Hybrid Value Chains in Financial Services: Has the Time Finally Come for a New Contract between Banks and Social Enterprises to Address Financial Inclusion?

This paper examines the suitability of new partnerships between banks and social enterprises leading to a mutual growth. It states that despite their inherent capacity for innovation, banks still exhibit conservative policies towards partnering with social enterprises and this acts as a barrier for banks in modernizing their own value chains and reaching to the financially excluded.  The paper presents compelling rationales in support of collaboration, including:

• Examples of market failure in financial services are abound, and social enterprises are finding solutions in areas where banks fear to tread;
• Social Enterprises can make it easy for banks to be partners in social change through Hybrid Value Chains (HVCs);
• HVCs are mechanisms for value identification and creation that go outside the traditional bank parameters and leverage the experience, insight, and proven delivery capabilities of social enterprises;
• Connecting bank procurement and sourcing strategies to social enterprises and exploring new partnerships presents a huge opportunity to magnify their social impact;
• Social enterprises can bring speed, innovation, trust, and integrity to help banks reinvent their business models and get ahead of the government and regulatory agendas.