How banks in Emerging Economies can grow profitably by being more inclusive: CARE’s Report Sharing Event
15 March, 2016
CARE Bangladesh and Bangladesh Institute for Bank Management (BIBM) jointly organized a Global Financial Inclusion Report Sharing event on March 15th, Tuesday from 10 AM to 1 PM at the BIBM Auditorium in Mirpur, Dhaka.
At the event, Mr. Gerry Boyle, Senior Policy Advisor CARE International UK presented findings from a global research report titled, ‘Within Reach: How banks in emerging economies can grow profitably by being more inclusive’. Research was conducted by CARE International and Accenture Development Partners to study the current financial inclusion capabilities and strategies of 30 leading banks across 12 developing and emerging countries.
Director General of BIBM Dr. Toufic A. Choudhury presided over the event as Chair and Moderator, while Ms Jamie Terzi, Country Director CARE Bangladesh attended as Special Guest, and Mr. Sukamal Sinha Choudhury, Faculty Consultant, BIBM and Bangladesh Bank provided the Vote of Thanks.
Around 50 participants comprising CARE and BIBM officials, Heads of Financial Inclusion of commercial representative’s banks, members of the donor community, senior academics, social entrepreneurs, and industry attended this important event.
In her opening remarks Ms Jamie Terzi said ` Why we care about financial inclusion? In the recent years, the numbers of the unbanked have declined by 500 million, yet there are still two billion people without access to formal financial services. And this number is substantially larger if those who have financial accounts but don’t use them are taken into account. The broad numbers also mask wide disparities in access between regions, countries, income groups, and for subsets of populations that are often excluded, particularly women. Even as the overall numbers of the unbanked have declined, the gender gap between women and men who are banked has remained fixed.
Dr. Toufic A. Choudhury, in his event inauguration speech he said `I would like to congratulate CARE Bangladesh and BIBM for jointly organizing this important event on Financial Inclusion, which features findings from a Global Report released on November 5, 2015; titled, ‘Within Reach: How banks in emerging economies can grow profitably by being more inclusive’.
To the best of my knowledge this important global research, conducted by CARE International and Accenture Development Partners, studies the current capabilities and strategies of 30 leading banks across 12 developing and emerging countries. The outcome of this important study offers insights on how banks can best meet the financial needs of underbanked consumers in developing nations.
During a time when the World Bank’s 2014 Global Financial Inclusion Database shows that the number of people worldwide having an account grew by 700 million between 2011 and 2014, yet 2 billion adults still remain unbanked, I think the content of the report to be presented today, will provide us all with valuable insight on understanding the nuances of the most important strategies that can influence financial inclusion and profitability.
Mr. Gerry Boyle, in his presentation highlighted the state of Financial Inclusion in 12 countries around the world and offered 6 key insights on how banks can best meet the financial needs of underbanked consumers in developing nations. These are:
• Invest now or be left behind.
• Get the products right by taking a new view on customer segments.
• Start with payments and savings, then consider extending to credit.
• Use savings and loan groups as an entry strategy.
• Find the right balance between physical and digital channel capabilities.
• Align the operating model to a financial inclusion strategy
Following the keynote presentation, an interactive discussion session was moderated by the DG of BIBM, in which commercial banks working in financial inclusion, entrepreneurs, and industry stakeholders made the following main observations:
1. Reasons for financial exclusion typically include lack of assets, lack of financial literacy, little or no credit history, little or no loans, and the like;
2. Commercial banks are better off adopting a long term business and investment strategy regarding financial inclusion;
3. Banks also need to account for the fact that with time, a vast cross section of Bangladesh’s population, potentially hundreds of millions of people will become gradually become financially empowered, with more money in their hands, and thus serve as a tremendously profitable market;
4. One major problem commercial banks face in becoming inclusive is high costs of operations incurred due to large volume of transactions, large number of loan products, large number of customers to be managed, at the Base of the Pyramid – this in turn results in higher interest rate and collateral requirements;
5. Strategic alliances between banks, government, NGOs, and businesses can potentially reduce these operating costs by making loanees more business and investment ready, and through instruments like credit guarantee schemes;
6. Another instrumental way of lowering operating costs is through targeted investments in digitization of banks’ operations at the BoP, and use of Big Data;
7. Building the Financial literacy capacities of a vast majority of people who are unbanked and underbanks is imperative to the cause of financial inclusion;
Mr. Sukamal Sinha Choudhury provided a vote of thanks to the distinguished guest, participants and organizers for coming together to make for an intriguing day of learning in the challenging area of growing profitably through financial inclusion.
CARE is a leading international humanitarian organization fighting global poverty and injustice, with a special focus on working with women and girls. Founded in 1949, CARE Bangladesh is one of CARE’s oldest and largest country offices.
Placing women and girls at the centre of our work enables us to tackle the root causes of poverty and inequity amongst Bangladesh’s rural and urban populations. Working with over 100 partners and reaching millions of beneficiaries, CARE Bangladesh creates lasting change by strengthening marginalized, excluded and extremely poor communities, building their resilience to shocks and amplifying their voices to influence governance, public policy, and development planning and practices. We work with the government, civil society and the private sector to implement a holistic program that encompasses livelihoods and household security, health and hygiene, nutrition, governance, small enterprise development, disaster and climate risk reduction and emergency response. This is underpinned by the empowerment of women and girls, because when they are equipped with the proper resources, they have the power to lift whole families and communities out of poverty. To learn more, visit www.carebangladesh.org.
Saif M M Islam, Private Sector Engagement Coordinator, office: +880-2-9112315, +880-2-9119294 Extension: 333, Cell: +8801751711949 Email: email@example.com