| Business: RURAL BANKING CONCEPT A TRAILBLAZER FOR REGION |
Its success is drawing global interest
Dionisia Tabureguci
Like the provision of every other service to the wider community of the South Seas, doing rural banking is not something that every banking institution operating in the region would rush into for challenges that are geographically and culturally related.
| Proving to be a success... ANZ's rural banking project has so far banked 60,000 people in the rural areas of the region. |
But taking on what had traditionally been left as uncharted waters is now turning out to be the thing that gets the corporate adrenaline pumping for some, since any success would be a badge earned after much creative thinking on the part of those who are providing the service.
For how else does one marry the prevalent non-saving, wealth-sharing cultures of Pacific islanders with the cash society that now looms before them and still come up with progress and prosperity? Furthermore, there is the curious challenge of how to deal with the geographical realities of most islands, which makes the sporadic spread of their rural population an unattractive prospect for a well-functioning commercial market.
In October 2004, the Australia and New Zealand Banking Group (ANZ) in partnership with the United Nations Development Programme (UNDP), made an important contribution to the history of world banking by turning rural Fiji into a pilot project for a mobile rural banking service where ANZ was to be complemented by UNDP’s financial literacy programme.
By April 2006, ANZ had already mobilised some US$1 million from over 54,000 rural accounts, according to a paper on the project prepared by Jeff Liew, UNDP’s Pacific Regional Sustainable Livelihood specialist.
Last month, ANZ informed ISLANDS BUSINESS that it had already taken the service to eight other countries in the Pacific region, although each was at a varying stage of implementation and not all had mobile banking units.
These islands countries are Samoa, Tonga, American Samoa, Papua New Guinea,
Kiribati and the Solomon Islands and the outreach had resulted in ANZ having so far banked 60,000 people with a total deposit of around US$2-US$3 million.
In his paper, titled Banking the Unbanked in Fiji: The ANZ Bank and UNDP Partnership Model, Liew estimated that around 75 percent of the population of Pacific Islands Countries (the 14 Pacific islands countries excluding the French territories) or 6.5 million people in the region, did not have access to financial services. By that, he means transaction banking, usually provided by commercial financial institutions, which includes commercial banking, insurance, money transfers, asset financing and social security.
The challenge of providing banking services to this section of the population is therefore daunting and requires unique solutions and a totally different approach, something that both UNDP and ANZ have recognised.
Their partnership itself, which is a package of complementary expertise, is part of this solution, which recognises not just the need for banking services but also financial literacy.
“Financial service providers in the region have perceived the unserved and under-served, especially rural and low income communities, as either uneconomic or too difficult to serve and this has influenced corporate strategies and practices that have tended to exclude the majority,” wrote Liew.
“The UNDP and ANZ partnership for banking the un-banked in the Pacific is a tangible example of a substantive partnership aimed at pooling the respective strength of each partner to devise viable and innovative banking services to the large number of people living in rural communities who do not have access to the services.”
Unsurprisingly, the effort, which is said to be the first of its kind in the world, has drawn interest from the global community.
Carolyn Blacklock, ANZ’s Pacific Rural Banking manager, said while ANZ has no intention of taking the service outside of the Asia Pacific region, it has had countries such as Mozambique in Africa asking for assistance.
“I recently spoke at the World Bank’s global conference on access to finance. The response was overwhelming,” said Blacklock.
“I am beginning to understand why our programme in the Pacific is so attractive—we are a large bank operating in a unique environment. What makes us different though is that we act with humility.
“We must continue to do so and understand that our role is to unleash economic potential through banking services that are appropriate, affordable and reliable and coupled this with financial literacy. This is to be the answer to economic prosperity, not just for individuals, villages or communities, but for the Pacific’s developing countries.”
Blacklock, who is already a veteran at efforts to bank the rural Pacific, believes the challenge of banking the rest of the 6.5 million people is made even more difficult because they are not homogenous in their locations, living conditions, culture or appetite for banking services.
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