Innovative program provides unprecedented access to savings options that lay the groundwork for financial security
NEW YORK, NY—February 5, 2014 – The millions of people around the world without access to secure and reliable savings accounts are now one step closer to saving money consistently, a result of Gateway Financial Innovations for Savings (GAFIS), a four-year project of Rockefeller Philanthropy Advisors managed by Bankable Frontier Associates (BFA). The project, which is funded by the Bill & Melinda Gates Foundation, partnered with five leading financial institutions in Latin America, Africa, and Asia to develop viable banking solutions for unbanked and underbanked communities around the world.
According to the World Bank’s Global Financial Inclusion Database, more than 2.5 billion people around the world are unbanked, meaning they do not have a bank account at a formal financial institution. Access to financial services is linked to overcoming poverty, reducing income disparities, and facilitating economic growth. As a result of the project, the five partner banks have discovered, developed, and delivered new savings products that are sustainable, safe, and secure for the poor. The partner banks are: Bancolombia in Colombia, BANSEFI in Mexico, Equity Bank of Kenya, ICICI Bank in India, and Standard Bank of South Africa. The global, collaborative effort is in line with the beliefs of the Gates Foundation, which focuses on giving people the chance to lift themselves out of extreme poverty by increasing their access to financial services.
“Basic savings accounts are a cornerstone of building economic stability, and millions of people around the world don’t have access to secure options. We’ve supported the development of key resources that provide safe, dependable solutions for low-income consumers all over the world that cut across institutional, cultural, and lifestyle divides,” said Chris Page, Senior Vice President of Rockefeller Philanthropy Advisors. “We’ve found that it’s possible for large banks to provide solutions that are sustainable and affordable both for the institutions and for consumers. Funders can now make a life-changing impact on these communities by helping low-income consumers build an economic foundation through savings.”
The project provided new solutions and findings for banks, including:
- Partner banks introduced several new savings products designed for low-income segments.
- There are now five times more on-the-ground agents in these countries than physical branches, meaning consumers now have access to more convenient locations to sign up for and use savings accounts.
- While scaling the agent channel can be challenging, it is the biggest potential gateway by which banks can touch new low-income clients.
- By leveraging agents and mobile phone technologies, banks now have more economically feasible savings products for low-income consumers.
- GAFIS created a knowledge framework based on on-the-ground feedback from agents, banks, and consumers in each of these countries; this model will be useful when expanding these programs to other underbanked communities.
Across four of the countries, the project also gathered and analyzed a detailed view of consumers’ household budgets and cash flows for 6 to 12 months each, in records and stories called Financial Diaries. According to these records, poor households, despite their limited income, manage their money actively across a large number of formal and informal financial instruments. Those who previously used bank accounts primarily used them to receive payments instead of for long-term savings accumulation, and often use informal instruments for savings, which can be unsafe. A woman in South Africa found, “The bank is the best way (to save) as it doesn’t tell you stories when you need your money.”
“We’ve created and tested these models now in five different countries around the world, and have found that savings products for the poor are not only critical, they’re scalable and sustainable,” said David Porteous, Managing Director of BFA. “We’re looking forward to seeing how financial institutions around the world learn from GAFIS models, adapt to their communities, and help change the way the poor save. These changes are a critical stepping stone toward reversing negative trends like illiteracy and poverty, and ultimately helping enhance communities through financial stability.”
GAFIS employed a two-pronged approach that focused on both consumer and bank concerns, finding viable solutions that support the needs of both parties, thereby making low-income savings solutions more sustainable in the future.
For more information about GAFIS, please visit http://gafis.net/
About Rockefeller Philanthropy Advisors
Rockefeller Philanthropy Advisors (RPA) is a nonprofit organization that currently advises on and manages more than $200 million in annual giving by individuals, families, corporations, and major foundations. Continuing the Rockefeller family’s legacy of thoughtful, effective philanthropy, RPA remains at the forefront of philanthropic growth and innovation, with a diverse team led by experienced grantmakers with significant depth of knowledge across the spectrum of issue areas. Founded in 2002, RPA has grown into one of the world’s largest philanthropic service organizations and, as a whole, has facilitated more than $3 billion in grantmaking to nearly 70 countries. RPA also serves as a fiscal sponsor for more than 25 projects, providing governance, management and operational infrastructure to support their charitable purposes. For more information, please visit www.rockpa.org.
Bankable Frontier Associates LLC
Bankable Frontier Associations LLC (BFA) is a niche consulting firm that focuses on providing clients with high quality advice on strategy, policy and implementation of financial sector development in emerging markets. BFA has undertaken several projects for the Gates Foundation Financial Services for the Poor group in the past three years. Other BFA clients include a number of leading public agencies such as the World Bank Group and innovative private financial providers such as international NGOs, international banking groups and mobile network operators. BFA focuses on the questions and opportunities created by financial sector development, and it has completed assignments for clients based in Europe, Asia, Africa, the US and Latin America. With a core team based in Boston, MA (USA), BFA draws on expertise in specialist areas from a range of skilled associates across the globe. For more information, please visit http://bankablefrontier.com/
