A journey in making small scale savings work
Apr 18, 2016
By the end of 2020, all 110 WSBI members set an ambitious plan. They aim to reach 1.7 billion customers and 400 million new transaction accounts by then. The work really kicks off this year, starting from a base level of 1.4 billion people who seek banking services from WSBI members every day. It's news in a way, but it's also part of an evergreen story - WSBI's longstanding commitment to provide an 'Account to Everyone'. Twenty-five focus countries under the Universal Financial Access (UFA) need to address this most. We've set out through our member savings and retails banks to tackle the issue of the unbanked and underserved in 17. Financial inclusion matters to an increasing number of players. With support of a sponsored Programme WSBI in 2008, wanted a fundamental question answered: what would it take to boost financial inclusion through the WSBI network of postal and savings banks? Driving WSBI's member support today to achieve the next set of UFA 2020 goals means taking lessons from this work on board. The WSBI Programme aimed to increase formal savings services for poor people at 10 WSBI member banks across the globe. Active accounts swelled within five years from 1.2 million in 2008 to 2.8 million in 2015 in six of ten selected countries generating deep insights into the drivers and barriers of account usage. Regular active account usage turned out to be much more difficult than first thought and account dormancy remained an elephant in the room. The core of the challenge was threefold: affordable pricing and low population densities put limits to the banks for providing a sustainable and accessible solution, plus there was a growing need to offer more convenient and intuitive services. Questions arose that demanded an answer. Two especially came to mind. 1. How do we add value to the way rural people already manage money informally? Linking formal banking to village groups and replication the way people already manage money emerged as the most successful route to meet rural peoples' financial needs and close the proximity gap in remote Eastern Africa. Most of the cash in East Africa stays in villages, in a lot of places money circulates just within one kilometer of people's home and work, a member of a group would save $5-10 per month. Linkage banking with village groups became an arena to capture these high turnarounds of financial transactions and nontrivial amounts of savings. WSBI member Postbank Uganda (PBU) adopted linkage banking in 2012: it linked its mobile banking platform not just to village groups but also to individual group members. PBU reaches out to 28,000 village groups so far. Without distorting the group model, PBU found a way to electronically replicate and link up with the group's existing savings and loan business. The result: a growing funding base and a threefold increase in PBU's active customer base. 2. How can segmentation of client data help us to predict people's' transactional behavior and address sustaining account activity after account opening? Having a shared meaning of what defines an active account is paramount. WSBI's definition was any account that transacted in the previous six months. The Global Findex data shows a third of all adults doing any kind of saving during one year right up the development spectrum. Could it therefore be that customer's desired savings behavior to save occurs in bursts of activity followed by a quiet period before starting again and how much time passes between these periods? WSBI member Kenya Post Office Savings Bank (KPOSB) developed an analytical model for the better understanding of the drivers of account activity. Together we looked at the periods when clients would normally reengage with the bank after a first contact has been made and whether getting messages out to clients by using local options could nudge their behaviour. Trust in financial services offered to the unbanked an underserved depends hugely on the ability of service providers to invest time and resources into continuously gaining insights into the financial lives of the poor and translate these into convenient services. This takes time and can be costly, and it makes small-scale savings work much easier said than done. It's a journey where learning is a continuous process. Our newly produced video report highlights what bumps and discoveries we have found along the way.