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1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
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Opportunities and Obstacles to Financial Inclusion in Peru
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In#2010,#the#Center#for#Financial#Inclusion#(CFI)#conducted#a#field#survey#to#find#out#what#financial#sector#participants#thought#about#the#opportunities#and#obstacles#to#financial#inclusion.#The#survey#sought#responses#from#service#providers,#investors,#members#of#support#organizations,#and#policymakers.#A#total#of#301#respondents#from#67#countries#were#received#and#the#results#were#compiled#in#the#CFI#report#Opportunities+and+Obstacles+to+Financial+Inclusion+in#2011.#+Oikocredit#Perú#and#CFI#joined#forces#to#carry#out#a#countryLspecific#version#of#this#study#in#Peru#in#2012L2013.#Peru#was#chosen#in#recognition#of#developments#in#the#microfinance#market,#market#regulation#and#rules,#the#free#competition#
model#and#the#present#government’s#interest#in#working#towards#financial,#economic#and#social#inclusion.####Study Elements ##The#study#was#carried#out#in#Peru#in#three#main#phases.#1)#First,#an#online#survey#asked#senior#professionals#at#major#private#and#public#sector#institutions#to#rank#a#series#of#preLselected#Opportunities#and#Obstacles.##2)#Second,#experts#with#extensive#experience#in#the#local#market#commented#on#and#validated#the#survey#findings.#3)#Finally,#a#series#of#inLdepth#interviews#were#held#with#a#number#of#the#most#recognized#and#prestigious#players#in#the#local#market.##By#supplementing#the#ranking#of#preLselected#factors#with#interviews#with#experts#and#opinion#leaders#on#financial#inclusion,#this#study#was#able#to#attain#a#deeper#understanding#of#the#reasons#why#the#key#obstacles#and#opportunities#were#selected.##Stakeholders#who#participated#were#grouped#by#organization#type:#financial#service#providers#(cajas+municipals,#credit#unions,#regulated#microfinance#institutions,#cajas+rurales,#EDPYMES,#and#finance#companies)#and#NGOs;#government#or#regulatory#bodies;#support#organizations;#private#companies;#investors;#donors;#and#research/academic#organizations.##Key Findings !
• The!survey!results!largely!coincide!with!the!results!of!the!global!study.#However,#exceptions#include#regulation,#legal#issues,#credit#bureaus,#and#competition,#all#of#which#rank#lower#in#Peru#on#the#list#of#opportunities#and#obstacles,#possibly#signaling#that#Peru#already#does#well#on#these#dimensions.!
• In!the!survey,!financial!education!was!selected!as!both!the!top!obstacle!and!top!opportunity.#The#majority#of#survey#respondents#concluded#that#financial#education#is#necessary#to#increase#the#use#of#existing#products#and#services,#but#does#not#address#the#problems#faced#by#mainly#rural,#remote#and#excluded#areas#without#access#to#financial#services.#For#those#who#have#access,#financial#education#is#definitely#an#obstacle.#!
• The!survey!shows!a!consensus!that!financial!education!is!a!main!responsibility!of!the!Peruvian!government.!The#government#has#incorporated#financial#education#topics#into#the#secondary#education#
October 2013
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1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
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curriculum;#it#has#started#piloting#training#programs#for#teachers#in#public#schools;#and#it#is#working#on#online#educational#initiatives.#Private#sector#efforts#are#seen#as#complementary#to#government#efforts.!
• The!expert!interviews!suggested!that!the!main!obstacle!to!achieving!financial!inclusion!in!Peru!is!the!high!cost!of!delivering!services!to!rural,!remote,!and!poor!areas.!Delivery#costs#are#high#because#of#the#following#constraints:#gaps#in#basic#infrastructure,#difficult#geography,#lack#of#interconnectivity#of#mobile#solutions#and#banking#and#card#platforms#in#remote#areas,#and#the#scarcity#of#branches#in#those#areas.##
• Experts#agreed#on#the#initiatives#and#actions#that#the#private#sector#can#take#to#promote#financial#inclusion.#These#can#be#grouped#around#the#following#categories:#cost,!use,!access,!quality,!consumer!protection,!financial!education,!and!institutional!strengthening.#
• The!key!objectives!for!long@term!sustainability!and!full!financial!inclusion!are:#the#reduction#of#transfer#and#delivery#costs#to#excluded#areas;#appropriate#design#of#services#to#meet#people’s#needs;#education#in#the#use#of#these#financial#services;#promotion#of#financial#capability;#adoption#of#these#services#and#their#functions#as#enablers#of#development#for#these#regions;#and#the#mass#delivery#of#services#supported#by#technology.##
• The!interviewees!had!a!positive!view!of!the!extent!of!Peru’s!progress!toward!financial!inclusion.!In!their!opinion,!the!country!is!at!the!mid@point!towards!achieving!full!financial!inclusion!by!2020.#This#perception#comes#from#progress#toward#financial#inclusion#in#urban#and#suburban#areas,#and,#at#the#same#time,#the#awareness#that##inclusion#has#not#yet#reached#the#country’s#most#remote#and#rural#areas,#or#the#informal#economy#that#makes#use#of#informal#credit.#!!
Recommendations: • Incorporate!financial!inclusion!issues!into!the!national!culture,#so#that#all#citizens#recognize#their#
importance,#as#they#do#with#low#inflation,#which#is#understood#as#supporting#the#sustainability#of#Peru’s#economic#growth#and#development.#
• Maintain!a!free!competition!model!based!on!the!existence!of!various!types!of!financial!institutions.!This#will#ensure#the#longLterm#sustainability,#even#in#economic#downturns.#The#interviewees#said#that#it#is#desirable#for#regulation#to#protect#the#mix#of#institutions#by#offering#temporary#incentives#and#by#making#the#regulatory#and#supervisory#requirements#more#flexible#for#the#smallest#institutions,#to#support#their#longLterm#survival.#
• The!government!should!provide!temporary!incentives!to!the!private!sector#so#that#it#may#offer#tailored,#attractive#and#sustainable#services#to#underserved#and#excluded#areas.#
• Public!and!private!sector!efforts!should!be!aligned!under!one!unified,!long@term!financial!inclusion!plan.#Only#a#comprehensive#approach#to#state#and#private#sector#participation#will#ensure#that#key#issues#are#tackled:##improvement#in#the#circumstances#of#those#excluded#from#the#financial#system;#the#creation#of#conditions#for#the#reduction#of#service#delivery#costs;#and#improvements#in#levels#of#financial#literacy#through#education,#product#uptake,#and#behavior#building#programs.###
• The#government#should#provide#structured#plans#and#programs#to#serve#as#the#foundation#for#private#sector#actions#and#initiatives. #
• Innovation#should#be#promoted#in#the#development#of#microLinsurance#products,#such#as#those#aimed#at#rural#and#agricultural#sectors.#
#The#Committee#of#Experts,#who#graciously#contributed#to#this#study,#included:#Walter#Torres,#General#Manager,#FEPCMAC,#Peruvian#Federation#of#Municipal#Savings#and#Loan#of#Peru;#Francisco#Salinas,#General#Manager,#FEPCMAC,#Peruvian#Federation#of#Municipal#Savings#and#Loan#of#Peru;#Jose#Zapata,#Supervision#Manager,#FENACREP,#National#Federation#of#Savings#and#Credit#Cooperatives#of#Peru;#Jorge#Arias,#General#Manager,#ASOMIF#PERU,#Association#of#Microfinance#Institutions#of#Peru;#Cesar#Portalanza,#Chief#of#Education#and#Financial#Inclusion#Department,#SBS,#Banking#and#Insurance#Superintendence;#Iris#Lanao,#Executive#Director,#FINCA#Peru;#Diego#Fernandez#Concha,#Managing#Director,#PRISMA#Peru;#Jacinta#Hamann,#Directress,#Oikocredit#International;#and#Carmen#Velasco,#Director,#PROMUJER.#
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This+report+is+available+in+Spanish+and+English+at+www.centerforfinancialinclusion.org.+
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1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
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October 2013
GENERAL SURVEY RESULTS: OPPORTUNITIES AND OBSTACLES TO FINANCIAL INCLUSION IN PERU
2012 !! !! !! !! !! !! !! !! !! !!
!!OPPORTUNITIES*FOR*FINANCIAL*INCLUSION* RANKING' NUMBER!OF!
RESPONSES! %!!!
!! OBSTACLES*TO*FINANCIAL*INCLUSION* RANKING'NUMBER!
OF!RESPONSES!
%!
!! Financial!educa5on!! 1! 158! 76.7%! !! !! Limited!financial!literacy! 1! 144! 72.4%!!! Expanding!the!range!of!products! 2! 117! 56.8%! !! !! Unsustainable!growth! 2! 120! 60.3%!
!! Mobile!(phone)!banking!! 3! 110! 53.4%! !! !! Insufficient!infrastructure! 3! 119! 59.8%!
!! Correspondent/Agent!Banking! 4! 109! 52.9%! !! !! Product!costXstructures! 4! 111! 55.8%!
!! Mandates!to!provide!noXfrills!bank!accounts! =5! 100! 48.5%! !! !! Limited!understanding!of!client!needs! 5! 107! 53.8%!
!! Capacity!building!for!microfinance!ins5tu5ons! =5! 100! 48.5%! !! !! Poor!business!prac5ces! 6! 100! 50.3%!
!! FullXinclusion!financial!ins5tu5ons! 7! 98! 47.6%! !! !! Costs!of!building/opera5ng!branches! 7! 89! 44.7%!
!! Improved!demandXside!informa5on! 8! 96! 46.6%! !! !! Microfinance’s!singleXproduct!approach! 8! 83! 41.7%!
!! Reaching!out!to!new!client!groups! 9! 92! 44.7%! !! !! Weak!legal!infrastructure!! 9! 76! 38.2%!
!! Expansion!and!improvement!of!microfinance!associa5ons! 10! 87! 42.2%! !! !! Limited!ins5tu5onal!capacity!among!MFIs! 10! 75! 37.7%!
!! !! !! !! !! !! !! !! !! !! !!
!! Client!protec5on!regula5on! 11! 86! 41.7%! !! !! Impact!of!financial!inclusion! 11! 72! 36.2%!
!! Mobile!(branch)!banking!! 12! 81! 39.3%! !! !! Lack!of!demographic!informa5on!on!the!excluded! 12! 68! 34.2%!
!!Strengthening!financial!infrastructure!for!electronic!(nonXcash)!transac5ons!
13! 74! 35.9%!!! !! Commercially!oriented!entrants!
=13! 66! 33.2%!
!! Collateral!and!secured!transac5ons!reform! 14! 68! 33.0%! !! !! Inadequate!regulatory!framework!for!MFIs! =13! 66! 33.2%!
!! Building!investor!markets! 15! 63! 30.6%! !! !! Lack!of!network!coopera5on! =15! 63! 31.7%!
!! Compe55on! 16! 62! 30.1%! !! !! Lack!of!interest!by!providers!and!policymakers! =15! 63! 31.7%!
!! Credit!bureaus!! 17! 61! 29.6%! !! !! Appropriate!funding! 17! 60! 30.2%!
!! Village!savings!and!loan!associa5ons/selfXhelp!groups! 18! 58! 28.2%! !! !! Documenta5on!requirements! =18! 59! 29.6%!
!! Na5onal!iden5fica5on!documenta5on! 19! 55! 26.7%! !! !! Client!risk! =18! 59! 29.6%!
!! Improved!regula5on!and!supervision!of!microfinance! =20! 54! 26.2%! !! !! Poli5cal!interference! 20! 55! 27.6%!
!! Microfinance!transforma5on! =20! 54! 26.2%! !! !! Regula5on!that!lags!technology! 21! 48! 24.1%!
!! Commercial!bank!downscaling! 22! 46! 22.3%! !! !! Financial!regulatory!priori5es! 22! 46! 23.1%!
!! Pruden5al!regula5on!and!supervision!(in!general)! 23! 41! 19.9%! !! !! Inadequate!client!protec5on! 23! 45! 22.6%!
!! Linking!government!transfers!to!deposit!accounts! 24! 36! 17.5%! !! !! Lack!of!credit!bureaus! 24! 39! 19.6%!
!! Matched!savings!and/or!cash!transfer!schemes! 25! 35! 17.0%! !! !! Public!mistrust!of!financial!ins5tu5ons!! 25! 34! 17.1%!
!! Directed!credit/service!mandates! 26! 30! 14.6%! !! !! Limited!knowXhow!of!mainstream!providers! 26! 28! 14.1%!
!! SelfXregula5on!! 27! 27! 13.1%! !! !! Transient,!migrant!displaced!popula5ons! =27! 26! 13.1%!
!! Product!bundling!and!crossXselling! 28! 25! 12.1%! !! !! Weak!industry!voice! =27! 26! 13.1%!!! State!Bank!!Reform! 29! 24! 11.7%! !! !! NonXbusinessesXfriendly!environment! 29! 25! 12.6%!
!! Non!–Tradi5onal!providers! 30! 13! 6.3%! !! !! Nega5ve!press!image! 30! 18! 9.0%!!! !! !! !! !! !! !! !! !! !! !!!! !! !! !! n=!206! !! !! !! !! !! n=!199!
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1101 15 St., NW, Suite 400, Washington, DC 20005 USA Tel 202.393.5113 Fax 202.393.5115 www.centerforfinancialinclusion.org
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October 2013
