 Article 36 (1) (b) in order to eliminate current disadvantages for the EU institutions in comparison with the USA institutions and to create and foster a level playing field;

Regarding the flexibility on asset quality assessment of loans under Covid-19 related public moratoria, we ask ECB to extend this flexibility to all moratoria given by banks to temporarily support solvent clients facing liquidity difficulties due to Covid-19 crisis.

Postponement of first impact of the ECB NPL Addendum (which should start in April) for one year and review of supervisory expectations affecting the stock of NPLs communicated to entities in the SREP letter.

Allow for a non-deduction of irrevocable payment commitments (IPCs) from own funds.

 

National level:

National competent authorities and national governments could significantly increase public default guarantees in order to back temporary emergency loans for companies hit by the coronavirus outbreak (like being short of cash due to sharp falls in sales) and to mitigate the effects of possible moratoria that may be established by the entities in the payment schedules of their clients (with special focus on SMEs and the self-employed); they could relax fiscal rules and coordinate fiscal action in Europe (also supported by the IMF) to avoid supply/demand shocks.

In cooperation with the ECB, measures of price stability must be foreseen because during this period prices of various products began to increase, having the potential to provoke an unjustified speculating panic to the detriment of consumers.

European Banking Authority (EBA):

EBA should promptly issue a waiver to EBA guidelines on definition of default to competent authorities on how to temporarily, in a clearly defined timeframe, wave prudential and, only if necessary, consumer protection regulation in order to:

  • avoid or limit adverse liquidity effects on European businesses and households;
  • secure the continuation of credit transmission by banks without major disruption to their prudential status;
  • secure the continuation of payment services;
  • allow banks to change the payment schedule of borrowers which are affected by the consequences of the COVID-19 (e.g. moratorium tool for instalment payments of sound borrowers) along with other exceptional measures deemed necessary to minimize the impact of COVID-19 on consumers (for instance, exceptional delay in payments in case consumers experience a disruption in their revenue stream);
  • ensure that these measures are available and put in place without an increase of costs and burden of distressed consumers. Taking inspiration on the EBA Guidelines on arrears and foreclosure (under the MCD), it would make sense that all measures have a neutral impact on credit institutions and borrowers;
  • facilitate the debt restructuring of firms which are in temporary distress but still economically viable;
  • set up clear expiration dates for the temporary measures aimed at stabilizing the financial system, and a plan for a return to compliance with current regulatory requirements, such as easing forbearance and NPL regulations.
  • advise national competent authorities that they should apply a pragmatic approach if due to the corona crisis banks can temporarily not cope with the given deadlines for supervisory reporting; the same should apply with regard to statistical reporting deadlines.
  • advise national competent authorities to take a pragmatic approach if due to the corona crisis large exposure limits are exceeded, especially in cases in which commitments are drawn to ensure liquidity

Later implementation of planned/currently consulted Guidelines (suspension by 6 months including delayed implementation timelines accordingly):

EBA draft guidelines on the treatment of structural FX under 352(2) of the CRR;

EBA draft guidelines on loan origination and monitoring.

Delayed implementation of the three reporting packages EBA 3.0, EBA 2.10 and EBA 2.9 (Changes to FINREP concerning non-performing and forborne exposures reporting, P&L and IFRS 16, Changes to LCR to align with the LCR amending Act and Changes to reporting requirements as specified in the ITS on supervisory benchmarking of internal models).

 

Resolution authorities:

The calendar for MREL compliance should be reviewed, taking into account the extreme volatility and rising risk aversion in the markets. This is particularly important for those cases in which MREL compliance was anticipated at the end of 2020, through the transitional agreements communicated individually to entities. The calendar established in BRRD 2 should also be extended beyond January 2024, especially the first binding milestone of January 2022 should be moved to 1 January 2024. These days the AT1 instruments are suffering a lot in the market due to their risk nature, and we fear that appetite on the markets for these instruments will significantly decrease.

Flexibility regarding the resolvability self-assessments, due in mid-2020, should be granted: As banks have to do the comprehensive resolvability assessment for the first time, endorsed by the management body, and due to limited technical work capabilities, priority setting and limited capabilities for external support, flexibility in deadlines and scope should be introduced.

Further proposals for the European level:
Application of parts of CRR II that were supposed to entre into force in December 2020 and that require significant implementation efforts should be postponed until the corona crisis is overcome, e.g. extended consolidation rules.

A temporary increase in exposures being subject to the derogation provided for in the NPL backstop regulation (CRR article 469a) must not cause the exposures to be included in the NPL backstop deductions, when the increase in exposures can be directly attributed to the consequences of Covid-19.

The implementation of the IFRS 9 accounting standard for the recognition of loan loss provisions should take into account the disruptive Covid-19 crisis as many banks are re-focusing their short-term priorities to ensure customer protection. In addition to this, a postponement of the implementation of definition of default seems appropriate in the current exceptional situation, as well. Given the current circumstances, the already very challenging deadline of 1 January 2021 appears overly optimistic. We have the opinion that a postponement of one year would be useful to both banks and supervisors to get ready to apply the new definition consistently across Europe. It is crucial that banks have enough room of manoeuvre to modify the payment schedule of the affected borrowers without affecting their accounting provisions nor its solvency (that is, avoiding the increase in non-performing assets that would derive from the current regulations). Such clarification is essential to the extent that IFRS 9 is a principle-based standard and the EBA Guidelines have become a key reference to determine the accounting judgments and policies that entities apply in the classification and assessment of credit risk.

The SRB should consider measures to reduce or defer this year’s contribution in light of the corona crisis to come to solvency discharges for banks.

We also propose to increase the percentage up to which institutions are entitled to provide their contribution in form of IPCs from the current 15% to 30% (50% would be legally possible). ​

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Savings and Retail Banks in Africa: Research Report 2019

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African banks must re-think business models to compete in the low-income market
Scale2Save research shows banks value efficiency, a digital offer, and customer-centric service, but must boost all in a fiercely competitive segment

BRUSSELS, 12 March 2020 – ​A new report released in March shows that financial service providers (FSPs) in Africa see value in serving low-income people but need to overhaul their business models in an increasingly cost-competitive environment. The report, “Savings and Retail Banking in Africa”, was released today by the Scale2Save programme, a partnership between WSBI and Mastercard Foundation to establish the viability of low-balance savings accounts in six African countries.

Low-income markets valued by banks surveyed

Based on survey data harvested from 37 FSPs in Africa, the report finds that they see low-income markets as more and more viable for their operations. Hosting about 12% of Africa’s retail bank accounts and 26% of accounts in countries covered by the survey, these providers are responding with new accounts, products, and fee structures. Their efforts to win new customers, however, too often fail to appeal, and accounts lapse into inactivity.

WSBI’s Weselina Angelow, who leads Scale2Save, said: “To reach low-income people better, FSPs must research markets, taking pains to find opportunities while grasping better what different market segments need and tailor products accordingly.”

“FSPs need to optimise processes and boost digitisation,” she added, “sometimes via partnerships which can help pare down operating costs. When banks transform themselves, a true opportunity takes hold as customers enjoy lower costs.”

The 2019 report builds on the 2018 edition and goes beyond the WSBI membership to a broader set of FSPs in more African markets. It also draws on a richer data set and includes case studies that highlight innovation, partnerships, and listening to people’s needs on the ground, thinking differently about how to serve them.

Banks’ prefered chanels: Mobile banking, roving agents

The latest data show the FSPs have a sharpened focus on customers, targeting different segments of people with tailored accounts and savings products. Respondents – both WSBI member and non-WSBI member banks – see many advantages to mobile banking. Non-members appear sanguine on deploying roving agents, the channel of choice to reach the unbanked, drive account growth, and put downward pressure on fees that cost-conscious customers shun.

The number of accounts offered by the 21 WSBI members surveyed surged 24% year on year. Meantime, the savings products tally jumped 27%. Despite this double-digit growth, disappointingly low account activity persists. Only 43% of transaction accounts are active. That measure falls to a mere 17% for mobile banking accounts.

Regulatory concerns: Know-Your-Customer, enabling innovation

A surprising 63% of WSBI respondents expressed concerns over regulation. Know-Your-Customer regulations, conceived to combat money-laundering and terrorism, are increasingly seen as a barrier to extending financial inclusion.

“Proportionate rule-making hugely matters,” said Weselina Angelow, “but appears inadequate to protect customers, provide value, and bolster outcomes. Beyond regulation that protects customers, authorities play a vital role to enable innovation and support – or even direct – broader and deeper access to financial services.”

​

Notes to editor:

About Scale2Save: Scale2Save is a partnership between WSBI and Mastercard Foundation to establish the viability of small-scale savings in six African countries. The six-year programme aims for 1 million more people banked in those countries through projects using innovative models. Learn more about Scale2Save online and @Scale2Save on Twitter.

About Mastercard Foundation: The Mastercard Foundation seeks a world where everyone has the opportunity to learn and prosper. The Foundation’s work is guided by its mission to advance learning and promote financial inclusion for people living in poverty. One of the largest foundations in the world, it works almost exclusively in Africa. It was created in 2006 by Mastercard International and operates independently under the governance of its own Board of Directors. The Foundation has offices in Toronto, Canada and in Kigali, Rwanda. Visit www.mastercardfdn.org for more information and to sign up for the Foundation’s newsletter. Follow the Foundation at @MastercardFdn on Twitter.

​About WSBI: The World Savings and Retail Banking Institute (WSBI) represents the interests of 6,760 savings and retail banks globally, with total assets of $16 trillion and serving some 1.7 billion customers in nearly 80 countries (as of 2018). Founded in 1924, the institute focuses on international regulatory issues that affect the savings and retail banking industry. WSBI supports the achievement of sustainable, inclusive, balanced growth and job creation, whether in industrialised or less developed countries. Learn more at www.wsbi-esbg.org.

​

Methodology: WSBI conducted primary research in a similar way to its study released last year, using the same survey questionnaire. WSBI surveyed the 31 WSBI members in Africa, and 21 responded. In addition, WSBI contacted banks within the Financial Sector Deepening/FinMark Trust network and received another 16 responses. Responses were provided by FSPs of varying types and sizes, and market positions. Any analyses of aggregated responses will tend to be influenced by the larger FSPs. Similarly, analyses dealing with responses “on average” will give greater significance to the smaller organisations. The number of respondents is not large enough to provide categorisations based on type of FSP (often related to size). This is an area where additional work in later studies could be worthwhile. The results from the survey should also not necessarily be interpreted as being indicative of the market, since they represent the views of the FSPs that responded to the survey. The respondents were not chosen at random, so the results only apply to the respondents. WSBI gathered demand-side information and insights from the Global Findex surveys for 2011, 2014 and 2017 and from FinScope surveys conducted in Africa in the past five years. The FinScope surveys are nationally representative consumer surveys covering all aspects of financial inclusion and issues that are pertinent to a particular country. These surveys stem from the original FinScope survey conducted in the early 2000s in South Africa by FinMark Trust. Apart from the WSBI surveys, researchers obtained additional supply-side indicators from the IMF Financial Access Survey. Market insights came from interviews with market facilitators in eight African countries. Authors consulted existing published research on the African low-value savings and transaction market, and relevant insights are shared in this report.

​

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Women matter: Local savings groups in Côte d'Ivoire

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Abidjan, Côte D'Ivoire, 8 March 2020:  ​Financial inclusion of women remains a major issue in places like Côte d'Ivoire. That's especially true when it comes to women's autonomy and their ability to “open up" within local communities.v

In Côte d’Ivoire, for example, people have limited and unsuitable access to conventional financial services. Data show 37% are banked in a financial institution, just 2% were able to borrow money from a formal institution, and 36% who have used loans from informal sources (source Findex).

Vulnerable women face an even starker reality. Financially excluded, living in extreme poverty in rural areas, they remain ill-informed about financial basics. That’s why it’s so important for women to be allowed to gain access to adequate banking services in a world where they oftentimes live in remote areas. Tackling this challenge requires long-term support where savings and the mobile service are nearby, especially among rural populations.

ADVANS sees a way. A leading international microfinance group with operations in nine countries, including Côte d’Ivoire, they look to strengthen the capacity of rural women to save, mobilise and manage their own resources, and to redistribute them by offering formal financial services.

Field agents deployed to boost inclusion
Field agents have a big task to boost inclusion and play a crucial role in the progressive empowerment of women living in rural areas excluded from formal banking systems.
ADVANS gets this. They deploy field agents in the West-African country. Present in Côte d’Ivoire since 2012 and working with cocoa communities, the microfinance institution has set up partnerships with international NGOs, which aim to promote banking access to women organised in village savings and credit associations (VSLA).

ADVANS strategy: A two-step process
ADVANS uses a two-stage process to widen access for women in the financial market:
Step 1 – NGOs come in and help create and formalise VSLAs, – village savings and loan associations – made up of 15 to 30 members. Known for being well organised, these VSLAs meet weekly and save regularly. Savings amassed are kept in a physical fund and then redistributed in credit form to finance income-generating activities (IGAs) or to deal with emergencies. ADVANS sees it as an improved form of tontine. The NGO’s mission is to follow these groups to maturity: a one-year period during which the group forms and follows along the “VSLA” methodology.
Step 2 – This is where ADVANS steps in. Once groups have been assessed as “fairly mature” by the non-governmental organisations, they are put in contact with ADVANS who then deploy trained field agents. Those agents ensure properly functioning financial inclusion by taking charge of financial education and products for VSLAs. More specifically training them on the use of their accounts and a digital mobile service. ADVANS has proved that their specific products and services offer are adapted to VSLAs.

ADVANS implements an innovative system that guarantees easy account access. This completely digital service allows people to make free deposits or withdrawals from their various savings accounts and in any zone.
Innovation working for women
ADVANS’ innovative project that helps women works for three reasons. First, because ADVANS’ efforts, built on partnerships with key players such as NGOs, form strong roots in rural communities. Second, their project capitalises on the links formed between people in the community and traditional savings practices, all while allowing the savings and group credit processes to be formalised and digitalised. Finally, ADVANS allows VSLAs members to secure and increase their savings, to enter the formal banking system and to be introduced to the use of digital financial services, by offering remunerated bank accounts. Members benefit from credit products preferable to informal credits, due to their lower interest rate and the access to a higher amount for a longer duration.

Results: Thousands enabled
Since the launch of the agricultural banking project in 2015, ADVANS enabled 14,400 members with VSLA to save more than € 183,200. Some 1,770 members obtained loans for a total of € 190,800. Between 80 to 85% of the VSLAs comprise women.
Lessons learned: Loans nudge savings, groups comprising mostly women out-save men-only groups
Loans encourage savings. VSLAs become more motivated to save via the mobile service when they know they will have access to credit. In addition, once the credit has been obtained, VSLAs tend to make ​more transactions on their savings account.
Groups comprised of mostly women save more than other mixed groups or those made up of men only. The empowerment of women who manage VSLAs also allows them to gain autonomy and leadership, and therefore allows them to fully participate in their family and community life.
When women are empowered to save, borrow and lead in groups, their world opens up and their lives become richer.

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Scale2Save

by Constantin