Extension of banking services to the unbanked and underserved communities through the postal network

1. Extension of banking services to the unbanked and underserved communities through the postal network Mamadou Saïdou DIALLO Advisor Africa Ouaga, Feb 8, 2011

2. Agenda • WSBI • Why non inclusive financial systems? • How to advance financial inclusion? • What role for Postal Financial Services? • Examples of WSBI members

3. The World Savings Banks Institute (WSBI) International savings and retail banking association 111 members in 90 countries Africa (37 in 31), Asia (22 in 16), America (16 in 13), Europe (36 in 30) 3Rs : Retail, Regional and Responsible Advocacy, Consultancy and Training, Business Cooperation services Sister organization: European Savings Banks Group (ESBG) (25 members in 25 countries)

4. WSBI Membership in Africa • Majority of Postal Financial Institutions • Strong focus on savings

5. Why non inclusive financial systems? • Supply side • Outreach: low density areas and low income populations not attractive and financially sustainable • Regulation: frameworks not always adapted to local contexts • Providers: limited number and type of financial providers • Services: non adapted products and services to low income populations and the informal economy • Demand side • Lack of trust in formal banking institutions • Lack of knowledge/understanding of financial products • Cultural and religious obstacles

6. How to advance Financial inclusion? (1/3) Policy & regulation (1/2) Political momentum at international level: « Mutually reinforcing objectives of financial stability, financial integrity, financial inclusion and consumer protection » G20, Toronto and Seoul 2010 Summits. Financial inclusion should rank high on policymakers agenda at national level Proportionate rules and regulations to reach underserved groups should be established Stakeholders at national level should coordinate their efforts: financial/banking, government, social development and education

7. How to advance Financial inclusion? (2/3) Policy & regulation (2/2) Level playing field should be established to encourage the pluralism of the banking system Innovative approaches in products and channels should be supported Consumer protection should be ensured: Savings: all deposit taking institutions should fall under some minimum prudential requirements Credit: Over-indebtedness must be avoided credit bureaus, transparency, etc. Financial education should be enhanced

8. How to advance Financial inclusion? (3/3) Products and services Range: savings, loans, insurance, payments, remittances Usability: flexible to adapt to non regular incomes, small/scarce amounts, and to customers’ activities Affordability: Pricing should be fair for clients and sustainable for institutions Accessibility: Closest possible to customers  agency banking, mobile phone banking, ATMs mini or mobile branches, etc. right type of outlet for the targeted segment Appropriate partnerships to leverage on core strengths

9. What role for Postal Financial Services? (1/5) Positioning Banks Microfinance Mobile phone operators Semi-formal/ Informal financial systems

10. What role for Postal Financial Services? (2/5) Challenges Restrictive legislations that prohibit certain businesses (lending, foreign exchange, international business, etc.) Restrictive access to national payment systems Limited ICT infrastructures Limited automation of business processes Complex relationship with the Post Office

11. What role for Postal Financial Services? (3/5) Reforms (1/2) In the framework of a broad reform agenda of the Post Ring-fencing financially (and legally) between Post and Postal Financial Services Enhancing corporate governance : Independent Management and Board Management and Board members with Banking experience Supervision by Banking authorities

12. What role for Postal Financial Services? (4/5) Reforms (2/2) ‘Savings’ and ‘Payments’ units should be managed under the same operational unit. Access to financial infrastructures (ex. payment systems) should be granted in the same conditions as to other banks Introduction of a commercial culture Setting up of appropriate incentives for Post agents Staff training efforts

13. What role for Postal Financial Services? (5/5) Way forward Bring the institutional reform on the agenda Invest in ICT infrastructure Streamline business processes Invest in staff training and marketing Build successful partnerships with institutions that have complementary skills and strengths (Microfinance institutions, Mobile network operators, commercial banks, etc.)  WSBI-AUC joint study

14. Examples of WSBI members Gates Foundation facility to double the number of savings accounts opened with the poor: 7 African Postal Financial Institutions : Burkina Faso, Morocco, Kenya, Tanzania, Uganda, Lesotho, South Africa ICT infrastructure Business process re-engineering Products and services re-engineering  pro-poor products Marketing Banking beyond branches

15. For more information: savings-banks.com THANK YOU! Mamadou Saïdou DIALLOWorld Savings Banks Institutemamadou.diallo@savings-banks.com+ 32 2 211 11 32