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WSBI programme. to double savings accounts at members. WSBI General Assembly Berlin, 13 June 2013. Ian Radcliffe ( Programme Director). The Mass Retail Banking Market you should target are the unbanked poor and there are 2 ½ billion of them. ”.

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slide1

WSBI

programme

to double savings accounts at members

WSBI

General Assembly Berlin, 13 June 2013

Ian Radcliffe

(Programme Director)

slide2

The Mass Retail Banking Market you should target are the unbanked poor and there are 2½ billion of them

slide3

DoublingSavings Accounts – a world of experiences …

Al Barid

Bank

LienViet

Postbank

PT Bank

Tabungan

Negara

Postbanks:

Uganda,

Kenya,

Tanzania,

Lesotho,

S. Africa

Sonapost

Sistema

Fedecrédito

slide4

DoublingSavings Accounts – varyingunbankedpotential

Burkina Faso:

Onlyone-in-sixhouseholdsbanked

Indonesia:

140+ million

to bank

South Africa:

Onlyone-in-sixhouseholdsstillunbanked

Lesotho:

< 1 mnadults

unbanked

slide5

DoublingSavings Accounts – different levels of poverty

Morocco/El Salvador:

+/- 50% households free of poverty

Burkina Faso/Tanzania:

95% and more poor/

near-poor

slide6

KEY FINDING No1

Despite differences the poor/near-poor always dominate the unbanked

Best-off threecountries

(220 millionadults)

Poorestfourcountries

(78 millionadults)

slide7

KEY FINDING No1

Despite differences the poor/near-poor always dominate the unbanked

Best-off threecountries

(220 millionadults)

Poorestfourcountries

(78 millionadults)

slide8

KEY FINDING No1

What does allthismean?

  • In poorercountries:
  • The poor are (notsurprisingly) the massmiddle market
  • The extreme poordominate but there are still a lot of unbankedmoderately/near-poor
  • Andwithin the unbanked, poorhouseholdersdominate
  • In better off countries:
  • The moderately/nearpoornowabsolutelydominate the unbankedmassmiddle market
  • Unbankedhouseholds/householdersratherless significant
  • Because the biggestunbankedgroup are mostlyyoungthirdadultsstill living in the parental home
  • These need a specific marketing strategy
slide9

Populationprofilesandspending power defineaffordability

… and

everything

in between

Countrieswhere 80% of peoplereally do have <$1 tospend per dayand the average is $2

Countrieswhere half the population is off the scaleand the average is $16

slide10

How much the poor have tospendvarieshugelyby country

… Whereas in better off countries it means having +/- $2-3 per day

In poorercountriesbeingpoorcanmean living on +/- 75 actual cents per day …

slide11

How much the poor have tospendvarieshugelyby country

We can now start

togeneralise the framework

slide12

KEY FINDING No2

The affordabilityenvelopeeases in

better-off countries but it stays tight

  • The challenge is how to cover the cost of +/- 5 transactions per month within this envelope
slide13

KEY FINDING No2

What does allthismean?

  • In poorercountries:
  • What the target poor/near-poormightapparently have tospend on fees per month is a day’s living forsomeone
  • In many cases this is goingto have tobe shared withother financial service suppliers (mobile operators, informal, etc.)
  • A safer assumptionwouldbetothink of +/- 60 cents in a monthto do two or three transactions andbuildfromthis
  • In better off countries:
  • The affordabilityenvelopeeasesand the experience of payingforformal financial services grows
  • The key point is to load charges on transactions the client expects to pay for and get charges off saving
  • A safe assumptionwouldbe a dollar a month
slide14

Fitting resources to the market – networkstrategy

  • There is a variety of ways of meeting the proximity challenge
  • Branches and vans need catchments of 50 – 100.000 people depending on the level of competition
  • Single teller kiosks work in smaller towns with populations of about 10.000
  • Agent models work in rural centres with populations of as little as 5.000

But how many locations are there with this sort of population within a 2km walking distance?

slide15

KEY FINDING No3

Getting a real ruralreachmaybebeyondus

in Africa/Asia without a mobile money tie-up

East Africa

High level mapping of cities/towns/

larger clusters

GIS analysis allowsustosee ‘people clusters’ andhowmanylocationsthere are at scale.

It is surprisinghowquicklysettlementdensityfalls below the level neededto have 5000 people living within 2km of a possible agent location.

slide16

KEY FINDING No3

Getting a real ruralreachmaybebeyondus

in Africa/Asia without a mobile money tie-up

East Africa

High level mapping of cities/towns/

larger clusters

GIS analysis allowsustosee ‘people clusters’ andhowmanylocationsthere are at scale.

We think mobile money reaches further out as people will easily walk 5km to pick-up/send a transfer that typically equals a week’s living.

slide17

KEY FINDING No3

Getting a real ruralreachmaybebeyondus

in Africa/Asia without a mobile money tie-up

Kenya

41 mnspop’n mid-2010

GIS analysis allowsustosee ‘people clusters’ andhowmanylocationsthere are at scale.

In Kenya the cut-off where clusters stop having the scale to take a bank agency comes after +/-1000 locations containing about half the total population.

slide18

KEY FINDING No3

Getting a real ruralreachmaybebeyondus

in Africa/Asia without a mobile money tie-up

Tanzania

45 mnspop’n 2010

GIS analysis allowsustosee ‘people clusters’ andhowmanylocationsthere are at scale.

In Tanzania the cut-off comes after only a 200~300 locations that capture only a quarter of the whole population  parts of rural Vietnam look very similar.

slide19

KEY FINDING No3

Getting a real ruralreachmaybebeyondus

in Africa/Asia without a mobile money tie-up

Vietnam

87 mnspop’n mid-2010

GIS analysis allowsustosee ‘people clusters’ andhowmanylocationsthere are at scale.

In Tanzania the cut-off comes after only a 200~300 locations that capture only a quarter of the whole population  parts of rural Vietnam look very similar.

slide20

KEY FINDING No3

What does allthismean?

  • In poorercountries:
  • In countrieswithdispersedruralpopulationsthere is no sustainable ‘own-agent’ solution toreaching the ruralpoor
  • Paying mobile money operators to collect ruraldepositsandnotcharging the customer forthis is the next step
  • In veryruralcountriesthis is probably the only way toreach more than a quarter of the unbankedpopulation
  • In better off countries:
  • 60 cents a month in poorercountriespaysfor IT and five minutes of teller time – justenoughfor 2-3 counter op’s
  • But thisonlyworksforbankswithactive customer bases of a million-plus, eachtransacting 2-3 times a month
  • Alsojustenoughfor 2-3 agent/m-money op’s
slide21

What do these threekeyfindingsmeanfor the Marrakechdeclaration

… most adults without an account in most countries will generally be poor/near-poor, most will be rural and many of them will be young adults (15~24) in the parental home …

… what this market can afford is very tight compared to historic tariffs but affordable pricing can be sustainable provided staff/ systems productivity is forced up …

… the relatively urbanised poor can be reached affordably, just, with our own network solutions but we will only ever reach the unbanked rural poor as well as mobile money does by partnering with mobile operators

slide22

WSBI

General Assembly Berlin, 13 June 2013

Ian Radcliffe

(Programme Director)