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Building Inclusive Financial Sectors for Development
A relevant example of standardized but competitive products can be found in what a number of postal systems discovered in offering products to low and middle-income customers, as well as poor people. The postal systems found that all customers at all social and economic strata want products that are simple, easy to use and understand, convenient, transparent in conditions of use and pricing, fast, reliable and secure (Boon, 2004, p. 58). In Tunisia, for example, La Poste Tunisienne: “…has succeeded in both developing its traditional postal financial services and in launching new account-based postal financial services on a large scale. More than 500,000 postal giro accounts are in operation, providing modern cashless payment instruments for payroll services, bill payments and transfers. The payment instruments also include electronic money orders, payment via the Internet and online account information, electronic wallets, and ATMs at which clients can withdraw with ‘Dinarpost’ cards. Moreover, Tunisia Post is preparing for the introduction of insurance products, consumer credit (in partnership with a bank) and savings and deposit products” (Boon, 2004, p. 45). For savers, the key words are security, convenience, liquidity, confidentiality, access to credit, good service and returns (Robinson, 2001, p. 28). In essence, they are no different than the type of financial products anyone wants to use. It is, however, possible to offer standard products that build in these features, as shown by the Grameen II experience (noted in Chapter II) and by the experience of Bank Rakyat Indonesia (see box III.2).
Product diversity and the importance of alliances There are limits to the number of products and services an institution can provide efficiently. Figure III.3 compares the range of products provided to customers by a sample of commercial banks that serve low-income and poor clients, regulated MFIs and unregulated NGOs in Latin America and the Caribbean. It is clear that banks offer the most comprehensive products and services and show up more strongly in offering savings, payment and insurance services. Almost all the MFIs offer consumer credit as well as microcredit and almost half offer mortgages, but fewer offer savings accounts or payments. The NGOs offer fewer financial services, as may be expected since they are the smallest and are prohibited from offering savings accounts. More than half of them, however, offer training in one form or another. The differences, in short, may be explained both by the principle business of the institutions, regulatory prescriptions, and the size of their capital base and operations. Alliances with specialized providers present an opportunity to overcome the limit on the products and services that an institution can offer on its own. If smaller organizations would be hard pressed to develop a business line outside their core expertise, figure III.3 shows that doing so is not necessary. NGOs or MFIs offering remittance services and insurance usually provide the products and services in alliance with more specialized providers. On the opposite end of the spectrum, large organizations, such as ICICI Bank in India (see box III.1) seek to form alliances with MFIs, small community-based NGOs and local entrepreneurs, such as kiosk-based services. Alliances also provide opportunities to expand core products and services that complement the new service. For example, the relationship that Equity Bank Limited (EBL) of Kenya built with Western