The final GAFIS report is out. “Big banks can’t serve low-income clients because small balance accounts just do not offer a sustainable business proposition” has been a truism since forever, and for good reason. This report takes a good stab at how that doesn’t always have to be the case, and how some of the biggest banks in sizeable developing countries are finding creative, segmented solutions to expanding the envelope of financial inclusion.

Between 2010 and 2013, the GAFIS project engaged five banks – Bancolombia (Colombia), BANSEFI (Mexico), Equity Bank (Kenya), ICICI Bank (India), and Standard Bank (South Africa). Together, they serve 77 million clients, and have combined assets of $250 billion, many of whom are the low-income segment. Obviously not all low-balance accounts belong to low-income clients, but the vast preponderance of low-income clients will have low-balance accounts; hence the focus on making them sustainable.

The final impact was described as follows (p.g. 38):

Collectively, the GAFIS banks have opened more than 4.2 million new accounts in GAFIS-linked products in less than three years. More importantly, they now serve approximately 420,000 “new, poor savers” as a result of the project (see Box I). This number is measured according to the GAFIS project definition, which requires evidence of both savings activity (870,238 accounts) and the poverty status of the account holders (543,119 new accounts meet both criteria); and which also weights the level of attribution to the project according to how directly GAFIS was involved (reducing the 543,119 to 419,654). Even with delays in launching new products at several banks, these growing numbers provide early indication that large banks can achieve scale outreach with their new propositions.

Very importantly, the business case for these 420k new, poor saver accounts was improved significantly through a combination of strategies:

  • Costing methodology adjusted to product and channel specifications: It doesn’t make sense to load up branch costs into an acquisition expense if the product is mostly mobile phone based, for example.
  • Using agent channels, where agents are essentially mom-and-pop stores set up to function as mini-banks: Transactions cost about a fifth as much with agents, where the agent is paid a commission. Account origination costs are in the $1-$6 range at agents, while those at branches are $16-$25.
  • Increasing cross-sell: This might mean serving credit needs of clients, or fees from intermediating inflows from government or other sources of credit payments.

Here’s a summary of what each bank did to improve the business case (p.g. 22):


Still, all this does not make the business case for the accounts a positive one. It does significantly improve it though, from losing $2.79 per account per month, to losing $1.02 per account per month (p.g. 32):


Lot’s more details in the report – do check it out!