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> Posted by Hannah Henderson, Principal Director, Communications, Accion
The Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.
In the United States, online banking has become the norm for many, with over 63 percent of U.S. households now using online financial services.* I recall ING Direct putting branchless banking on my personal finance radar back in September 2000 with its do-it-yourself, low overhead, higher interest bearing online savings account. Just the other day, I read about a new online banking platform called Simple, which bills itself as a “worry-free alternative to traditional banking.” Simple is a purely transactional web-based platform that partners with The Bancorp Bank where customer funds are held.
The concept that banking could be simple, or better yet, worry-free, seemed a remote possibility not so long ago. In my own experience, I’ve found relative simplicity in online banking but my personal finances are far from worry-free. These days, I can easily move funds between my savings and checking accounts—even though they are with different banks. I can pay all of my bills online and keep an eye on my balance in real time. My mobile phone allows me to stay on top of my bills even when I am traveling. And my credit score only stands to gain as my auto-paid recurring bills no longer rely on my memory to be processed on time. What do I worry about? Cash flow, fees, and trying to get to the bank or ATM when I need to deposit or withdraw cash. I am fortunate to rarely worry about safety—but I live in a virtually crime-free neighborhood.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
Opening a new bank branch is expensive. It requires a substantive up-front investment, and to stay open, the institution has to maintain an ample volume of business. This poses a challenge when trying to reach the financially excluded – many of whom live in relatively remote rural areas, and many of whom don’t have financial needs that draw a high volume of banking transactions. Mobile money is one way to mitigate this cost of bricks and mortar. But it is not the only way.
In pursuing financial inclusion, more and more countries are turning to the post office to offer on-the-spot financial services. Using this preexisting network, financial institutions are teaming up with postal services, outfitting the post offices so that they can conduct financial transactions, and training postal employees. Post office banking is only one variation of agent banking, which is increasingly practiced around the world, turning supermarkets, convenience stores, pharmaceutical retailers, and even lottery outlets into banking outlets.
It was just announced that Airtel – the second largest mobile phone provider in Madagascar – is expanding mobile money services to 170 post offices throughout Madagascar. Previously, clients’ deposits, withdrawals, and payments could only be made at Airtel and Bank of Africa locations. Only five percent of people in Madagascar have formal bank accounts.
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