>Posted by Anita Gardeva

American Banker

In an op-ed in yesterday’s American Banker, Elisabeth Rhyne, managing director of the Center for Financial Inclusion at ACCION, highlights the importance of innovative financial products and delivery methods that are tailored to the needs of clients.  Creativity and simplicity are the keys to opening the door to financial access for the poor.

“The first lesson for any financial service designer for the so-called base-of-the-pyramid market is that products for low-income people are not just scaled-down versions of products for the middle class.  To assume that they are might be called the subprime fallacy.”  With examples from countries around the world, Ms. Rhyne highlights successful innovations in providing financial services to the poor that are creative, yet simple, in their adaptation to the market’s local dynamics.  “Only simple products can be delivered at affordable prices to low-income people.  At the same time, simplified products must incorporate risk reduction in creative ways.”  Ms. Rhyne also points out that providers who are able to rethink the nature of banking have the potential to generate benefits for both their clients and their businesses.

The article, which is adapted from Ms. Rhyne’s latest book, Microfinance for Investors and Bankers: Understanding the Opportunities and Challenges at the Bottom of the Pyramid, is available on the American Banker website.  Access is password-protected but free trials are available. To read the book’s chapter from which the article was adapted, click here.