Showcasing Successes in Banking Beyond Branches in Latin America

This is a guest blog by Mireya Almazán & Ignacio Mas from the Bill & Melinda Gates Foundation.

A couple of months ago, we launched the Bill & Melinda Gates Foundation initiative, Showcasing Successes in Banking Beyond Branches, and blogged about it here. We’re pleased to report that success stories are out there and 3 institutions have claimed success under the showcase criteria: Safaricom, Banco de Crédito del Perú (BCP), and Banco Wal-Mart (BWM). Safaricom and BCP lead the way in the Bridges to Cash showcase, and BWM carries the torch for the Digital Piggy Bank showcase. Successful showcase entries were announced at the World Economic Forum Africa Summit in Cape Town this week, and you can read about them on the foundation’s website.

As a reminder, the Bridges to Cash showcase recognizes players who have built a dense and sustainable network of cash merchants where people cash-in and cash-out conveniently from their electronic accounts. Under the showcase criteria, this is defined by a volume of transactions at cash merchants of at least 30 per day, and a network of cash merchants with at least 10 times the number of bank branches of the largest bank in the country where it operates. The Digital Piggy Bank showcase recognizes players that can demonstrate their electronic accounts are being used as a store of value, with at least 100,000 customers with a non-zero balance in their electronic accounts, and an average balance of at least 20 USD.

While it may come as no surprise to the industry that Safaricom’s M-PESA is being recognized as the world’s leading mobile money scheme, it may be eye-opening to look to a Latin American commercial bank that is successfully implementing an innovative distribution model to reach low-income segments with savings and other financial services. BCP has managed to build an impressive network of over 4,000 cash merchants across all Peruvian provinces conducting on average 47 eligible transactions per day. If we include nonmonetary account management functions, such as balance inquiries, this number jumps up to 70 transactions per day. Although the most popular transaction types are withdrawals (23% of transactions) and service payments (22% of transactions), deposits are not insignificant (13%). And while transactions are card/POS device based, BCP can consider mobile-based solutions in the future to achieve further scale and more rapidly penetrate rural areas.

A second surprise is that no other mobile operator-led scheme yet meets the criteria of the Bridges to Cash showcase, or at least not that we’ve been made aware of. The industry eagerly awaits a second mobile money deployment that is showing signs of reaching critical mass and meets the showcase criteria.

Banco Wal-Mart in Mexico is being recognized for a successful electronic account, and not its physical reach and channel health, under the Digital Piggy Bank showcase. The SuperDebito account, which can be used at any Wal-Mex store (Mexico’s largest retailer), now has 850,000 accounts with a non-zero balance. The innovation behind this product is that fees are levied for inactivity, as opposed to more common methods of acquiring revenue (monthly fees or charging per transaction). While analysis is needed to assess the factors that are driving savings behaviors on this account, we know that average balances are relatively high (70 USD). With more than 3 million Mexicans visiting its stores and restaurants every day, BWM is a case worthy of further study.

Brazilian banks, please speak up if you, too, meet the criteria articulated in this showcase with a decade of experience in banking beyond branches under your belt. And, mobile operators, we know a few of you are very close, and we are looking forward to highlighting your institution in the next few months. This is an on-going effort that seeks to profile success cases as they develop. Email us at FSPShowcase@gatesfoundation.org.