Opportunities and Obstacles to Financial Inclusion in Peru · 1101 15 St., NW, Suite 400,...
4
1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org Opportunities and Obstacles to Financial Inclusion in Peru In 2010, the Center for Financial Inclusion (CFI) conducted a field survey to find out what financial sector participants thought about the opportunities and obstacles to financial inclusion. The survey sought responses from service providers, investors, members of support organizations, and policymakers. A total of 301 respondents from 67 countries were received and the results were compiled in the CFI report Opportunities and Obstacles to Financial Inclusion in 2011. Oikocredit Perú and CFI joined forces to carry out a countryL specific version of this study in Peru in 2012L2013. Peru was chosen in recognition of developments in the microfinance market, market regulation and rules, the free competition model and the present government’s interest in working towards financial, economic and social inclusion. Study Elements The study was carried out in Peru in three main phases. 1) First, an online survey asked senior professionals at major private and public sector institutions to rank a series of preLselected Opportunities and Obstacles. 2) Second, experts with extensive experience in the local market commented on and validated the survey findings. 3) Finally, a series of inLdepth interviews were held with a number of the most recognized and prestigious players in the local market. By supplementing the ranking of preLselected factors with interviews with experts and opinion leaders on financial inclusion, this study was able to attain a deeper understanding of the reasons why the key obstacles and opportunities were selected. Stakeholders who participated were grouped by organization type: financial service providers (cajas municipals, credit unions, regulated microfinance institutions, cajas rurales, EDPYMES, and finance companies) and NGOs; government or regulatory bodies; support organizations; private companies; investors; donors; and research/academic organizations. Key Findings • The survey results largely coincide with the results of the global study. However, exceptions include regulation, legal issues, credit bureaus, and competition, all of which rank lower in Peru on the list of opportunities and obstacles, possibly signaling that Peru already does well on these dimensions. • In the survey, financial education was selected as both the top obstacle and top opportunity. The majority of survey respondents concluded that financial education is necessary to increase the use of existing products and services, but does not address the problems faced by mainly rural, remote and excluded areas without access to financial services. For those who have access, financial education is definitely an obstacle. • The survey shows a consensus that financial education is a main responsibility of the Peruvian government. The government has incorporated financial education topics into the secondary education October 2013
Transcript of Opportunities and Obstacles to Financial Inclusion in Peru · 1101 15 St., NW, Suite 400,...
! ! !!
1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
!
Opportunities and Obstacles to Financial Inclusion in Peru
!
In#2010,#the#Center#for#Financial#Inclusion#(CFI)#conducted#a#field#survey#to#find#out#what#financial#sector#participants#thought#about#the#opportunities#and#obstacles#to#financial#inclusion.#The#survey#sought#responses#from#service#providers,#investors,#members#of#support#organizations,#and#policymakers.#A#total#of#301#respondents#from#67#countries#were#received#and#the#results#were#compiled#in#the#CFI#report#Opportunities+and+Obstacles+to+Financial+Inclusion+in#2011.#+Oikocredit#Perú#and#CFI#joined#forces#to#carry#out#a#countryLspecific#version#of#this#study#in#Peru#in#2012L2013.#Peru#was#chosen#in#recognition#of#developments#in#the#microfinance#market,#market#regulation#and#rules,#the#free#competition#
model#and#the#present#government’s#interest#in#working#towards#financial,#economic#and#social#inclusion.####Study Elements ##The#study#was#carried#out#in#Peru#in#three#main#phases.#1)#First,#an#online#survey#asked#senior#professionals#at#major#private#and#public#sector#institutions#to#rank#a#series#of#preLselected#Opportunities#and#Obstacles.##2)#Second,#experts#with#extensive#experience#in#the#local#market#commented#on#and#validated#the#survey#findings.#3)#Finally,#a#series#of#inLdepth#interviews#were#held#with#a#number#of#the#most#recognized#and#prestigious#players#in#the#local#market.##By#supplementing#the#ranking#of#preLselected#factors#with#interviews#with#experts#and#opinion#leaders#on#financial#inclusion,#this#study#was#able#to#attain#a#deeper#understanding#of#the#reasons#why#the#key#obstacles#and#opportunities#were#selected.##Stakeholders#who#participated#were#grouped#by#organization#type:#financial#service#providers#(cajas+municipals,#credit#unions,#regulated#microfinance#institutions,#cajas+rurales,#EDPYMES,#and#finance#companies)#and#NGOs;#government#or#regulatory#bodies;#support#organizations;#private#companies;#investors;#donors;#and#research/academic#organizations.##Key Findings !
• The!survey!results!largely!coincide!with!the!results!of!the!global!study.#However,#exceptions#include#regulation,#legal#issues,#credit#bureaus,#and#competition,#all#of#which#rank#lower#in#Peru#on#the#list#of#opportunities#and#obstacles,#possibly#signaling#that#Peru#already#does#well#on#these#dimensions.!
• In!the!survey,!financial!education!was!selected!as!both!the!top!obstacle!and!top!opportunity.#The#majority#of#survey#respondents#concluded#that#financial#education#is#necessary#to#increase#the#use#of#existing#products#and#services,#but#does#not#address#the#problems#faced#by#mainly#rural,#remote#and#excluded#areas#without#access#to#financial#services.#For#those#who#have#access,#financial#education#is#definitely#an#obstacle.#!
• The!survey!shows!a!consensus!that!financial!education!is!a!main!responsibility!of!the!Peruvian!government.!The#government#has#incorporated#financial#education#topics#into#the#secondary#education#
October 2013
! ! !!
1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
!
curriculum;#it#has#started#piloting#training#programs#for#teachers#in#public#schools;#and#it#is#working#on#online#educational#initiatives.#Private#sector#efforts#are#seen#as#complementary#to#government#efforts.!
• The!expert!interviews!suggested!that!the!main!obstacle!to!achieving!financial!inclusion!in!Peru!is!the!high!cost!of!delivering!services!to!rural,!remote,!and!poor!areas.!Delivery#costs#are#high#because#of#the#following#constraints:#gaps#in#basic#infrastructure,#difficult#geography,#lack#of#interconnectivity#of#mobile#solutions#and#banking#and#card#platforms#in#remote#areas,#and#the#scarcity#of#branches#in#those#areas.##
• Experts#agreed#on#the#initiatives#and#actions#that#the#private#sector#can#take#to#promote#financial#inclusion.#These#can#be#grouped#around#the#following#categories:#cost,!use,!access,!quality,!consumer!protection,!financial!education,!and!institutional!strengthening.#
• The!key!objectives!for!long@term!sustainability!and!full!financial!inclusion!are:#the#reduction#of#transfer#and#delivery#costs#to#excluded#areas;#appropriate#design#of#services#to#meet#people’s#needs;#education#in#the#use#of#these#financial#services;#promotion#of#financial#capability;#adoption#of#these#services#and#their#functions#as#enablers#of#development#for#these#regions;#and#the#mass#delivery#of#services#supported#by#technology.##
• The!interviewees!had!a!positive!view!of!the!extent!of!Peru’s!progress!toward!financial!inclusion.!In!their!opinion,!the!country!is!at!the!mid@point!towards!achieving!full!financial!inclusion!by!2020.#This#perception#comes#from#progress#toward#financial#inclusion#in#urban#and#suburban#areas,#and,#at#the#same#time,#the#awareness#that##inclusion#has#not#yet#reached#the#country’s#most#remote#and#rural#areas,#or#the#informal#economy#that#makes#use#of#informal#credit.#!!
Recommendations: • Incorporate!financial!inclusion!issues!into!the!national!culture,#so#that#all#citizens#recognize#their#
importance,#as#they#do#with#low#inflation,#which#is#understood#as#supporting#the#sustainability#of#Peru’s#economic#growth#and#development.#
• Maintain!a!free!competition!model!based!on!the!existence!of!various!types!of!financial!institutions.!This#will#ensure#the#longLterm#sustainability,#even#in#economic#downturns.#The#interviewees#said#that#it#is#desirable#for#regulation#to#protect#the#mix#of#institutions#by#offering#temporary#incentives#and#by#making#the#regulatory#and#supervisory#requirements#more#flexible#for#the#smallest#institutions,#to#support#their#longLterm#survival.#
• The!government!should!provide!temporary!incentives!to!the!private!sector#so#that#it#may#offer#tailored,#attractive#and#sustainable#services#to#underserved#and#excluded#areas.#
• Public!and!private!sector!efforts!should!be!aligned!under!one!unified,!long@term!financial!inclusion!plan.#Only#a#comprehensive#approach#to#state#and#private#sector#participation#will#ensure#that#key#issues#are#tackled:##improvement#in#the#circumstances#of#those#excluded#from#the#financial#system;#the#creation#of#conditions#for#the#reduction#of#service#delivery#costs;#and#improvements#in#levels#of#financial#literacy#through#education,#product#uptake,#and#behavior#building#programs.###
• The#government#should#provide#structured#plans#and#programs#to#serve#as#the#foundation#for#private#sector#actions#and#initiatives. #
• Innovation#should#be#promoted#in#the#development#of#microLinsurance#products,#such#as#those#aimed#at#rural#and#agricultural#sectors.#
#The#Committee#of#Experts,#who#graciously#contributed#to#this#study,#included:#Walter#Torres,#General#Manager,#FEPCMAC,#Peruvian#Federation#of#Municipal#Savings#and#Loan#of#Peru;#Francisco#Salinas,#General#Manager,#FEPCMAC,#Peruvian#Federation#of#Municipal#Savings#and#Loan#of#Peru;#Jose#Zapata,#Supervision#Manager,#FENACREP,#National#Federation#of#Savings#and#Credit#Cooperatives#of#Peru;#Jorge#Arias,#General#Manager,#ASOMIF#PERU,#Association#of#Microfinance#Institutions#of#Peru;#Cesar#Portalanza,#Chief#of#Education#and#Financial#Inclusion#Department,#SBS,#Banking#and#Insurance#Superintendence;#Iris#Lanao,#Executive#Director,#FINCA#Peru;#Diego#Fernandez#Concha,#Managing#Director,#PRISMA#Peru;#Jacinta#Hamann,#Directress,#Oikocredit#International;#and#Carmen#Velasco,#Director,#PROMUJER.#
++
This+report+is+available+in+Spanish+and+English+at+www.centerforfinancialinclusion.org.+
! ! !!
1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
!
!
October 2013
GENERAL SURVEY RESULTS: OPPORTUNITIES AND OBSTACLES TO FINANCIAL INCLUSION IN PERU
2012 !! !! !! !! !! !! !! !! !! !!
!!OPPORTUNITIES*FOR*FINANCIAL*INCLUSION* RANKING' NUMBER!OF!
RESPONSES! %!!!
!! OBSTACLES*TO*FINANCIAL*INCLUSION* RANKING'NUMBER!
OF!RESPONSES!
%!
!! Financial!educa5on!! 1! 158! 76.7%! !! !! Limited!financial!literacy! 1! 144! 72.4%!!! Expanding!the!range!of!products! 2! 117! 56.8%! !! !! Unsustainable!growth! 2! 120! 60.3%!
!! Mobile!(phone)!banking!! 3! 110! 53.4%! !! !! Insufficient!infrastructure! 3! 119! 59.8%!
!! Correspondent/Agent!Banking! 4! 109! 52.9%! !! !! Product!costXstructures! 4! 111! 55.8%!
!! Mandates!to!provide!noXfrills!bank!accounts! =5! 100! 48.5%! !! !! Limited!understanding!of!client!needs! 5! 107! 53.8%!
!! Capacity!building!for!microfinance!ins5tu5ons! =5! 100! 48.5%! !! !! Poor!business!prac5ces! 6! 100! 50.3%!
!! FullXinclusion!financial!ins5tu5ons! 7! 98! 47.6%! !! !! Costs!of!building/opera5ng!branches! 7! 89! 44.7%!
!! Improved!demandXside!informa5on! 8! 96! 46.6%! !! !! Microfinance’s!singleXproduct!approach! 8! 83! 41.7%!
!! Reaching!out!to!new!client!groups! 9! 92! 44.7%! !! !! Weak!legal!infrastructure!! 9! 76! 38.2%!
!! Expansion!and!improvement!of!microfinance!associa5ons! 10! 87! 42.2%! !! !! Limited!ins5tu5onal!capacity!among!MFIs! 10! 75! 37.7%!
!! !! !! !! !! !! !! !! !! !! !!
!! Client!protec5on!regula5on! 11! 86! 41.7%! !! !! Impact!of!financial!inclusion! 11! 72! 36.2%!
!! Mobile!(branch)!banking!! 12! 81! 39.3%! !! !! Lack!of!demographic!informa5on!on!the!excluded! 12! 68! 34.2%!
!!Strengthening!financial!infrastructure!for!electronic!(nonXcash)!transac5ons!
13! 74! 35.9%!!! !! Commercially!oriented!entrants!
=13! 66! 33.2%!
!! Collateral!and!secured!transac5ons!reform! 14! 68! 33.0%! !! !! Inadequate!regulatory!framework!for!MFIs! =13! 66! 33.2%!
!! Building!investor!markets! 15! 63! 30.6%! !! !! Lack!of!network!coopera5on! =15! 63! 31.7%!
!! Compe55on! 16! 62! 30.1%! !! !! Lack!of!interest!by!providers!and!policymakers! =15! 63! 31.7%!
!! Credit!bureaus!! 17! 61! 29.6%! !! !! Appropriate!funding! 17! 60! 30.2%!
!! Village!savings!and!loan!associa5ons/selfXhelp!groups! 18! 58! 28.2%! !! !! Documenta5on!requirements! =18! 59! 29.6%!
!! Na5onal!iden5fica5on!documenta5on! 19! 55! 26.7%! !! !! Client!risk! =18! 59! 29.6%!
!! Improved!regula5on!and!supervision!of!microfinance! =20! 54! 26.2%! !! !! Poli5cal!interference! 20! 55! 27.6%!
!! Microfinance!transforma5on! =20! 54! 26.2%! !! !! Regula5on!that!lags!technology! 21! 48! 24.1%!
!! Commercial!bank!downscaling! 22! 46! 22.3%! !! !! Financial!regulatory!priori5es! 22! 46! 23.1%!
!! Pruden5al!regula5on!and!supervision!(in!general)! 23! 41! 19.9%! !! !! Inadequate!client!protec5on! 23! 45! 22.6%!
!! Linking!government!transfers!to!deposit!accounts! 24! 36! 17.5%! !! !! Lack!of!credit!bureaus! 24! 39! 19.6%!
!! Matched!savings!and/or!cash!transfer!schemes! 25! 35! 17.0%! !! !! Public!mistrust!of!financial!ins5tu5ons!! 25! 34! 17.1%!
!! Directed!credit/service!mandates! 26! 30! 14.6%! !! !! Limited!knowXhow!of!mainstream!providers! 26! 28! 14.1%!
!! SelfXregula5on!! 27! 27! 13.1%! !! !! Transient,!migrant!displaced!popula5ons! =27! 26! 13.1%!
!! Product!bundling!and!crossXselling! 28! 25! 12.1%! !! !! Weak!industry!voice! =27! 26! 13.1%!!! State!Bank!!Reform! 29! 24! 11.7%! !! !! NonXbusinessesXfriendly!environment! 29! 25! 12.6%!
!! Non!–Tradi5onal!providers! 30! 13! 6.3%! !! !! Nega5ve!press!image! 30! 18! 9.0%!!! !! !! !! !! !! !! !! !! !! !!!! !! !! !! n=!206! !! !! !! !! !! n=!199!
! ! !!
1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
!
!
October 2013
