Informal/formal sector partnerships: Fidelity Bank Ghana BUSINESS UNIT: MICROFINANCE DATE: 22 nd February 2013 Dr. William Derban Director, Financial Inclusion, CSR & PMO Fidelity Bank Ghana
Fidelity Bank - a growing local bank in Ghana Background to Fidelity Bank • The Fidelity Bank Ghana was established in 2006 • Among the top 10 banks in the country • Over 45 branches and 65 ATMs in all regions • More than 400,000 accounts Financial Inclusion Strategy • Started working with informal sector in 2009 • Initial strategy focused on working in the microfinance sector by partnering with Susu collectors, Credit unions and other associations • Rapidly become the leading bank supporting the microfinance sector in Ghana • Preparation for Agency banking started in 2012 receiving full Bank of Ghana approval late 2012 • In June 2013, the financial inclusion department set up to drive mass / informal sector strategy • July 2013 commenced agency banking, the first bank to do so in Ghana
Fidelity Bank offers tailored products and services the informal sector financial players Strategic Partners Services Susu collectors Existing Business GAMC membership Total number 4000 (est) Registered with 500 Deposit Association GCSCA membership Licensed by BoG 350 Assets Number 200 reporting Latest Initiatives Credit Unions FB clients 80 Microfinance Money Transfer Institutions Financial NGOs Total number 1000 Payment Services Licensed by BoG 360 Utility payments Money Lenders Prepaid top-ups FB clients 200 Money Lenders Management systems Deployment Traders Assoc 3
The financial inclusion strategy started with engaging with Susu collection – a basic model of savings collection • Collect equal amounts of money per day from people for 31 days (as low as 50p/ day). • At the end of 31 days they return 30 days worth and keep 1 day as a fee. • Each collector has between 300- 2000 clients. • There are about 4000 susu collectors. In 2004 they collected over £75 million. • Susu collectors also advance credit to clients.
Susu collection is becoming more professionalized Susu Collection 2005 Susu Collection 2013 Susu collectors were mostly individuals Many collectors have agents Most had simple un manned offices while they Established offices with PCs, Internet, printers and walk around staff Not regulated by Bank of Ghana Regulated by Bank of Ghana (tier 4 banking) Minimal reporting requirements (only from the Prudential reporting to the Bank of Ghana association) Many susu collectors were semi educated and Many have higher levels of education and come from mainly have experience from the informal sector the formal sector, such as bankers Investments are usually from local sources Some are getting investments from individual Ghanaians abroad Main source of income is the ‘one day’ Susu collectors give the ‘one day’ back and even give repayment from clients interest to be competitive Collectors keep money for 30 days Client keep their money with the SC for 2-3 months take advantage of interest Daily savings was the main product Many have devised ‘project’ based products such as school fees savings, funeral savings and insurance
While some solutions have been provided to the challenges susu collectors face a few remain Loans • Many banks provide loans to susu collectors Safety of deposits • Many banks take savings from susu collectors • Due to re-denomination of the currency, there Carrying large sums of money are less notes to carry • Since records are done manually on the field, it is Keeping records difficult to get real time data for reporting • Still susu collectors or their agents need to walk Walking around long distances to collect deposits Reaching the clients of susu • Susu Collector might be bankable, it is their collectors clients that we need to target
Tackling the barriers: Keeping records • Out of the 300 susu collectors registered by the Bank of Ghana only 20 are reporting on a regular basis • Gathering data is a major challenge for collectors as it is done manually • Data is vial for the collectors to enable them understand the dynamic clientele • Collectors are too busy to put training sessions into practice • Data is vital for banks to design products
Tackling the barriers: Walking around • Traditionally Susu collectors have had to walk distances to service customers • Each susu collectors tends to have between 500 to 2000 clients • Use of agents have not been successful as susu agents tend to ‘steal’ their masters customers • It is usual to see them with large hats and a towel to help them wipe the sweat • The number of clients a susu collector has is dependent on their strength and ability to walk to every client. • Their work is often limited to a small area
Tackling the barriers: Banking the unbanked • The susu collectors may be bankable • Many of their clients are not banked • Typical barriers include: • Lack of documentation • Distance to banks • High initial opening amounts for accounts
Susu collectors are core to FB strategy Objectives of the 4000 Susu strategy Collectors in Ghana • Provide banking services to susu collectors • Build their capacity and 500 Clients provide support to build per susu collector the sector through technology • Ultimately, provide GHc 5 per banking services to their day savings clients from clients GH 10 Million 10
Building Capacity : G-Kudi banking platform project G Kudi - uses IT ‘Cloud’ and Mobile technology to provide an end- to- end, real- time management information system to run and control risk for banking operations in MFIs. Project is in partnership with the Ghana Cooperative Susu Collectors Association The Project has the following goals: • To ensure that all susu collectors who bank with FB have access to the platform at a subsidized rate • Train and pilot with 200 susu collectors • Improve reporting to BoG using real-time data from the field
Using technology to improve collections SC searches for clients by name or number on phone View Info hits account backend info SMS is sent Select to client to withdrawal confirm or deposit transaction SC collects money or gives it out
Banking the unbanked: Agency banking • To provide a full fledged account that is convenient for the unbanked to access. • Developed the ‘Smart Account’ and agency banking • First bank in Ghana to be receive approval from Bank of Ghana for agency banking • Opened over 2,000 accounts since 25 th July 2013 with 10 agents including super markets and their vendors – no adverts! Key features of Smart account • People can open account with $5. $2.50 for the card and $2.50 as a minimum balance on the account. • Open an account with one national ID (approved by BoG) in 5 min • With the chip and pin enabled Smart Account card, one can: Check balances mobile money Withdraw Funds transfer Deposit • Channels are: Smart Agents (merchants) Dedicated e-tellers at the branch ATMs Internet Mobile phone
Agency banking and Susu collection – the way forward • Susu collectors can act as FB smart agents to facilitate opening of accounts for clients • Collectors can sell other services such as mobile top up and bill payments • Insurance companies have shown interest in using agency banking to sell their products • Susu collectors can earn commissions on transactions that take place on their POS in their offices For Clients: • They can deposit and withdraw into their accounts at any agent not only their local susu collector • Many companies see this as a solution to pay their low income workers • Clients have more choice in the market place, they can transact directly with the bank, through a susu collector or an agent
Thank you
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