October 6, 2014. By David Porteous.
A 1990’s management book called Teaching Elephants to Dance offered hope that this feat was indeed possible. And the GAFIS session at last week’s SIBOS conference in Boston affirmed that the particular species of elephant known as large banks could also join the dance of financial inclusion.
SIBOS is a major annual networking and conference event for the global financial sector. Financial inclusion is a recent addition to the already extensive agenda. On the same day as the GAFIS panel, Bill Gates himself delivered his vision of how digital payment platforms are needed to address financial inclusion and poverty itself; and Kennedy School professor Jay Rosengard delivered a lecture of what financial inclusion is.
In the midst of all the bustle of activity, the senior champions from the four large private GAFIS banks took the stage in a session called “Large Banks and Small Savers” to share their experiences of wrestling with product, process and structural innovations to serve their already large low end segment, while also justifying a business case for doing so (see video of full session here). They all accept that the business case for offering low end (and therefore low balance) savings products alone is hard, as the GAFIS report demonstrated; but they all maintain that at the level of the inclusion segment as a whole, it is possible to make money by any of their banks’ standards over the medium term.
Importantly, they all also affirmed the need for humility as bankers—during the GAFIS process, they learned again to listen to and understand better the needs of their low end customers. And also, the need ultimately to get beyond cash handling which is happening on large scale through their large and growing agent networks today to the world of digital platforms using which clients can transfer funds to different savings wallets or windows with differing degrees of liquidity or illiquidity in a cost effective and convenient way. That remains the vision of Savings “Proposition 2.0” framed in the GAFIS report; and it is very much aligned with the vision of digital platforms set out by Bill Gates later the same day. The experience of GAFIS banks suggests that large banks like these can be part of the financial inclusion dance—and that, unlike the dance to which Citi CEO Chuck Prince infamously referred in 2007, saying “As long as the music is playing, you‘ve got to get up and dance”, this dance will go on.