Archive for: Colombia

An important part of effectively rolling out a banking agent network - a network of retail or postal outlets that handles transactions on behalf of financial institutions and mobile operators - is the agent location. 

Our project partner, Credibanco VISA in Colombia, is using a georeferencing tool to advise banks as to where large numbers of their target clients are located, and also which retail outlets in that area might make good “corresponsales no bancarios”, as the Colombians call their banking agents.

The process is easy. Based on the bank’s target clientele (e.g., income up to COP 250,000 per month [US$122] and “estrato 2″ reflecting the Colombian economic classification of 0-6, where 0 is poorest and 6 highest income) and preferred location (e.g. high population density, no financial infrastructure, etc.), VISA uses census data, financial infrastructure coverage, and retail information from yellow pages to develop heatmaps which combine the following:

• poverty and income levels 
• population density
• postcode boundaries
• existing financial infrastructure (e.g. branches, ATMs, etc.) and card holders
• stores and other commercial activity
• areas that generate a lot of foot traffic (e.g. bus stations, markets, hospitals, etc.)

Based on the resulting maps, the bank can see in which areas their agent would be most effective. Factors like poverty and income level, population density, and existing financial infrastructure will impact the agent’s future transaction volume; placing agents near bus stops and market areas will make them more visible and increase the likelihood that clients will repeatedly use the agent to conduct transactions.

On the picture you see the final heatmap. Red areas show neighborhoods with great opportunity to reach the bank’s target clients; the mountains refer to population density. If you would like more detail, please send me an email and I can forward you VISA’s complete analysis of Ciudad Bolivar, a poor neighborhood of Bogota, Colombia.

We’re in the last day of the conference CGAP co-organized with IFC, sponsored by Visa. This morning, three partners of the CGAP technology program are presenting their experiences on using technology to increase access to finance.

Delivery Channels for Microfinance. Banking agents are becoming a popular way of signing up new customers and offering services outside of the branch environment. Can these agents deliver a range of products? How far from the bank branches can this model reach to serve rural areas? Moderator: William Schoch, Vice President, Consumer Products, Visa International.

• Abbas Sikander, Group Executive Director for Operations and Technology, Tameer Bank, Pakistan
• Alex Acosta, Credibanco Visa
• Rizza Maniego-Eala, President, G-Xchange, Inc.

You can watch it live here.

Happy Monday…this Monday is more auspicious than most because it’s the start of our three day conference looking at how technologies such as card-based networks and mobile phones could increase access to finance. IFC is a co-organizer, and Visa is a sponsor.

Want to know more? Visit here for the full agenda.

We’ll be posting presentations as we get them…and this link should take you to a live video stream of the event.

…this is how Brian Richardson, CEO of WIZZIT started off his presentation at a conference earlier this month in Cartagena, Colombia.

The two-day event brought together a great cast of experts including representatives from the Procredit network, GXI(Philippines), Banco Azteca (Mexico), the Colombian Superintendent of Banks, as well as David Porteous and Ernesto Aguirre (who also advise the CGAP Technology Program). This very diverse group of practitioners, regulators, and technology providers created a great base to discuss and share experiences and challenges on how to provide low-income clients in Latin America and other regions with access to financial services.  The presentations touched on a range of issues vital to successfully scaling up microfinance: market research, product development, financial education, innovative delivery channels, and supporting regulation.

Even though the use of technology and new business models to push the access frontier was a major theme of the conference, the constant theme throughout all the presentations was that technology and innovative delivery channels are only part of what it takes to scale up microfinance and reach people we cannot reach today.

BancoEstado from Chile presented impressive information about the clients they want to serve. They used this knowledge on customer perceptions and preferences to design an account product without monthly account fees, but “pay per use.”   In India, banks have been experimenting with ways to support microfinance and ICICI Bank presented its partnership model, disaggregating the microfinance value chain: Banks use microfinance institutions and NGOs as banking agents to handle savings and credit transactions.   The Central Bank of the Philippines explained how they started to adapt regulation to foster innovation, but at the same time protect consumers and the financial system.

All these delegates are true pioneers and still experimenting with the right operational approaches, organizational set-ups, regulatory frameworks, demand-driven products, and a lot of other issues to ensure client take up and increase access to finance in their market.

It will take time to unleash ready-made solutions that reach the very poor in remote areas on a viable basis, and it will require substantial commitment and investment from providers.

Want more presentations? Visit the Asobancaria website.

Banking agents, retail and postal outlets handling banking transactions for financial institutions and mobile operators, are mushrooming all over! It took less than four years to cover almost all of Brazil. Colombian banks established 3,548 service points in just one year. In Peru banks manage more than 2,500 agents. Equity Bank in Kenya is piloting agents in rural areas. Xac Bank in Mongolia is planning to develop an agent channel….

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Our very own Kabir Kumar made his public radio debut today to talk about the mobile banking work we’re doing:

All Things Considered, June 30, 2007 - In developing nations, many people still do not have bank accounts but they do have cell phones.

Now, a group with the World Bank is trying to develop a way to allow poor people to use their cell phones to save and transfer money.

Kabir Kumar of the Consultative Group to Assist the Poor talks to Debbie Elliott about the project.

NPR

The technology program of the Consultative Group to Assist the Poor (CGAP), co-funded by the Bill and Melinda Gates Foundation, will support Credibanco in a unique project that aims to increase the reach of financial services to poor people. The key aspect of the project is the use of banking “agents” - enabling retailers outside of traditional bank branches to extend financial services. Credibanco will receive technical assistance and funding to offset risks, as well as capture lessons learned for the benefit of increasing access to finance.

press release

We’re at a banking conference in Sao Paulo, where I had a chance to present on agents and our work in Colombia. In terms of using banking agents to reach remote areas and poor clients, the Brazilian financial system represents probably the future of many Latin American markets. Whereas countries like Colombia are just starting to develop such outlets, in Brazil they already make up 56% of all financial system points of sale are, reaching all municipalities.

Since our last visit in June 2006, the atmosphere has changed a lot. Whereas last year, banks were still experimenting with different approaches and were not yet convinced that banking agents were viable, today everybody we asked during our last week in Sao Paulo, considered banking agents a profitable channel. Banking agents move clients which are high cost for the bank (small ticket size, often only limited usage of products) to the low-cost agent channel, and free space in branches for clients which generate more revenue for the bank. Before branches were full of people just paying their bills. Read the rest of this page »

The CGAP Technology Program plans to partner with Credibanco Visa to find ways to increase access to financial services. The proposed project would focus on three banks, which would roll out a network of banking agents.

“No, I don’t want a bank account. How do I know they’re not stealing my money? And it costs too much in any case,” says Juan, a cab driver in Bogota. In Colombia, as few as one in three people have access to financial services. Reasons for this include taxation on withdrawals, stringent account-opening requirements, and high costs to open and maintain a bank account. This is not uncommon in Latin America. According to figures from the International Monetary Fund, in Sao Paulo fewer than 40% of households have access to financial services. In Mexico City, that number drops to just one in four. The Inter-American Development Bank says that only 14.4 percent of the low-income population in Latin America has access to a savings account, and only 6.4 percent of them have obtained a loan.

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