Access to Finance: What Does It Mean and How Do Savings Banks Foster Access
The World Savings Banks Institute (WSBI) in cooperation with Oxford Policy Management (OPM), conducted a study commissioned by CGAP to analyze the poverty levels of clients reached by savings banks worldwide. This brief summarizes the main findings from the study. The study showed there were 1.3 billion low-average balance deposit accounts in developing and transitioning economies. However, it was unclear how many of the clients served by postal and savings banks were coming from the poorest households.
In late 2006, CGAP commissioned research to address that question. Four savings banks representing good geographical spread and all major strands of the membership of WSBI were chosen to test exactly how many poor customers they reach and whether their poor customers use the services on offer any differently than do better off customers. CGAP's Poverty Assessment Tool was applied across savings banks. Key findings of the report include:
- Size matters: As large providers of financial services, savings banks have a larger outreach among the poorest households than most other pro-poor institutions. For example, although only 13% of NSI (India) clients are among the poorest households, this percentage represents six million poor households.
- Significant depth of outreach: Savings banks have a significant outreach among the poorest households in their countries, especially in rural areas and among women.
- Active product use: The poorest clients actively use their savings accounts.
- Direct distribution and right incentives are crucial: While product design and physical accessibility are important for financial institutions, direct distribution combined with the right set of incentives seems to be the crucial factor behind pro-poor outreach.
