RPA Launches Innovative Program to Help the World's Poor Gain Access to Safe Ways to Save Money

NEW YORK, June 7, 2010 – To help the millions of poor people worldwide who lack a safe way to save money, Rockefeller Philanthropy Advisors has launched a novel initiative that will work with regulated financial institutions in five countries to create savings accounts that are appropriate and affordable for poor families and profitable for banks over the long term. The three-year program, called Gateway Financial Innovations for Savings (GAFIS), is funded by a $9.5 million grant from the Bill & Melinda Gates Foundation.

Over three years, GAFIS will work with large banks in Latin America, Asia, and Africa to develop or expand new savings products and approaches, including those using mobile phone technologies. In most cases, GAFIS will explore savings opportunities for the estimated 150 million people who make regular bank visits to collect government welfare payments and remittances, which account for hundreds of billions of dollars in transactions. Most people have no safe means to save this money, so offering convenient savings products would help them build security for their families and protect them from financial catastrophe.

Additionally, even though countries such as Mexico, South Africa and India require or encourage basic accounts in the interest of financial inclusion, there is little encouragement or incentive for residents to come through the “gate” of the financial system and become formal bank customers. This is due partly to the high cost for banks to serve customers depositing just a few dollars at a time, especially in remote locations, but also due to bank accounts with features that are incompatible with many poor families’ circumstances.

"Saving money can have transformative power for poor families, as it can help them prepare for their children’s education and reduce vulnerability to life’s unexpected events, including illness,” said Chris Page, a senior vice president of Rockefeller Philanthropy Advisors and chair of the program’s advisory committee. “This program has the potential to break through cultural and institutional barriers that have prevented the poor from building such security. In the process it will also develop new banking models that can serve poor communities worldwide.”

GAFIS will support market, product, and business research to help develop appropriate distribution channels for savings products. Additionally, GAFIS will engage families to keep “financial diaries” to record their daily financial lives and needs. This research element will inform the development of new, large-scale, high-quality savings products by GAFIS participating institutions, which are expected to be used regularly by at least 500,000 poor clients.

“Without bank access, many of the world’s poor resort to risky ways of saving, such as storing money in their homes or buying livestock,” said Bob Christen, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. “Programs such as GAFIS expand the availability of affordable, accessible savings accounts and other financial services, which are powerful tools to help the poor build financial security and improve their lives.”

Over the course of the program, GAFIS will also disseminate interim research to help participating institutions improve their understanding of how to provide these new services to clients. Research will include:

  • Factors that encourage or inhibit the poor from adopting and maintaining savings products and behaviors;
  • Cultural shifts and capacity required for an institution to effectively and sustainably offer savings to the poor; and
  • How “second generation” banking models (e.g., non-bank retail networks and mobile phone technologies) affect transaction costs borne by financial providers and their poorer clients.

“Technological advances have made it easier to reach communities in far-flung regions, conduct research and share knowledge quickly and effectively,” said Page. “There has never been a more opportune time to bring poor households permanently into the financial system and, thus, profoundly affect future generations.”

To develop and manage GAFIS, Rockefeller Philanthropy Advisors has engaged Boston-based Bankable Frontier Associates LLC (BFA), a niche consulting firm recognized internationally for its work in developing and strengthening financial inclusion in emerging markets. An advisory committee comprised of experts in financial services, microfinance, institutional savings products and asset-building policy has been appointed to provide program oversight and advice.

The grant to Rockefeller Philanthropy Advisors is part of the Gates Foundation’s Financial Services for the Poor initiative, which is working with a wide range of public and private partners to harness technology and innovation to bring quality, affordable savings accounts and other financial services to the doorsteps of the poor in the developing world. The foundation believes that setting aside small sums in a safe place allows people to guard against risks, build assets, and provide opportunities for the next generation.

For more information please visit www.gatewaytosavings.org.

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Rockefeller Philanthropy Advisors
Rockefeller Philanthropy Advisors is a nonprofit organization that currently advises on and manages more than $200 million in annual giving by individuals, families, corporations, and major foundations. Headquartered in New York City with offices in Los Angeles, Chicago and San Francisco, it traces its antecedents to John D. Rockefeller, Sr., who in 1891 began to professionally manage his philanthropy “as if it were a business.” With thoughtful and effective philanthropy as its only mission, Rockefeller Philanthropy Advisors has grown into one of the world’s largest philanthropic service organizations and as a whole has facilitated more than $3 billion in grantmaking to nearly 70 countries. RPA’s diverse staff of 42 is led by experienced grantmakers with significant depth of knowledge across multiple issue areas.

Bankable Frontier Associates LLC
Bankable Frontier Associations LLC (BFA) is a niche consulting firm that focuses on providing clients with high quality advice on strategy, policy and implementation of financial sector development in emerging markets. BFA has undertaken several projects for the Gates Foundation Financial Services for the Poor group in the past three years. Other BFA clients include a number of leading public agencies such as the World Bank Group and innovative private financial providers such as international NGOs, international banking groups and mobile network operators. BFA focuses on the questions and opportunities created by financial sector development, and it has completed assignments for clients based in Europe, Asia, Africa, the US and Latin America. With a core team based in Boston, MA (USA), BFA draws on expertise in specialist areas from a range of skilled associates across the globe.