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BUSINESS UNIT: MICROFINANCE DATE: 22nd February 2013
Informal/formal sector partnerships: Fidelity Bank Ghana
Dr. William Derban
Director, Financial Inclusion, CSR & PMO
Fidelity Bank 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 - a growing local bank in Ghana
3
Strategic Partners Services
GAMC membership
Credit Unions
Financial NGOs
Money Lenders
GCSCA membership
Deposit
Assets
Latest Initiatives
Money Transfer
Payment Services
Utility payments Prepaid top-ups
Existing Business
Management systems Deployment
Traders Assoc
Fidelity Bank offers tailored products and
services the informal sector financial players
Susu collectors
Total number 4000 (est)
Registered with Association
500
Licensed by BoG 350
Number reporting
200
FB clients 80
Microfinance Institutions
Total number 1000
Licensed by BoG 360
FB clients 200
Money Lenders
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 2005 Susu Collection 2013
Susu collectors were mostly individuals Many collectors have agents
Most had simple un manned offices while they walk around
Established offices with PCs, Internet, printers and staff
Not regulated by Bank of Ghana Regulated by Bank of Ghana (tier 4 banking)
Minimal reporting requirements (only from the association)
Prudential reporting to the Bank of Ghana
Many susu collectors were semi educated and mainly have experience from the informal sector
Many have higher levels of education and come from 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’ repayment from clients
Susu collectors give the ‘one day’ back and even give 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
Susu collection is becoming more professionalized
While some solutions have been provided to the challenges
susu collectors face a few remain
• Many banks provide loans to susu collectors Loans
• Many banks take savings from susu collectors Safety of deposits
• Due to re-denomination of the currency, there are less notes to carry
Carrying large sums of money
• Since records are done manually on the field, it is difficult to get real time data for reporting
Keeping records
• Still susu collectors or their agents need to walk long distances to collect deposits
Walking around
• Susu Collector might be bankable, it is their clients that we need to target
Reaching the clients of susu collectors
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
10
• Provide banking services to
susu collectors • Build their capacity and
provide support to build the sector through technology
• Ultimately, provide banking services to their clients
Objectives of the strategy
GH 10 Million
4000 Susu Collectors in
Ghana
500 Clients per susu collector
GHc 5 per day savings from clients
Susu collectors are core to FB strategy
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 account
info
Select withdrawal or deposit
SC collects money or
gives it out
SMS is sent to client to
confirm transaction
Info hits backend
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 25th 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