Banks today are well positioned to unlock the potential of inclusive financial services and make the most of the opportunities offered by emerging economies.
Three key market drivers are compelling banks to rethink their position:
Economies in developing countries are growing rapidly and becoming more efficient. India is expected to experience
7 percent growth by 2017—the fastest among the world’s 50 largest economies, according to World Bank projections.
Digital technology is enabling new forms of access to financial services and value propositions with lower transaction costs. It is catalyzing regulators and policymakers to encourage and, in some countries, mandate banks to address unbanked consumers.
There is no status quo. Hungry bank and nonbank competitors who recognize the unprecedented opportunity are already moving to capture the unbanked market. Mainstream banks in many countries are already under considerable threat from mobile network operators (MNOs), such as MPesa in Kenya, that provide mobile wallets.
To help banks better understand the challenges, strategies and capabilities associated with financial inclusion, Accenture Development Partnerships and CARE International have jointly identified key insights on how banks can grow profitably by being more inclusive.
Accenture Development Partnerships and CARE International examined the capabilities and strategies of 30 leading banks across 12 emerging economies to diagnose how banks can best meet the financial needs of unbanked consumers:
23 percent are aligning their strategies to financial inclusion and creating commercially sustainable business models.
20 percent are focused on philanthropic or corporate social responsibility (CSR) initiatives, desiring to be seen as good corporate citizens, with limited investment outside their core business.
17 percent are regulations-driven, complying with government requirements to serve low-income customers
40 percent are driven by short-term profits, focusing on commercial opportunities in specific financial inclusion segments.
The capability assessment results show that very few banks consistently lead across all areas. However, some are excelling in particular capabilities, which indicates that banks can achieve changes across their business to extend their products and services inclusively and profitably.
Banks can refine their strategy to become more inclusive by embracing these six steps:
Invest now or be left behind. Develop a clear strategy that targets specific segments of the unbanked market, while capitalizing on investments already made
Define segments at more granular levels. Expand the target mix to include highpotential segments, such as women, youth and micro-businesses.
Start with entry-level payments and savings, then extend to credit. Use mobile payment services and develop entry-level products to usher unbanked consumer groups.
Use savings and loan groups to reach low-income customers. These groups enable individuals to save and borrow small amounts of money while building financial assets, skills and a track record.
Balance investment between physical and digital channel capabilities. Adopt an omnichannel distribution model where more transactions occur outside the branch.
Capitalize on enterprise innovation. Data and analytics, supportive operating structure, digitization of operations and using technology for risk management are basics of an effective financial inclusion strategy.