What a journey it has been!
Scale2Save Campaign
Micro savings, maximum impact.
By Weselina AngelowA basic account is a secure entry point for previously unbanked people to become financially more resilient. It also opens a whole world of opportunities – be it for investing in education for themselves or their children, or in growing their businesses.
In the words of one of the customers of a Scale2Save initiative, implemented in partnership with Centenary Bank:
“I got to know about CenteXpress account from my friend who helped me open the account. I learned about its benefits from my friend and I also
started opening accounts for other students (through the digital link feature)
I have greatly benefited from CenteXpress through the commissions that I have received for opening accounts for others. Further, my parents send me school tuition digitally via CenteXpress. I also use it to buy airtime. More importantly, it helps me save the little amounts that I can set aside from my tailoring business.”
Nakayima Magret, Student and tailor. Kikuubo, Masaka, Uganda.
Between 2016 and 2022 Scale2Save financially included more than 1.3 million women, young people and farmers in Kenya, Uganda, Nigeria, Morocco, Senegal and Côte d’Ivoire that helped us better understand – especially in the midst of a pandemic – how, when and why savings contribute to household wellbeing, financial resilience or (creating) business opportunities of or for the people served.
- Given that the majority of customers are low-income, investments in expanding, restarting, or opening a business can increase income quickly, thereby improving customers’ economic status and financial stability. On average, about 49% used their savings for investment purposes, and most of the time for business-related investments. Almost all financial service providers recorded use of savings for businesses purposes across nearly half of their customers who’d used their savings, 50% of them being male adults. Business investment was also common among adult women. This largely stems from the fact that certain partner FSPs purposely targeted female micro-entrepreneurs and encouraged them to save toward the purchase of a productive asset or another business-related goal. If small balance savings play such an important role for small businesses to sustain, how much more a loan attached to it can assure small business to grow and help create jobs? Something worth exploring going forward.
- Beyond business investments, approximately 20% of customers used their savings to cover household needs or to finance educational needs.
- 32% of customers across the target FSPs, indicated that they had experienced some type of shock since they opened their account. 65% of customers who reported experiencing one or multiple shocks indicated that they had used some of their savings to cope with these emergencies.
- Gender and age aspects matter hugely, but also location and income levels for driving inclusive savings. The research observed differences between ways in which young female customers and young male customers used their savings. Young males more frequently use their savings for business-related purposes, while young females more often use savings for consumption smoothing and for other household-related expenses.
12 unique business models tested
Scale2Save tested and explored 12 very unique business models with a broad range of financial services partners to prove the viability of low balance savings and understand how the institutional model affects the ability to serve the low-income market. Seven of these service partners being WSBI members of which three (BRAC Uganda Bank Limited, Finca Uganda, LAPO Microfinance Bank Nigeria) joined the WSBI family through Scale2Save.
- The variety of institutions created a whole world of experience that all worked towards the same goal: build partnerships and solutions that are intentional and simple but meet the needs of the specific customer segments they are serving.
- Sometime this journey was painful, accompanied by repeated trial and error, endless data segmentation and interpolation, all accompanied by an enormous agenda for cultural change to sensitize all value chain actors for what it takes to offer digital savings to low-income people.
- Here again, female preferences as for the type of information they wish to receive have to be taken into account. It was revealing to us that, across the board, product features seemed to matter less to women than information about channel features and fee structures followed by the need for personal touch points.
- Digital has been a game changer throughout and not just during COVID but needs to be handled with a gender lens and accompanied by human touch if it is to be successful. If a product worked for women, it equally tended to work for men.
- The local sales forces, roving agents, field officers, family & friends equipped with digital devices were incremental for creating the volumes of transactions and deposits needed for making the business case for small balance savings work.
- Financial education – in particular personal nudges – that take women needs and the digital gender gap into account are considered incremental for improving digital account usage.
Research
Scale2Save became a strong brand and a community of practice that conducted useful sector research, collaborated with a wide array of sector players and that facilitates disseminating the learnings amongst our members and strategic partners.
Our sector research
For four years in a row, The State of Savings and Retail Banking Sector Series that we put out in partnership with FinMark Trust shed light on innovative models, applied by the now 27 WSBI member institutions in 20 countries on the African continent, sometimes enriched with insights from other sector players such as MNOs, Fintechs, the national Financial Sector Deepening units, the most recent on the state of SME Finance and separately on Innovative Agric Platform models on the African continent.
Collaboration with sector players
- Jointly with Efina (the lead Financial Sector Development Organization in Nigeria) we piloted a customer segmentation tool that creates different customer personas and allows Nigerian financial sector players to define their pro-women or pro-youth financial outreach strategies and that has already generated interest from other financial markets.
- Together with Centenary Bank and Bank of Uganda (BoU)– the Central Bank – we tested the CGAP customer outcome framework. This framework could help Ugandan FSPs to assess how they meet customer needs around safety, convenience, fairness, voice and choice of services. It can also help the Ugandan and other central banks to assess how the sector meets the goals of its financial inclusion strategy.
- Insights from Scale2Save allowed us to participate in the European Microfinance Platform’s Action Group on better metrics for savings.
We now have a better understanding of the metrics that track high-level outcomes. This will help WSBI to better tell the story about the huge impact its network has to develop people, businesses and communities.
Ongoing dissemination of our learnings to the membership and the wider sector
Our national inclusion events with partners and ecosystem players in Lagos (Nigeria), in Kampala (Uganda) and our close out event in Paris (France) this year received overwhelming interest amongst a couple hundred sector players. In addition, Scale2Save will has put out more than 100 case studies, learning papers, industry reports and blog pieces over the course of its lifetime.
Scale2Save officially ended on 31 August and closed administratively over the course of October. The team however continues unpacking the learnings coming out of Scale2Save on women, youth and farmers, to highlight what drives their economic activity, empowerment and customer engagement, also with a view of continue contributing with learnings to WSBI member best practice exchange and to the ongoing conversation of industry players about financial services’ contribution to impact and wider outcome goals.
For the past six years, Scale2Save has highlighted our African members’ contribution to inclusive finance. Our aim is to have more members benefit from this experience and join our community of practice, which nurtures the role that WSBI members play. It has been a great pleasure to be part of this journey and we thank all our team members, partners institutions, consultants, researchers, national development bodies and policy makers as well as our sponsors the Mastercard Foundation for six years filled with learnings and excitement. We will continue sharing Scale2Save outcomes to keep the momentum alive and raise awareness of the power of the WSBI network.
About the author: Weselina Angelow is WSBI’s Scale2Save Programme Director.
Scale2Save
Call for clarification on the Artificial Intelligence Liability Directive
On 28 September, the European Commission published its proposal for the Artificial Intelligence Liability Directive which complements and modernises the EU civil liability framework by introducing for the first time rules specific to damages caused by AI systems.
The purpose is to lay down uniform rules in case of damages caused by AI systems and to establish broader protection for victims. The Directive is applicable to both individuals and businesses. The new rules will, for instance, make it easier to obtain compensation if someone has been discriminated against in a recruitment process involving AI technology.
It is proposed that five years after the entry into force of the AI Liability Directive, the Commission will assess the need for no-fault liability rules for AI-related claims if necessary.
Consequently, on 3 October, the Commission enabled relevant stakeholders to provide feedback on the proposed AI Liability Directive. All feedback to be received will be summarised by the Commission and presented to the Parliament and Council with the aim of feeding into the legislative debate.
As part of its mandate, ESBG replied to the Commission’s call for feedback on 2 December. In its response, ESBG supports the protection of consumers as well as adapting liability rules to the digital age, thereby setting out a framework for excellence and trust in AI.
However, ESBG understands from the proposed Directive that the presumption of a causal link in the case of fault is mainly a matter of “non-compliance of due diligence duties”. In this context, ESBG calls for clarification on what could be considered as non-compliance of due diligence duties. In particular, ESBG questions whether the presence of bias or discrimination could be considered a noncompliance of due diligence duties. Furthermore, clarification is necessary on what tools are available to providers and users of AI systems to refute the causal link.
Finally, as the AILD is a directive, members stress the importance to take the cultural and legal differences between member states into account when implementing. Different application across member states can lead to regulatory arbitrage where firms choose where to be domiciled according to the member states legislative application. Therefore, the directive should be aligned with the Rome I Regulation and the Rome II Regulation regarding the conflict of laws on the law applicable to non-contractual obligations.
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Call for clear scope of applicability of the Cyber Resilience Act
On 14 November, ESBG submitted its input to the European Commission’s call for feedback on the proposed Cyber Resilience Act, which was published in September. All feedback received will be summarised by the Commission and presented to the European Parliament and Council with the aim of feeding into the legislative debate.
On 15 September, the Commission published a proposal for a Cyber Resilience Act, which aims to protect consumers and businesses from products with inadequate security features. The Cyber Resilience Act introduces mandatory cybersecurity requirements for products with digital elements. It will ensure that digital products, such as wireless and wired products and software, are more secure for consumers across the EU. In addition to increasing the responsibility of manufacturers by obliging them to provide security support and software updates to address identified vulnerabilities, it will enable consumers to have sufficient information about the cybersecurity of the products they buy and use.
In the position paper, ESBG members welcome the Commission proposal and support the goal of only having secure software on the internal market. However, members believe that the Cyber Resilience Act leaves too much room for interpretation regarding its scope of applicability and therefore proposes that the Commission should make a clear scope-statement that would dissolve any uncertainty whether the software developed, operated, or marketed by financial institutions is in scope of this Act.
In addition, there are vertical initiatives that already regulate the cyber-resilience of hardware and software products used by certain sectors. This is the case of the Digital Operational Resilience Act (DORA) for the financial sector, a regulatory framework specifically designed and developed to ensure the digital operational resilience of the financial sector. Extending the scope of the Cyber Resilience Act to products manufactured by credit institutions may place additional burdens onto banks, on top of the already existing tight regulatory corset.
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Application of CGAP Customer Outcomes Framework in Uganda
Scale2Save Campaign
Micro savings, maximum impact.
The case study has applied the CGAP customer outcome indicator framework to test the impact of a new basic savings product positioned in the financial inclusion market and designed to encourage digital and/or remote account opening and transactions.
As a member of the WSBI and part of the Scale2Save program, a prominent retail bank volunteered this product for a case study.
The objective was to assess if the CGAP customer outcome indicator framework could be applied as a measuring tool to determine whether or not:
- The design, positioning, performance and management of the product are working as intended;
- The product is indeed improving the lives of target customers;
- The bank is contributing to Uganda’s Financial Inclusion goals.
The CGAP customer outcomes indicators are generated from supply-side data and can be used internally by providers to measure their levels of customer-centricity. The ultimate objective, however, is for the jurisdiction’s authorities to have a quantifiable, comparable and consistent way to:
- Detect which strategies, policies, practices, activities, products/services work for or against the customer;
- Assess the impact of financial services at a market level for all customer segments; and
- Determine if, and to what extent, providers in the sector are improving or detracting from national goals.
Since the focus of the Uganda case study is Financial Inclusion, focusing on savings, the jurisdiction-specific context was informed by the Bank of Uganda’s (BoU) Financial Inclusion Strategy, 2017. The five main strategic goals classified twenty gaps that the BoU had set out to address. These gaps were therefore used as the basis to map the global CGAP indicators to Uganda’s context.
Download the case study here
Scale2Save
Driving formal savings: What works for low-income women
Scale2Save Campaign
Micro savings, maximum impact.
Gender-inclusive products need to be designed with women’s needs in mind. Yet, the real question remains: What services do female customers value, prioritize and need? This learning paper aims to contribute to the growing evidence base around this topic, building on findings from a recent Scale2Save Customer Research.
While financial inclusion is expanding globally, the gender gap in access to financial services and products persists. To close the gender gap in financial inclusion and improve women’s meaningful use of financial services, there is a clear need for financial service providers to transition toward gender-aware strategies to build tailored products that create opportunities for women and lower barriers in their lives.
This paper found that by carefully crafting the customer experience for women, financial service providers considerably amplified the adoption of formal savings products, thus significantly expanding their customer base while also contributing to financial inclusion for a traditionally excluded customer segment, such as women.
Scale2Save is WSBI’s most recent programme for financial inclusion. It operated in six African countries.
Download Learning Paper Here
Scale2Save
The art of change
Scale2Save Campaign
Micro savings, maximum impact.
A practical approach to changing behaviors of financial service providers for more meaningful outreach to low-income people.
During six years of implementation, the Scale2Save programme for financial inclusion gathered significant learning on institutional transformation. This publication explores the leanings from change management processes within the programme’s partner financial service providers.
Is change possible without changing our behaviours and habits? No. Change is not possible without changing the way we do things. And this requires close accompaniment, trust, and energy.
This paper analyses the processes Scale2Save implemented with LAPO Microfinance Bank in Nigeria, ADVANS Côte d’Ivoire and BRAC Uganda Bank Limited.
Download Learning Paper Here
Scale2Save
ESBG welcomes EU Commission's legislative proposal on instant payments
BRUSSELS, 26 OCTOBER 2022. The European Savings and Retail Banking Group (ESBG) welcomes the European Commission’s legislative proposal on instant payments announced today. The ESBG hopes that the initiative will strengthen the efforts of savings and retail banks to make instant payments the new normal across the European Union.
Since its introduction, the ESBG has been supporting the development and roll out of instant payments, inter alia by encouraging its member banks to adhere on a voluntary basis to the European instant payments scheme (SCT Inst), one of the major building blocks of a future pan-European solution. Instant payments allow frictionless transfers within 10 seconds in all European countries and therefore support the ambition to strengthen the European sovereignty in the payments sector. However, the ESBG still considers that adherence should be measured in terms of number of accounts reached, rather than in terms of adhering banks and therefore stresses the importance of a more balanced approach in this respect. Nevertheless, we welcome that a differentiation has been made between banks within the euro area and banks within other EU member states when it comes to adhering to the scheme.
The ESBG especially welcomes the proposal’s attempt to streamline the approach to sanctions screening, for which it has been advocating as a key element to make instant payments effective while remaining safe.
“Relying on a daily client database screening, instead of forcing both the sending and the receiving bank to screen each and every cross-border transaction, will allow banks to offer pan-European innovative solutions while ensuring full compliance with AML/CTF rules and targeted financial sanctions regulations” said Fabrice Denèle, CEO BPCE Payment Services and Chair of the ESBG Payments Committee.
“I am very pleased to see that the suggestions put forward by the industry have been taken on board” he continued. “The ESBG was among the first associations to raise awareness on the topic to the political agenda and our regular talks with the European Central Bank have triggered the set-up of a Task Force on sanctions screening that in January 2022 delivered its report to policymakers. I am convinced that with this new approach the number of false positives will decrease drastically – hence increasing consumer trust”.
“ESBG member banks were already between the early adaptors of instant payments in euro”, said the association’s Head of Innovation and Payments, Diederik Bruggink.
“The first cross-border instant payment in euro took place between two ESBG member banks, notably between CaixaBank and Erste Bank, and also the first transaction in the European Central Bank’s instant settlement system TIPS was between to ESBG member banks, BPCE and CaixaBank”, he added.
The ESBG also welcomes the focus of the proposal on consumer protection, a long standing priority for all its member banks. It especially supports the decision to leave the concrete implementation of services known as Confirmation of Payee to the market, which demonstrates full trust in the ability of the industry to find the best solutions based on the specific needs of each Member State.
Finally, in taking note about the Commission’s position on the charging principles, the ESBG highlights that a long term sustainable business model benefiting all stakeholders is key not only to ensure the success of instant payments, but also to foster their innovative potential in the ecosystem.
Press contact:
Leticia Lozano, Senior Communications Adviser
leticialozano@wsbi-esbg.org
Tel. +32 2211 1196
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ESBG and EACB congratulate EU Commission’s Expert Group on its Open Finance report
BRUSSELS, 25 OCTOBER 2022. The European Savings and Retail Banking Group (ESBG) and the European Association of Co-operative Banks (EACB) congratulate the Expert Group on European financial data space of the European Commission on the finalisation of their Report on Open Finance, delivered yesterday to Commissioner Mairead McGuinness. The report provides an overview on the modalities for data sharing and reuse based on a specific number of illustrative use cases and describes the key components of an open finance ecosystem in the EU.
“Established in June 2021, the financial data space Expert Group provided advice and expertise to Directorate General for Financial Stability and Capital Markets Union (DG FISMA) in relation to the preparation of legislative proposals and policy initiatives to foster the establishment of a common financial data space in the EU. The EACB and ESBG were actively involved by working closely with their representatives within the Expert Group, namely: Juliana Pichler, Senior Manager for Group Regulatory Affairs & Data Governance at Raiffeisen Bank International; and Gilles Saint-Romain, Head of Digital European public affairs at Groupe BPCE.
Working with experts from different fields representing a broad range of stakeholders was an incredible learning experience” declared Juliana Pichler. “This report is very balanced and reflects the diversity of views between financial market participants, the outcome should help the reader to understand what is at stake and to make its own opinion.”
Gilles Saint-Romain stated: “We are convinced that a collaborative market driven approach allowing all EU economic actors to maximise innovation collectively is essential not only to have strong European market players in the lead of digital finance but also to bring more benefits to European customers”.
The ESBG and EACB believe that, for a data-driven economy to be successful, consumer protection and trust are the first prerequisite. A possible legal framework must avoid repeating the PSD2 model and instead be based on principles of mutual benefits, creating incentives for all market participants to join. The principle ‘same activity, same risks, same supervision, same rules’ should apply to all actors. This alone ensures a level playing field and a high level of consumer protection.
Building on the Report, the ESBG, EACB, and their members look forward to continuing the dialogue on open finance with the European Commission.
Press contact:
Leticia Lozano, Senior Communications Adviser
leticialozano@wsbi-esbg.org
Tel. +32 2211 1196
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Savings can make all the difference
Savings can make all the differenceWorld Savings Day 2022
Established on 31 October 1924 by the WSBI founding fathers as the ‘World Thrift Day’, the World Savings Day has been marked ever since.
This year, as in the past, WSBI launched an awareness raising campaign, much in harmony with similar actions conducted by saving banks across the world. All these efforts have the same goal: to encourage people to save for ‘a rainy day’. The central piece of the campaign is an animated silent video with a simple but powerful message to raise awareness on how ‘Savings can make all the difference’ in times of need. In other words, how savings play a key role to build financial resilience and be prepared to face difficult times in the future.
Ahorrar puede hacer toda la diferenciaDía Mundial del Ahorro 2022
Establecido el 31 de octubre de 1924 por los fundadores del Instituto Mundial de Cajas de Ahorro y de Bancos Minoristas (WSBI, por sus siglas en inglés), el Día Mundial del Ahorro se conmemora desde entonces año con año en la misma fecha.
En esta ocasión, el WSBI lanzó su tradicional campana, en armonía con otras numerosas acciones que los bancos minoritas y cajas de ahorro llevan a cabo para concientizar a la población sobre la importancia de ahorrar para un futuro ‘día lluvioso’. La pieza central es un video mudo animado con un mensaje simple pero poderoso: Ahorrar puede hacer toda la diferencia.
L’épargne peut faire toute la différenceJournée mondiale de l'épargne
Etabli le 31 octobre 1924 par les pères fondateurs de WSBI, la Journée mondiale de l’épargne est célébrée depuis son instauration.
Cette année, comme par le passé, WSBI a lancé une campagne de sensibilisation, en harmonie avec des actions similaires menées par les caisses d’épargne à travers le monde. Tous ces efforts ont le même objectif : encourager les gens à épargner en prévision des mauvais jours.
WSBI présente une campagne visant à sensibiliser sur la façon dont l’épargne peut faire toute la différence en cas de besoin. En d’autres termes, comment l’épargne peut jouer un rôle clé pour renforcer la résilience financière et se préparer à affronter des moments difficiles à l’avenir. Comme l’indique notre slogan de cette année : L’épargne peut faire toute la différence.
Le point central de la campagne est une vidéo muette animée destiné à un public international.
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Bank Asia Agent Banking: An Initiative to Reach the Unreached People for Better Financial Inclusion in Bangladesh
A number of banks have emerged with several technology driven innovative banking solutions to accelerate the national financial inclusion drive under prudent directives and support from the central bank (Bangladesh Bank) in Bangladesh. Bank Asia pioneered Agent Banking in 2014 for rural financial inclusion under the auspices of Bangladesh Bank. The bank is extending full range of banking services to the last mile citizens across the country.
Bank Asia’s Agent Banking with a vast network of more than 5000 agent outlets is reaching more than 5.1 million customers across 64 districts in Bangladesh. Bank Asia, alone represents more than 45% of total female customers in Agent Banking. It serves more than 2.0 million social safety net (SSN) beneficiaries through its Agent Banking.
Bank Asia’s agent outlets doubled over the past three years and it added more than 3.0 million customers over the past years of pandemic. It partnered with a2i to expand agent network through Union Digital Centre (UDC) and Bangladesh Post Office (BPO) under PPP model.
- Bank Asia owns more than 26% of total agent banking outlets across the industry
- 62% of its total agent banking customers are women.
- The agent banking pioneer ranked top in customer acquisition. More than 90% customers of its agent banking fall under the rural geography.
- Bank Asia is the only bank in Bangladesh who received grants from the Gates Foundation and MetLife Foundation to address the gender gap and financial health within the Low & moderate income group people.
Bank Asia’s unique ‘micro-branch ‘model to make the rural economy more vibrant
Bank Asia adopted its pioneering ‘micro-branch’ model in agent banking. Recently it expanded a sizeable network for its invention of ‘rural micro-merchant’ towards building a complete digital banking ecosystem for the rural economy. Agent banking, in contrast to other branchless banking, is largely driven by an exclusive specialized agent model. This could be due to initial investment requirements to set up an outlet: An outlet in agent banking is exclusive for Bank Asia and distinctly branded by various permanent marketing collaterals and point-of-sale materials (PoSMs). This requires 10-15 times higher investment than is needed for a typical mobile financial service (MFS) agent outlet. This model focuses on the three stakeholders bank itself, banking agents and customers.
In accordance with the central bank guidelines bank must maintain a minimum ratio of 3:1 for rural and urban agent banking outlets. Bank should prefer remote rural areas, chars, islands and other geographical areas with limited accessibility for establishing new agent banking outlets where there is no bank branch or agent point within a proximity of one kilometre (with an exception of agent on UDC).
Bank Asia has 3 categories of agent outlets 1. Individual 2. Union Digital Centre (UDC) 3. E-Post centres by Bangladesh Post Office. Individual outlets are run by the individual entrepreneurs whereas UDCs and e-post centres are run by the designated entrepreneurs assigned by the Local Government Division (LGD) and Bangladesh Post Office.
Bank has defined a fees, charges and commission structure for the agent banking services. Agents earn from the commission set by the bank for each services category.
Key customer value proposition
#1 providing banking access to the last-mile citizen
- Bank Asia has an agent outlet network of more than 5000 across the country. Approximately 80% of them are located in rural areas. Bank Asia reports that more than 5.0 million clients transact through its agent outlet network, which accounts for approximately 34% of the total market share among 29 players. Unbanked customers can open bank accounts at the agent outlets and make peer-to-peer transfers to other bank accounts and pay their utility bills including passport fees and other variety of payments. Currently, a significant proportion of Bangladeshis still don’t have access to mobile phones, while agent banking offering bio-metric based digital banking services without mobile phones or any device ownership dependency at customers end.
- The reliance on agent networks has its challenges as the provider must principally control quality and service. However, Bank Asia’s management strategy pivots on its careful selection of agents. They are primarily small business owners, fresh entrepreneurs and other institutional agents (like Union Digital Centre under a2i and e-post centers of Bangladesh Post Office) in rural areas. This allows Bank Asia to focus on their ability to manage their liquidity, community standing, trust, and operating hours. Bank Asia’s agents are also required to invest approximately BDT 0.5 million, which builds ownership and motivates them to keep customers happy.
#2 Greater convenience, ease of use and cost effective
- Rural customers can access Bank Asia agent outlets with greater ease when compared to a bank branch and other financial service outlets. Rural customers need to travel a maximum distance of no longer than two kilometres to reach a Bank Asia agent outlet, who provide the added advantage of operating beyond typical banking hours.
- Compared to USSD or mobile phone based financial services where simple cash-in transactions can require seven to eight menu screens and entering two to three number sequences, Bank Asia agent banking to run on bio-metric fingerprint and facial recognition system without any dependence of mobile phones at user end.
- Agent banking fees and charges are also affordable. It offers Free of Charge (FOC) cash withdrawal in compare to the alternatives in the market for OTC withdrawal from the mobile wallets which charges 1.80% (i.e. BDT20 per thousand as per market practice) of the withdrawal amount.
#3 Building trust in digital platforms
- Cybersecurity is a burning issue across the regions and Bangladesh isn’t an exception. In 2017, country’s mobile payments industry faced a huge challenge with the rise of ‘digital hundi’ due to some anomalies in customer KYC. Given that customer trust of digital platforms, and in particular financial transactions is already low, incidents like this do not bode well. And payment solution providers, who are relatively new supply-side actors in the financial services space, cannot afford any reputational risks.
- Bank Asia has invested in a multi-tier security system that is compliant with latest regulations and global standards for branchless banking. As an added security measure, Bank Asia uses bio-metric authentication through m-POS to confirm all transactions at an agent outlet. Customer KYC is also cross-checked with the Election Commission (EC) NID database. Bank Asia also introduced a robotics technology for inward remittance disbursement through its agent banking. This robotics technology has significantly minimized the human error and faster the process of disbursement.
#4 Capturing the mass-market; leveraging key use-cases
The last decade in Bangladesh has seen substantial progress in terms of key underlying drivers for digitising financial services, such as more reliable internet connectivity and increased smartphone penetration. The market is supported by favourable demographics, such as a relatively youthful population and increasing income levels, with the growing middle-class segment. However, while banking agent networks exist and are growing in Bangladesh.
A number of use cases which have differentiated Bank Asia Agent Banking from other alternatives in the market. Bank Asia has been focusing on the low and moderate income group people with a vision of greater financial inclusion through social safety net payments, inward remittance disbursement and loans for rural micro-entrepreneurs. The agent banking pioneer has already made noteworthy contribution through these use cases. Both inward remittance and loan disbursement through Agent Banking experienced a significant growth over the past two years of pandemic.
Lessons learned
- Almost 50% customers are women in agent banking, however only around 2-3% agents are women. Female customers feel more comfortable to deal with a female agent.
- Bank faces difficulties in finding suitable women agents who can meet the application criteria.
- Agent outlets may act as center of excellence for providing complete digital banking services (payments, purchase, transfer, savings and credit) to the rural citizens of the country.
- Public-private partnerships with Union Digital Centers by a2i under the ICT Division and Bangladesh Post Office helped to achieve some quick wins in customer acquisition and agent network expansion.
- Partnerships with government entities facilitate more prospective businesses for the bank within digital space.
- Agent banking is more cost-effective than any other digital financial services in Bangladesh. Higher transaction limit, cost and bio-metric security were the top three factors for users’ preference of agent banking over MFS.
- The range of service offering from agent banking is greater than mobile financial services (MFS) channel. Agent banking extends full range of banking services to the last mile citizens whereas MFS do serve only digital payments without any savings and loans products.
Transitioning customers from OTC money transfer to financial wellness
In Bangladesh, the OTC trend is very similar to other Asian mobile/e-money markets, such as Pakistan, Myanmar, Vietnam and Cambodia, where OTC transactions made up the vast majority of transactions and served as a significant accelerator in each market.
However, we should keep it in our mind that MFS agents offering Cash in and Cash out (CICO), money transfer and bill payments services do not essentially create access to formal savings, credit and insurance for the last mile deprived people.
Bank Asia Agent Banking has been serving the rural citizens through a right set of value chain ‘Payments, Purchase, Transfer, Savings and Credits”
By Jakirul Islam
Senior Vice President in Bank Asia Limited
