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Within Reach report: Banks have a $380 billion market opportunity in financial inclusion

by Gerry Boyle 04th Nov 2015

The front cover and one of the illustrations from the Within Reach report

Within Reach, a new report launched on 5 November by CARE and Accenture, the global consulting firm, sets out how banks in emerging economies can grow profitably by being inclusive. At CARE we know that providing access to basic formal bank accounts has a transformative effect for those living in poverty, especially women. Decades of working in this area has proven that even the poorest, those living on less than $2, can save and become viable customers. We believe that this report shows that financial inclusion can also be a viable business strategy.

Until now, supporting financial inclusion has tended to not be viewed as a viable business plan for banks, as shown by our research finding that 77 percent of the 30 banks surveyed for the report were focused on short-term profit-driven commercial opportunities in a piecemeal manner, or were driven by philanthropic ambitions, the corporate social responsibility agenda or regulatory pressures. Only 23 percent of banks surveyed had financial inclusion as part of a coherent corporate strategy leading to long-term, sustainable investment plans to develop inclusive business models.

“The traditional view has been that banking the unbanked and underbanked tended to be low-end, unprofitable and philanthropic,” says Simon Whitehouse, a senior managing director in Accenture’s Financial Services Operating Group. “But new business models, enabled by digital technologies, are helping banks write a new rulebook for what is possible.”

The report outlines strategies for addressing the market opportunity estimated at $380 billion: according to Accenture research quoted in the report, closing the small-business credit gap at average lending spreads and adding fee-based services could generate about $270 billion in additional revenue for banks, while including unbanked adults into the formal financial system could generate another $110 billion.

To make financial inclusion viable, the report advises banks could:

Simplify existing products and use digital-enabling solutions

NMB Tanzania created an entry-level savings account, targeting Tanzania’s unbanked population through an agent banking model. Agents are equipped with smartphones and point-of-service devices that enable fast account opening (in under 10 minutes) and instant, branch-free transactions.

Be willing to partner with alternative providers

Fidelity Bank, Visa, telecoms company MTN and CARE International work together with support from FSD Africa to enable community savings groups in Ghana to open and operate a Fidelity Bank Smart Account without visiting a bank branch. Opening accounts is entirely digital and can happen in less than five minutes. Group members can access their account through an MTN mobile money wallet.

Join forces with the development sector

NGOs can provide access to savings groups; support development of suitable responsible products and services; and provide access to the mobile wallets and agent networks that can help overcome issues of remoteness. In Uganda, Barclays partnered with the Grameen Foundation and Airtel to develop a mobile product, called eKeys, which links a savings group’s mobile money wallet to a Barclays savings account. By visiting any of Airtel’s nearly 30,000 mobile money agents, the savings groups are able to make a deposit or withdraw funds from their bank account anytime, anywhere.

Use digital to drive efficiencies

Commercial Bank of Africa teamed with Safaricom to launch its M-Shwari mobile banking service. The M-Shwari account-opening process is initiated remotely by the customer, then fulfilled electronically using automated processes to verify know-your-customer information in a few seconds. Tapping into Safaricom’s mobile phone registration data eliminates the need for the bank to conduct additional checks. Customer transactions are 100 percent straight-through, allowing the platform to be supported with only seven back-office and IT staff.

The report is available for download here, and I will be featuring its key findings in a series of blogs here on Insights.

Gerry Boyle

Gerry led CARE International UK’s policy analysis and advocacy around value chains and dignified work. He originally joined CARE as the Senior Policy Adviser on Private Sector Engagement. With the advent of our new Global Programme Strategy which put a particular emphasis on women’s economic empowerment, his focus changed a little.

Gerry co-chaired the Bond Private Sector Working Group. Immediately before he joined CARE he worked for Oxfam as Head of Business Relations for about three years, but the vast majority of his career was spent as a management consultant including being a consulting Partner at Deloitte, where for a time he led Deloitte UK’s Consumer Business consulting practice, serving many major multinationals. Gerry's original degree was in Law from Oxford University, and in 2008 when he left Deloitte he did an MSc in Philosophy and Public Policy at LSE.

One good thing I've read

Amartya Sen’s Development as Freedom. It provides a framework for many people’s modern understanding of what is development, based on a profoundly human-centred approach rather than anything instrumental. And to check whether one personally is doing enough to fight poverty, I recommend Peter Singer’s The life you can save: Acting now to end world poverty – it’s very clear and easy to read but very challenging! Finally, Ha-Joon Chang’s Bad Samaritans: Rich nations, poor policies, and the threat to the developing world is a very readable guide to economic development which argues strongly against many of the prevailing orthodoxies.

Twitter: @gerryboyle10