Advancing Savings Services

This briefing note discusses the provision of deposits services to the poor.

It estimates global access of low-income households to formal savings services, size and nature of demand and retail institutions that provide accessible savings products. It discusses barriers to formal banking faced by potential clients as well as hurdles that MFIs face in offering low-balance deposits products. The note states that:

• Most of the worlds poor, especially across Sub-Saharan Africa, lack access to formal savings mechanisms;
• Savings services are in scarce supply because of institution-level constraints, inadequate infrastructure and regulatory barriers;
• MFIs often lack internal institutional capacity to develop appropriate and profitable savings products and sustainable delivery models;
• Inadequate roads, lack of electricity and other physical factors limit MFIs ability to expand into rural regions;
• Tailoring accountability requirements to the specificities of the microfinance model while ensuring security of deposits remains a complex challenge for many regulators.

It identifies innovations in service delivery, such as linking remittances and government to person transfers to savings accounts, child and youth savings accounts and branchless banking, as positive steps toward financial inclusion.