“For 3 billion people, the global financial system doesn’t even exist. Almost 2 billion people worldwide have no credit card, no savings account, no access to loans — nothing. Another 1 billion individuals may have some access to financial services, but they’re not getting what they need,” said Michael Schlein, CEO of US nonprofit Accion, in a recent blog post.
Accion is one of the leading organizations in the world in terms of work aimed at advancing financial inclusion, and it is very active in Latin America.
For this month’s Peru Banking Report, BNamericas conducted an interview with María Camila Gómez, VP of global advisory solutions, about Accion’s current activities in the Peruvian market.
Here is the full interview with Gómez, where she gives specific examples of how Accion is now strongly focused on technology and fintech development to increase Peru’s low levels of financial inclusion.
BNamericas: What has Accion been doing in the microfinance field in Peru during the past few years and what are your plans for the future in the Peruvian market?
Gómez: Accion’s focus for many years has been to engage financial service providers and policymakers around the world to create a financial system that works for everyone. Today, we are focused on ensuring the digital transformation of financial services happens in a way that benefits those who are left out of — or poorly served by — the financial sector. Our work with our established financial service provider partners is focused on helping them work toward a digital evolution and developing business efficiencies to work at scale.
In Peru, our partners include TiendaPago, a fintech startup helping small businesses access short-term working capital they need to thrive and grow; GKN, which provides convenient access to financial services and payments to underserved people in urban and rural areas; and Credinka, which provides microfinance services to bring underserved rural populations into the formal financial system. Accion’s Global Advisory Solutions team is also currently working with Mibanco and Banco Financiero del Perú to help them maximize their impact.
BNamericas: Credicorp’s purchase of MiBanco some years ago was a milestone in terms of microfinance M&A in Peru. What can we expect in the future in terms of microfinance-related M&A in the Peruvian market?
Gómez: Accion recognized early on the power of harnessing the capital markets to help achieve financial inclusion. We pioneered a commercial model of microfinance in Latin America that is now the standard around the world. The consolidation of microfinance institutions in Peru and across Latin America is indicative of this model’s success in creating scalable, well-governed, and sustainable organizations.
Moving forward, this places pressure on MFIs to adapt or differentiate themselves. We’re focused on helping our partners do so by embracing new technologies and finding more efficient ways to provide quality financial services to the underserved at scale.
BNamericas: In the Global Microscope study Peru has been recognized during several years by the Economist Intelligence Unit as having one of the best environments for microfinance in the world. Despite this, bank penetration remains low in the country. What are the reasons for the rather slow progress of bank penetration and overall financial inclusion in Peru?
Gómez: The Peruvian banking ecosystem is centralized in urban areas, and the country has the lowest bank branch penetration in Latin America. In the last few years, the country has had some success with agent networks to bring more financial services to underserved areas, but there is much room for growth. Infrastructure development will be critical to enabling financial service providers to leverage the power of mobile access and digital technologies to advance financial inclusion in Peru.
BNamericas: The Peruvian government launched a national financial inclusion strategy in 2015. What impact has this strategy had so far and how important will this national effort be in the quest for greater financial inclusion?
Gómez: Regulation is the single most effective way to promote or impede financial inclusion, and many Latin American governments, including Peru, Colombia, and Argentina, have recognized the importance of having a financial inclusion strategy.
Peru has been a leader in financial inclusion regulation and policy; the Global Microscope, which evaluates the enabling environment for financial inclusion, ranked Peru first in the world in 2016. Having a financial inclusion strategy in place is helping provide broader access to financial services, bring non-traditional players to the table, and build interoperable financial systems that can seamlessly interact with each other and lay the groundwork for greater financial inclusion.
One example of these is the launch of BiM, a pioneering nationwide mobile money platform that was the result of a collaborative effort that involved more than 30 financial institutions, telecom companies, and the Peruvian government.
BNamericas: Digital banking and fintechs are on the rise in several Latin American countries. In the case of Peru, how important can these new ways of doing banking be for the financial inclusion process?
Gómez: Similar to the rest of Latin America, Peru is still largely underbanked: 71 percent of the population is excluded. At the same time, financial technologies are allowing us to create better, faster, cheaper and safer ways to deliver financial services. For example, our partner TiendaPago finances short-term working capital for tiendas — which are often too small to access loans from traditional financial institutions — so they can better manage their inventory and cash flow.
There is a tremendous opportunity for fintech innovations like these to radically improve the quality and availability of financial services for underserved Peruvians. The Peruvian government and regulators, traditional financial institutions and new fintech models all have an important role to play to build an ecosystem that can deliver a full array of high-quality, affordable financial services for the underserved.