Informal/formal sector partnerships: Fidelity Bank Ghana

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1 Informal/formal sector partnerships: Fidelity Bank Ghana BUSINESS UNIT: MICROFINANCE DATE: 22 nd February 2013 Dr. William Derban Director, Financial Inclusion, CSR & PMO Fidelity Bank Ghana

2 Fidelity Bank - a growing local bank in 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

3 3 Fidelity Bank offers tailored products and services the informal sector financial players Strategic Partners Services GAMC membership Existing Business Susu collectors Total number 4000 (est) GCSCA membership Credit Unions Financial NGOs Money Lenders Traders Assoc Deposit Assets Latest Initiatives Money Transfer Payment Services Utility payments Prepaid top-ups Management systems Deployment 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

4 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 clients. There are about 4000 susu collectors. In 2004 they collected over 75 million. Susu collectors also advance credit to clients.

5 Susu collection is becoming more professionalized Susu Collection 2005 Susu Collection 2013 Susu collectors were mostly individuals Most had simple un manned offices while they walk around Not regulated by Bank of Ghana Minimal reporting requirements (only from the association) Many susu collectors were semi educated and mainly have experience from the informal sector Investments are usually from local sources Main source of income is the one day repayment from clients Collectors keep money for 30 days Daily savings was the main product Many collectors have agents Established offices with PCs, Internet, printers and staff Regulated by Bank of Ghana (tier 4 banking) Prudential reporting to the Bank of Ghana Many have higher levels of education and come from the formal sector, such as bankers Some are getting investments from individual Ghanaians abroad Susu collectors give the one day back and even give interest to be competitive Client keep their money with the SC for 2-3 months take advantage of interest Many have devised project based products such as school fees savings, funeral savings and insurance

6 While some solutions have been provided to the challenges susu collectors face a few remain Loans Many banks provide loans to susu collectors Safety of deposits Many banks take savings from susu collectors Carrying large sums of money Keeping records Walking around Reaching the clients of susu collectors Due to re-denomination of the currency, there are less notes to carry Since records are done manually on the field, it is difficult to get real time data for reporting Still susu collectors or their agents need to walk long distances to collect deposits Susu Collector might be bankable, it is their clients that we need to target

7 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

8 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

9 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 10 Susu collectors are core to FB strategy 4000 Susu Collectors in Ghana 500 Clients per susu collector GHc 5 per day savings from clients Objectives of the strategy 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 GH 10 Million

11 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

12 Using technology to improve collections Info hits backend SC searches for clients by name or number on phone View account info SMS is sent to client to confirm transaction SC collects money or gives it out Select withdrawal or deposit

13 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 25 th 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

14 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

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16 Thank you