The Voice of
Savings and Retail Banking
NON-BANKING CORRESPONDENTS
IN EL SALVADOR
THE CASE OF FEDECRÉDITO
(FEDERATION OF CREDIT UNIONS AND WORKERS’ BANKS)
“Working with banks and savings banks to double savings accounts for the poorest”
March 2015
Research Paper
Research Paper
NON-BANKING CORRESPONDENTS
IN EL SALVADOR
THE CASE OF FEDECRÉDITO
(FEDERATION OF CREDIT UNIONS AND WORKERS’ BANKS)
“Working with banks and savings banks to double savings accounts for the poorest”
March 2015
Main Author: Ernesto Aguirre
Co-author: Weselina Angelow
PREFACE
This study has been prepared under the patronage of the Instituto Mundial de Cajas de Ahorro y Bancos al por Menor
(IMCA) [World Savings and Retail Banking Institute], in the context of its programme “Working with banks and savings
banks to double savings accounts for the poorest”, with the main purpose of publicising the main experiences of
one component of the programme, developed by “Fedecrédito” in El Salvador.
This study presents the main lessons learned during the process of planning, preparation and start-up of a network
of non-banking correspondents throughout the country, and also examines the key factors which contribute to the
successes and failures of the programme, taking into account, in particular, work with local communities and
the challenges of turning a low-value payment system into a scheme which will make it possible to provide an array
of financial services to the poorest communities.
Fedecrédito is a member of IMCA, and was the only Latin American entity selected to participate in the
aforementioned programme. The network of non-banking correspondents whose establishment and start-up received
the financial and technical support of the programme, forms part of a broader strategy adopted by Fedecrédito which
is intended to expand the various distribution channels, including ATMs and mobile banking, to offer a more effective
service to the unbanked population who lack access to financial services in the country.
This project can be considered a pioneer in El Salvador since Fedecrédito was the first financial institution in the
country to establish and render operational a network of non-banking correspondents in the country.
The authors would especially like to thank the Fedecrédito team for its important contribution to the development
of this study. They would also like to thank Mr Jeremiah Grossman, Mobile Banking Regulations Manager at GSMA1
for his interesting comments on a previous version of the study.
1 Translator’s note: The GSMA is a body which represents the interests of mobile operators worldwide.
4
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
1. INTRODUCTION
In this document we will examine the planning and implementation of a network of non-banking correspondents, as
an innovative channel which will make it possible to increase the possibility of access to low-cost financial services for
low-income segments of the population, particularly in isolated areas and areas with certain access difficulties.
A particular feature of the case study, carried out in El Salvador, is that it concerns a network that is essentially made
up of cooperative entities, basically comprising members of the actual communities in which they operate, most of
which are self-regulated, and united through a federation (FEDECRÉDITO) which coordinates, regulates and supervises
them, as we shall see in this study.
2. BACKGROUND
a)
Banking service coverage in El Salvador (at the start of the project)
El Salvador, a small Central American country with a territorial extension of 21,041 km2, a population of 6,340,000
people (2013) and a gross domestic product per capita of US $3.720 (2013)2, had, at the end of 2009, a relatively
low level of banking service coverage3 and only 45% of its municipalities had direct access to financial services
(173 municipalities had no formal financial service provider)4.
It is a well-known fact that access by the poor population to low-cost basic financial services has turned out to be a
critical socio-economic variable, particularly in isolated rural areas. This is even more true for a dollar economy, highly
dependent on remittance flows from abroad, as in the case of El Salvador.
b) FEDECRÉDITO: basic structure, members and organisation
The FEDECRÉDITO system is made up of 55 cooperative-type financial entities, 51 of which are self-regulated, which
provide universal banking financial services to its members and customers, and FEDECRÉDITO (a federation which
brings together, coordinates, regulates and supervises the other entities). Four of the members of FEDECRÉDITO can
accept funds from the public and are regulated and supervised by the Superintendencia del Sector Financiero
[Financial Sector Supervisory Authority]5.
All of the members of FEDECRÉDITO are independent legal entities which operate autonomously. The Federation is
supervised by the Superintendencia del Sistema Financiero [Financial System Supervisory Authority], whose main tasks
are the provision of second-tier banking services, technical support, promoter of joint projects and common
technology system manager. Furthermore, it is responsible for regulating the FEDECRÉDITO System6, within a selfregulatory framework allowed under Salvadoran law.
2 World Bank. Indicators of World Development, 2013.
3 In 2007, El Salvador had 4.83 bank branches, 13.32 ATMs and 172.41 points of service (POS) for every 100,000 inhabitants, which placed it below the Latin
American average at the start of the programme (cf. FELABAN, “Promoviendo el acceso a servicios financieros en Latinoamérica” [“Promoting access to financial
services in Latin America”], 2009).
4 FEDECRÉDITO, “Project to increase the number of savings accounts used by people on low incomes”, 2009.
5 The FEDECRÉDITO SYSTEM comprises 55 first-tier entities, including 48 Lending Institutions, 7 Workers’ Banks; and FEDECRÉDITO, a federation which is a
second-tier entity, which manages and coordinates the whole system.
6 With the exception mentioned in the preceding paragraph.
RESEARCH PAPER
3. THE PROJECT
FEDECRÉDITO is a member of the Instituto Mundial de Cajas de Ahorro (IMCA), (World Savings Bank Institute (WSBI)),
an institution which in 2009 invited its members to participate in a 3-year project the main objective of which was to
increase the number of savings accounts used by people on low incomes.
Within the framework of the “project” the Instituto Mundial de Cajas de Ahorro (IMCA) provided FEDECRÉDITO with
technical and financial support with the aim of encouraging the poor in El Salvador7 to build up savings and to
facilitate access by the “unbanked” poor to basic financial services in at least half of the 173 municipalities which at
the start of the project (end of 2009) were without any banking services8.
To achieve the aims of the project, three basic tools were to be used:
(i) a network of ATMs;
(ii) a network of non-banking correspondents, owned and managed by Partner Entities and coordinated by
FEDECRÉDITO; and
(iii) the service provided by Mobile Banking.
ATMs are a well-known and more traditional way of providing financial services but the provision of financial services
by Salvadoran Mobile Banking is still in its infancy. Thus, in this study, we will concentrate on the lessons learned
during the establishment and development of the NBC [Non-Banking Correspondent] network.
4. PROJECT DEVELOPMENT
a)
Planning phase
i) Role of FEDECRÉDITO and of Partner Entities - Structure of the model
The business model plan for the project was produced by a FEDECRÉDITO technical team, with the assistance of
project consultants hired by the IMCA. Basically, the model was to enable FEDECRÉDITO and its members to
establish a sustainable network8 with at least 100 access points and the capacity to reach customers in at least
half of the 173 municipalities which, at that time, had no banking services. The network should make a
significant improvement in the use of basic financial services by the poor. What is more, it was supposed to
show how quickly people would take advantage of the services available and the realistic possibility of reaching,
in 2014, the target of opening 200,000 savings accounts.
The model assigned the main role to the Partner Entities, whilst the NBCs were to provide financial services in
their name and on their behalf. FEDECRÉDITO would develop the technological infrastructure offering a turnkey
service, including the training of both Partner Entities and NBCs, and it would become the central network
manager once it was up and running. The NBCs would act as agents of Partner Entities for the provision of
financial services, for which they would receive a fee. Partner Entities would be responsible for identifying and
designating the correspondents, with the help of FEDECRÉDITO, which, for this reason, carried out market
research at national level.
In a nutshell, despite FEDECRÉDITO’s important role of coordination and provision of technical and operational
support, the key element of the project were the Partner Entities who would offer services to end users through
the new channels. As can be seen, the success of the project ultimately depended on the interest expressed by
Partner Entities in taking part.
7 An initial target was set of opening 200,000 new savings accounts for poor customers within a three-year timescale.
8 IMCA received more than 40 expressions of interest from its members worldwide and after completing the evaluation process, FEDECRÉDITO’s proposal was
approved, it being the only institution to win this project in Latin America, paving the way for the implementation of the project and of the first Network of
Non-Banking Correspondents in El Salvador.
9 Generally speaking, a sustainable network is considered to be the network made up of Non-Banking Correspondents whose services generate sufficient income
to be commercially viable without receiving subsidies from the corresponding financial entity or parent company. In this project, the NBCs receive commission
for each transaction and are guaranteed a minimum commission by the Partner Entities. Even though many of the NBCs are subsidised by the respective Partner
Entities, it is hoped that, after an initial period, these NBCs will be able to rely solely on the income they have generated on their own.
5
6
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
ii) NBCs, technological requirements, services to be provided and financial structure
Two basic kinds of NBC were considered, one involving a very simple computer terminal capable of offering the
complete range of financial services covered by the project, and the other which would only use a point of service
(POS) system offering a more limited range of services, based on the provision of transaction services, such as
collection of utility payments (cash inflows) and cash payment of family remittances to the end beneficiaries (cash
outflows)10.
The NBCs would be able to provide a wide range of financial services, including:
cash deposits and withdrawals to/from savings accounts, payment of utility bills, transfers of funds between
savings accounts, payment of family remittances, loan and credit card payments and the provision of lending and
savings accounts information. They would also act as reference channels for the opening of savings accounts and
for the approval of credit by Partner Entities.
In addition, NBCs would provide services in the name and on behalf of the Partner Entities, and would receive
commission for each transaction, thereby guaranteeing them a minimum fixed monthly amount during the initial
period. In principle, the high number of service payment transactions (cash inflows) and family remittance
payments (cash outflows) appears to offer cash flow equilibrium.
iii) Creation of a regulatory framework and dealings with regulatory bodies
In principle, the NBC network was to operate with Partner Entities which were not regulated by the Financial
System Supervisory Authority. Thus, FEDECRÉDITO developed internal rules governing their management and
operation, which were approved by its Governing Board on 30 November 2011 and which came into effect on
1 January 2012. Before commencing activity, Partner Entities had to meet the conditions necessary to enable
correct functioning of the NBCs, including training and the signing of contracts with small businesses which were
to act as NBCs for the respective Partner Entity, and finally, seek the corresponding approval from FEDECRÉDITO.
The NBCs are subject to the administrative supervision of the Partner Entity that contracted their services and are
also supervised by FEDECRÉDITO.
The whole framework for working with NBCs, in terms of customer relations, technology, and financial and
operating risks was under the general supervision of FEDECRÉDITO, which would provide participants (Partner
Entities and NBCs) with technical and operational support. In this capacity, each Partner Entity was to sign a
management contract with FEDECRÉDITO.
It should be pointed out that at the start of the project, the financial entities regulated by the Financial System
Supervisory Authority were not able to operate through NBCs since there was no financial regulation available to
them to do so. It was not until 2013 that a regulation authorising this kind of operation was approved, which in
practice, gave unregulated Partner Entities of FEDECRÉDITO a certain advantage (almost two years) and, at the
same time, the responsibility of being the first ever group of entities in charge of running an NBC scheme in the
country.
It should also be mentioned that one of the core features of the project is that, unlike most other such schemes
applied in other countries (where, generally speaking, correspondents operate as part of a network belonging to
a large bank regulated by the banking regulator in that particular country), the Salvadoran scheme was made up
of small, self-regulated financial entities, which in most cases already had close links with the target population
living in poor areas to which the NBCs were to provide services.
iv) The search for enthusiastic participation by non-regulated Partner Entities
In addition to the particular features of the scheme described in the preceding section, it was essential to inspire
the directors and managers of Partner Entities to achieve enthusiastic participation, which in practice was
possible by an intensive process of briefing and training programmes, combined with appropriate leadership.
(The President of FEDECRÉDITO organised trips with managers of Partner Entities to visit other sites, e.g. IMCA
member institutions in Brazil, Peru and Colombia, to observe the work successfully carried out in other
correspondent agent networks.)
10 As at 31 December 2014, there are 203 NBCs in operation, which use the computer terminal-based model.
RESEARCH PAPER
b) Implementation phase
i) Search and procurement of resources
FEDECRÉDITO was tasked with finding and procuring the technical resources, which involved not only procuring
the resources to be used by the NBCs (computer terminals and points of service), but also the basic tools
necessary to operate the system. These included the “transactional switch” and other hardware and software
components necessary for operation of the central system which would connect the “switch” with the banking
computation centre of the system for the end processing of all the transactions carried out. The technological
components were purchased with technical support from the WSBI and with the financial support of
FEDECRÉDITO and its Partner Entities.
ii) Marketing programme
A regional specialist firm was contracted to carry out consultancy services which included a nation-wide market
study and the selection of potential Non-Banking Correspondent sites, with WSBI funding. It was very important
to take into account that the success of the project depended on having access to fairly isolated segments of the
population, most of whom lived in small towns/villages and cantons outside the capital which generally meant
those on the lowest incomes, and that NBCs would have to be rolled out primarily in municipalities where there
were no actual banks.
Basically, this meant encouraging the residents to open savings accounts through the Partner Entity that
approached them with the offer of the financial services, and then to deposit their small savings through the
correspondent, in order to reduce travel costs and gradually, the cost of the financial transactions themselves.
iii) Identifying suitable sites
The identification of the sites best suited to accommodating the establishment of NBCs, was a very interesting
part of the process, primarily involving the participation of Partner Entities with the support of FEDECRÉDITO.
Since most of the Partner Entities already had a long history of involvement in their respective towns and villages,
and their partners were mainly local residents, these close links were exploited to try to identify small-scale
entrepreneurs who might be of use to the project, both in towns/villages and in nearby settlements (cantons).
During the implementation process, small-scale entrepreneurs were identified, of good repute recognised in the
neighbourhood, and with an appropriate stable business to operate as an NBC. Thus, the trust of local residents
placed in the entrepreneur facilitated the execution of minor financial transactions, with greater emphasis on payment
of basic telephone, power and water bills; and besides the payment of family remittances, the bankarisation
process was started after providing access to these services.
Various basic kinds of NBC can be identified. In urban areas, most NBCs have the basic function of improving
agencies and easing their congestion, i.e. Partner Entities which have a significant turnover delegate a large
number of simple transactions and operations, conducted with several customers, to the correspondents. In this
way, the biggest transactions are reserved for the head offices and branches.
This kind of NBC accounts for roughly 8% of total agents. Where Partner Entities have a presence in rural areas,
most of the NBCs are used to carry out financial services and to facilitate the process of extending banking
services, i.e. extend the scope of Partner Entities to remote areas and thus create a wider market for very simple
transactions. Many of these NBCs operate in municipalities which previously had no access to financial services.
Lastly, a number of NBCs operate at smaller sites and very isolated settlements within municipalities which
previously had no banking services.
7
8
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
Picture 1: Fede Neighbour Point at the Letty store in Candelaria de la Frontera, in the Santa Ana
administrative district © Sistema Fedecredito
c)
Operating phase
i) Launch of the service in the community
A key factor in the launch of the new channel has been the advertising and promotion of the Correspondent
Network. Basically, this was carried out at two levels: a nation-wide advertising campaign was conducted using
mass media with national coverage. To do so, the trade name of FEDE PUNTO VECINO [Fede Neighbour Point]
was used, with standard signage and a brand image for all of the Non-Banking Correspondents designed in
agreement with the Partner Entities. The advertising campaign evoked elements of proximity and confidence in
the Partner Entities that supplied financial services to the community through neighbourhood trade.
For the specific case of operating a Non-Banking Correspondent in a specific place, each Partner Entity launches
the services accompanied by advertising and promotion of the Correspondent and of the financial services the
latter will provide, thereby turning the business into one of the most important in the area. The acceptance of
customers and partners to carry out financial transactions at Non-Banking Correspondent points quickly proved
to be successful, since the services immediately began to be provided, including the handling of deposits, since
confidence was placed primarily in the Partner Entity who supported the operations, benefitting the community
by enhancing comfort in the neighbourhood, cutting transaction costs, minimising travel times and generating
greater security.
ii) Services to be provided at NBC points
The first services to be used and positively perceived by the community were basic transactions, such as payment
of utility bills and collection of family remittances, but these are the majority of the transactions carried out
through NBCs11.
11 According to FEDECRÉDITO, 846,072 (more than 80%) of the 1,054,288 operations carried out through NBCs between September 2012 and June 2014 were
transaction-type. Cf. FEDECRÉDITO, “Corresponsales no bancarios del FEDECRÉDITOSISTEMA FEDECRÉDITO. Punto Vecino” (Non-banking correspondents of
the FEDECRÉDITO System. Neighbour Point”), PP presentation, July 2014.
RESEARCH PAPER
As already mentioned, probably the most important
reason for using NBCs, from the customer’s
perspective, was the saving in travel costs since they no
longer had to take the bus to carry out the same
transactions in the closest municipality to gain access
to the financial services. This function of reconciling
communities with NBCs has already been successfully
achieved. However, to extend the use of the
correspondent to other financial services, with levels
similar to those achieved with purely transactional
services, it is still necessary to promote credit and
savings products on an ongoing basis amongst
populations close to the NBCs, which is the
responsibility of the respective Partner Entity and which is
partly supported by the same Correspondent Agent.
Picture 2: Fede Neighbour Point in the Don Misa
store in Santo Domingo, in the administrative
district of San Vicente © Sistema Fedecredito
With regard to NBCs located in urban areas, there are
cases in which the services provided (in most cases,
transaction services) are generating significant time
and space savings for the Partner Entities. This factor may be more important for the financial situation
of these Partner Entities than for the project in terms of extending and providing financial services to the poorest
and most isolated segments of the population in the country.
iii) Balance between inflow and outflow cash transactions
Based on other international experiences12 we know that the transfer of cash was perhaps the most significant
operating cost within the NBC framework. Thus, special attention was devoted to trying to ensure that inflows
and outflows of cash were balanced, in order to minimise this basic cost.
So far, the balance in this project has generally been maintained basically because the service payment amounts
(money inflows) and the amounts for collection and payment of family remittances (money outflows), which are
the two main transaction groups which so far have been carried out through NBCs in the project, have been very
similar, as can be seen by the figures given in the following section. This has made it possible to minimise the
cost of transporting cash and taking out insurance, etc., which makes it possible to significantly reduce the costs
paid for the services13.
5. GAINS ACHIEVED
Since the start of the project, a network of 203 NBCs has been created (as at December 2014). According to figures
produced by FEDECRÉDITO14, 95% of the NBCs essentially carry out “bankarisation” tasks.
As at December 2014, 92 of the 173 municipalities previously without financial services can now access them.
A very interesting balance has been reached between cash inflows and outflows, because of the US $ 54.279
thousand for transactions carried out through the NBCs to December 2014, around 53% correspond to cash inflows
and 46.6% to cash outflows15. This has enabled the system to achieve a significant reduction in the cost of
transportation and insurance of physical cash.
For the end users, particularly residents in isolated areas (who in many cases were previously unbanked), the main
advantages are the reduction in the cost of collecting family remittances and savings in the cost of travel to pay public
utility bills and other basis expenses.
12 To learn more about international experience on this subject, the project provided financial and technical support to enable the representatives of FEDECRÉDITO
and its members to visit various entities in Brazil, Colombia, Kenya, Peru and Tanzania.
13 According to FEDECRÉDITO (cf. note 12), at this point, a reduction in the average cost per transaction from US$ 5 to US$ 1 is considered realistic.
14 Cf. table 1.
15 Calculation taken from table 1.
9
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
Graph 1: Non-banking correspondents in production (from 17 September 2012 to 31 December 2014)
Accumulated January - December 2014
there are 65 new NBCs operating.
220
203
200
188
180
173
160
Correspondents
10
155
138
140
120
107
100
80
60
48
40
20
23
30
5
0
Sep 12
Dec 12
Mar 13
Jun 13
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Source: FEDECRÉDITO. December 2014
Table 1
TRANSACTION TYPE
NUMBER OF TRANSACTIONS
AMOUNT ACCUMULATED IN THOUSAND $
Cash Inflow Transactions
1,469,228
28,761
Cash Inflow Transactions
1,469,228
28,761
Electricity bill payment
771,160
10,680
Telephone bill payment
132,714
2,364
Loan payment
117,828
6,999
75,987
5,159
345,241
2,099
Deposit made to savings account
Water bill payment (ANDA16)
26,298
1,460
Cash Outflow Transactions
Credit card payment
220,615
25,312
Family remittance payment
174,650
22,002
34,297
2,246
FISDL subsidies payment
9,149
835
Credit card cash withdrawal
2,519
228
Non-Monetary Transactions
88,322
206
Consultation of savings account statement
83,615
0
Savings account origination management
1,793
0
Loan origination management
1,769
0
Cash withdrawal from savings account (debit card)
17
Money transfer between savings accounts
TOTAL
1,145
206
1,778,165
54,279
Source: FEDECRÉDITO. December 2014
16 Administración Nacional de Acueductos y Alcantarillados (National Aqueduct and Sewer Authority).
17 Fondo de Inversión Social para el Desarrollo Local (Social Investment Fund for Local Development).
RESEARCH PAPER
From the point of view of FEDECRÉDITO, the project (including its three components: ATMs, NBCs and mobile
banking) has generated a significant increase in its visibility at national level and recognition as the country’s banking
organisation of Salvadoran ownership with the highest coverage of municipalities18. Given that other banks only
obtained authorisation to operate with NBCs at the end of 2013, and began setting up NBC networks at the end of
that year, the image of FEDECRÉDITO as a banking organisation close to small communities has, to a large extent,
been consolidated.
The Partner Entities have also consolidated their position as basic providers of financial services to the community,
particularly in rural and isolated areas, and have significantly increased the provision of transaction-type services.
Furthermore, a number of larger Social Partners operating in the San Salvador area and other major cities, have noted
a significant rise in revenue thanks to improvements in their ability to provide less costly financial services through
NBCs and the possibility of using more costly branches for more complex transactions19.
As for agents, the main advantages so far are the increased number of visits made by potential customers (additional
product sales) and the profit margins that can be achieved from carrying out financial transactions. However, in most
cases, the profit from the transaction does not exceed the fixed minimum level and so is supplemented by the
minimum level set by FEDECRÉDITO and each Partner Entity is paid this by the respective Correspondent Agent.
Significant exceptions include agents located in popular areas of San Salvador, whose profits have largely exceeded
the subsidy level determined by FEDECRÉDITO.
In short, by increasing its presence in rural areas, FEDECRÉDITO has increased the potential to collect savings from
the poorest segments of the population and the possibility of initiating them in use of electronic payment services.
In reality, agents provide their customers primarily with transaction-type services (payment of utility bills, collection of
remittances, etc.) and are also being used by customers to collect state benefits. Furthermore, with respect to a
complete range of formal financial services available to the poor population, there is still a long way to go to find the
right solution to make it possible to significantly increase the collection of the small amounts of surplus money held
by the poorest segment of the population to convert it into small savings or electronic payments20.
18 The FEDECRÉDITO SYSTEM is the fifth largest organisation in the country in terms of equity, and the four higher-ranked on the list are foreign companies;
it has the highest municipal coverage in the country, with a presence in more than 179 municipalities, including 67 without the presence of any other banking
institution.
19 For example, BANCOFIT, a Partner Entity which operates in a popular district of San Salvador, has said that by mid 2013, it had achieved a 48% increase in
the total amount of deposits and a 63% increase only in current account deposits, thanks to transactions conducted through NBCs.
20 With this in mind, FEDECRÉDITO is launching the process to implement low-savings products (Planned Savings and Electronic Savings Account).
11
12
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
LESSONS LEARNED
■
This is one of the few cases in the world where a Network of Non-Banking Correspondents has been created by
self-regulated cooperatives, most of which operate outside large metropolitan areas and which are basically made
up of members of the very communities in which they are active, operating with some degree of success taking
into account the total number of transactions carried out to date and the cash flows involved.
■
To achieve these results, it is very important to have the presence of one well-organised coordinator (FEDECRÉDITO)
and a clear sense of enthusiastic participation on the part of participating entities. The involvement of selfregulated Partner Entities and small and micro entrepreneurs in each place has been a major factor in promoting
the network of agents exploiting a local presence and their connections .
■
It is essential to create a simple, clear and complete regulatory framework which lends credibility and legal certainty
to the whole scheme.
■
In contrast to what was, at one time, the widely held opinion globally, it is clear that establishing and managing
a non-banking correspondent network through entities basically made up of members of the community in which
they operate, has, in practice proven to be easier than trying to convert cash payment transactions into an
integrated system of virtual payments .
■
Transaction-type operations such as payment of family remittances and basic services are the most appealing to
the poor segments of the population, because the accompanying economic advantages are more obvious.
The benefit derived from the savings in travel costs is a key incentive. In addition, it is very important to maintain
a good balance between the inflows and outflows of money which means major savings due to the reduced cost
of provision and collection of physical cash.
■
The opening of savings accounts is costly for the Partner Entities (high initial costs and incentives) and of little
interest to agents who, at least in principle, are more interested in the profit generated by their increased sales in
other products, than in the small commission they receive for more complex services such as collaboration in the
opening of accounts.
■
To motivate low-income segments of the population to open savings accounts and to deposit and keep money in
them, other incentives are needed which go beyond simply creating low-cost networks for the provision of basic
financial services. Even though it needs to be examined in more detail, it is possible that cross selling of other
products to new customers would be an easier and more profitable way of collecting formal savings. The recent
approval of a new low-cost savings product in October 2014 designed to serve the poor free of charge seems to
be a step in the right direction.
RESEARCH PAPER
13
14
NON-BANKING CORRESPONDENTS IN EL SALVADOR - THE CASE OF FEDECRÉDITO
WSBI
Rue Marie-Thérèse, 11 ■ B-1000 Brussels ■ Tel: +32 2 211 11 11
[email protected] ■ www.wsbi-esbg.org
Published by WSBI. © March 2015
■
Fax: +32 2 211 11 99