Lump sums & safety nets: How to encourage savings

  • Céline STEVENS, World Savings and Retail Banking Institute 
  • Ali Bou IMAJDIL, Al Barid Bank (Morocco) 
  • Jaco WEIDEMAN, FinMark Trust 
  • Saleh KHAN, Universal Postal Union 


Céline STEVENS from World Savings and Retail Banking Institute (WSBI) introduced the panel and presented WSBI’s Scale2Save programme. The aim of this programme is to establish the viability of low balance savings accounts and use of customer centric approaches to address barriers faced in access, usage and affordability of savings accounts. The programme operates in 6 African countries, aiming to bank 1 million people by February 2022. It consists of four main components: 1) Technical Assistance to banks to develop savings services and alternative distribution channels; 2) Conduct research; 3) Communicate learnings to the wider sector; and 4) Assess impact. 

Micro-savings is the main product for all partner financial service providers (FSPs) in the programme. The FSPs bundle these with other products, such as micro-loans and agent banking. Stevens presented several key questions the programme attempts to answer, such as which business models result in sustainable business cases, what are the causes of account inactivity, does customer centricity lead to customer growth and active customer bases? In a poll, the audience shared the view that keeping customers active is the main challenge for their organisation to encourage savings in low-income countries. 

As part of the Scale2Save programme, WSBI releases an annual report on the State of Savings & Retail Banking Sector in Africa. This publication tracks progress of the savings and retail banking sector in Africa in improving financial access to the financially disadvantaged. 

Stevens introduced Jaco WEIDEMAN from FinMark Trust, a partner in the Scale2Save project, who conducts research for this annual report. Weideman presented a market overview, based on this research. Even though “traditional” financial inclusion is increasing, the growth rate is slowing down. There is a continued growth of mobile services, particularly mobile money, and a low utilisation of card payments, with the exception of South Africa. Activity rates on transactional bank and mobile money accounts are low as well as savings rate. Income levels remain a major constraint to take-up sustainable financial services. 

On the supply side, the research looked at four financial inclusion pillars: 1) Usability; 2) Affordability; 3) Accessibility; and 4) Sustainability. In terms of usability, research showed that activity rate is low for both transactional and savings accounts. Affordability of savings and transactional accounts is still the main constraint to keep clients active. A strong growth in agents and mobile accounts compared to physical outlets, such as ATMs, indicate that people access financial services differently than in the past. Finally about sustainability, Weideman shared that a large share of FSPs perceive these services as at least slightly viable. 

Weideman concluded that changes are needed, stating that banking models have not yet adapted sufficiently to the local environment in which they operate. Weideman urged FSPs to focus on their clients’ needs and experiences to enhance customer value perception. As such, they can better determine how these needs should be met and what role the FSP can play. 

Stevens highlighted that research has confirmed access as a key driver for FSPs’ clients. Ali Bou IMAJDIL from Al Barid Bank in Morocco presented how the bank developed alternative delivery channels to increase access. He explained that the bank takes an ecosystem approach for mobile payments, covering an entire value chain with mobile payments to ensure they get as much traffic as possible. Together with WSBI, the bank started with the digitalisation of government to person payments, where beneficiaries would spend money in proximity shops. Those shops in turn would pay for their inventory with mobile payments as well.

Saleh KHAN from Universal Postal Union discussed the capillarity and reach of the postal network, demonstrating how these can help drive the national financial inclusion agenda. Postal offices are present in rural areas, even in places with limited access to banks or MFIs. In addition, 91% of Posts globally offer financial services with around 1 billion accounts. Posts traditionally cater to the needs of the most vulnerable and marginalised in society. UPU studies have also shown that women and unemployed people that are reluctant to hold accounts at formal financial institutions are more likely to have a Postal account. This makes the Posts ideally suited to reach out to the underbanked. He explained that the human capital of the post could be leveraged to provide solutions to its clients and adding complementary services to those of the post. 

Weideman added that such networks can be a huge asset, just like partnerships. He explained that networks can help financial institutions to solve their clients’ needs they could not solve on their own. Moreover, partnerships can help to bring down costs. Stevens added that partnerships can also add much-needed flexibility in the low-income market. 

In a second poll, Stevens asked the audience and the panel what they believed was key for customer engagement. The audience talked about services, real-time interaction, trust relationship management and co-creation of products. Khan shared the importance of trust in customer engagement. He added that as 90% of Posts are part of a country’s government, customers often tend to view them in the same way as they view their government, which can be both an asset and a limitation. 

Imajdil added that MFIs should assume that clients are not banks and, as such, are not used to technical terms and technology that are common to bankers. In 2014, the Al Barid Bank determined that mobile banking usage was too low. To solve this, staff now always take new clients through all steps of the bank’s mobile banking services and show them how the technology works in the store and make sure new clients connect at least once to their account. Weideman added that trust is an important issue in money. If a FSP does not work on this, clients will not engage. Governments can help build this trust. For that, open and transparent dialogue between financial service providers and policy makers is key. 


Stevens asked the panel to share their perspective for the future. Imajdil explained that the trend is to digitalise what can be digitalised, working on making services more efficient while reducing costs. Khan shared his belief that every citizen has the right to a bank account and that Posts can play a strong role in achieving this goal. Posts have a universal service obligation to provide affordable postal services to all citizens, and Khan would like to see this extended to financial services as well. 

Weideman shared his wish that the ecosystem for remittances is developed further. He stated that remittances are contributing more to international development than global development aid. Khan added that the Post is the cheapest way to send money. A member from the audience commented that in Serbia companies like Western Union are most used for remittances, even though this is the most expensive option. Khan explained that as a business, Western Union invests in marketing its services more than Posts. Posts need to improve their old-fashioned image among clients and develop more market and client-centric solutions. 

It is also important to change the mind-set of clients. At an individual level, fees to send remittances from Western Union are only slightly higher than remittances from the Post. However, at a systemic level, this can accumulate to huge amounts.