Barclays' 'Banking on Change' disrupts savings model

There are currently nearly 2 billion financially excluded adults around the world. Despite the introduction of mobile money and clever smartphone applications, 38% of all adults have no access to formal financial products. Working in partnership on a programme called 'Banking on Change' with NGO's CARE International and Plan UK, Barclays has set out to change this.

With a focus on supporting young people, the Banking on Change programme works in seven countries to give those in some of the world's poorest communities the skills to save, as well as access to basic financial services.

Everyone can save

The principle is simple; no-one is too poor to save. By forming community savings groups, individual members, most of whom earn less than US$2 day, save and lend together. Over 11,000 savings groups designed to meet the specific needs of young people have been created by the programme. They are provided with training to develop the skills and knowledge to save, manage their finances, and in most cases to set up a small business.

Barclays has developed bespoke products to suit the needs of a growing customer base in Africa, including group bank accounts, mobile banking products, and an overdraft facility.

The partnership has worked closely with the Grameen Foundation and Airtel in Uganda to develop innovative new mobile products. These products surmount some of the challenges preventing savings groups and others access from accessing financial services, such as distance to local bank branches and a lack of access to customer data.

Stephen Van Coller, Chief Executive, Corporate and Investment Banking, at Barclays Africa

Stephen Van Coller, Chief Executive, Corporate and Investment Banking, at Barclays Africa, said "Delivering mobile financial solutions in Africa, we are able to bypass traditional modes of banking, as experienced across the rest of the world. Innovation in mobile means we can create solutions that are geared towards the needs of local communities, businesses and savers - meaning we can tap into a much broader customer base across the continent".

Mobile financial solutions

Smartphone innovations are fostering financial inclusion among the poor and unbanked, increasing financial transparency, and reducing security risks for staff and clients. Less commonly talked about are the wider, positive 'side' effects that these applications have for women in particular.

In Uganda, where there is a vast gender gap in finance, evidence has shown that smartphone applications can yield surprising benefits for women, particularly young women. The Kyebakola Kyobona youth savings group is one of the groups using Ledger Link, which helps members build a credit history with the bank by enabling them to submit digital records of their savings and loan activities.

These technologies help the women, in particular, better manage their finances, empowering them to take the lead in determining household finances. There have also been improvements in overall financial literacy, increased confidence and even social status as a result of the training and support provided.

Using lessons learned from Banking on Change, Barclays, CARE International and Plan UK have established the Linking for Change Savings Charter to encourage other financial institutions' involvement in this issue. The charter sets out international principles enabling other organisations to effectively link community groups to formal banking products and savings.

Banking on Change model demonstrates how grassroots saving and linkage to financial institutions can contribute towards closing the gap on the two billion unbanked people across the world. There are clear opportunities for banks and other formal financial institutions worldwide, with informal savers alone representing a pool of potential customers with the ability to save $116 billion each year