Doing Well and Doing Good: Leveraging Our Scale to Enable Greater Access to the Financial System

October 18, 2016

Many of our customers are small storeowners in Peru, who in 2012 were some of the 6 million Peruvians without any access to banking services. They depended on cash flow and risked not having enough cash or stock to weather the economic times, let alone grow.

Recognizing the impact that this situation had not only on customers’ businesses but on our business, in 2012 we established an entirely new banking network across the regions of Peru.

Through Backus, a subsidiary of SABMiller in Peru, we made a commitment to support our partners, customers, and communities to grow together.

Tackling a Widespread Problem
With a customer base of 192,000+ retailers, we were very aware of the effects of financial exclusion, as was the Peruvian government, which in 2012 expressed its commitment to tackling the issue and recently defined the national strategy for financial inclusion.

We understood that, if we improved financial inclusion, we could increase our own sales and drive growth among small and medium enterprises (accounting for 42% of Peru’s GDP) and, ultimately, the Peruvian economy. We therefore set objectives to

  • Increase the number of businesses with banking collection.
  • Reduce costs associated with cash handling (including crime losses and man-hours).
  • Increase sales for both retailers and Backus.

Our Program
In 2012, we implemented our agenda-leading program of Bankarization and Financial Inclusion, which consisted of four stages:

  1. Research and diagnosis: Identified geographical areas where clients lacked banking services.
  2. Model design: Collaborated with banks to open up credit lines.
  3. Education, training, and communication: Delivered financial educational training to retailers.
  4. Infrastructure: In partnership with banks, enhanced the entire banking infrastructure, including 1,500 mini-banks and a new mobile transactions service.

Continual Development
In February 2015, we initiated a microinsurance program available to customers who use the banking services. It costs less than $1, but offers outstanding benefits covering life risks, medical attention, and discounts. It introduces the retailer to the “world” of insurance where then they will be able to manage their own risks. Since the launch, more than 2,500 customers have benefited from the program. In addition, we have been working on a “Virtual Cash Project” in our company and also in coordination with the bank and other critical entities, for example, the government. This project is an example in the region with the name “Virtual Cash—Peru Model.”

Results
Making Progress Together has delivered a win-win situation for businesses, banks, and ourselves.

Benefits for Our Customers

  • A total of 5,100 customers have received low-interest loans, totaling $38 million.
  • Collectively, 1,200 mini-banking agents have the potential to bring in an additional yearly income of US$4.5 million.
  • In 2013–14, more than 3,000 customers received 16 hours of free financial services and management skills training. To date, this has increased to 6,000 customers. We also supplied printed educational materials to a further 15,000 Peruvian businesses.
  • Businesses with banking collection have increased by 260%, from 5,000 in 2012 to 18,000.

Benefits for the Banks

  • In 2012–13, 1,500 mini-banking agents opened agencies in their outlets.
  • For the first time, banks can access valuable commercial information about clients in rural areas thanks to our nationwide coverage.

Benefits to Backus

  • The cash collection decreased from 70% to 47%, saving US$810,000. In 2014–15, this decreased to 40%, saving US$1.4 million in total.
  • Our financing program brought benefits for the clients involved, helping them to increase sales 16% on average.
  • We have saved US$374,000 (estimate for 2012–14) due to receiving funds earlier (income interest).
  • In total, robbery loses decreased by about US$265,000.

Lessons Learned

  • True breakthroughs often require us to think beyond our traditional scope. When we examine the major barriers to our growth, we often see that the root causes of those barriers extend beyond the traditional realm of our business.
  • Our unique scale and coverage provides us with a unique asset, and our financial strength specifically gives us leverage with banks, which we can use in favor of our customers.
  • When we provide service and support that is truly unique and difficult for others to replicate, we create uniquely strong loyalty with our customers.
  • Many of our customers would be better customers if they simply had access to basic financial services. There is huge latent demand from clients to develop their own business, yet they are severely hampered by limited access to financial services.

[Editor's Note: This article originally appeared in Private Sector Leadership in Financial Inclusion.]