Measuring the Social Dividend in WSBI Members' Activities: Revealing the Hidden Elements

This study looks at the ways in which savings banks achieve greater outreach and play a significant role in communities, while still operating profitably.

Savings banks adopt an approach founded on achieving social returns as well as financial returns to enable operational sustainability. A study of six World Savings Banks Institute (WSBI) members reveals that:

• Branches in less favored locations nearly always covered the marginal cost of keeping their presence in those areas;
• Savings banks are able to sustain marginal branches because they are not under pressure to create and distribute surplus capital back to shareholders;
• Deployment of resources such that it fits business potential of less favored areas is crucial for savings banks to retain high productivity of human and physical capital.

This study provides insights into the various mechanisms that allow savings banks to maintain a strong commitment to local community development. It shows that these institutions have the flexibility to scale branch costs to fit the income generating potential of disparate catchment areas. This enables them to maintain their strong target-market orientation, while at the same time operating profitably and sustainably.