Digital banking, an ally in fostering a savings culture

World Savings Day

30 October 2019
Fundación Microfinanzas BBVA

Saving is important to deal with unexpected contingencies that may arise in the future but, above all, to drive progress. This is stressed by the InterAmerican Development Bank (IDB) in its recent report “Saving for development: how Latin America and the Caribbean can save more and better”. The report also notes that people save less in this region compared to more advanced economies: around 18% of Gross Domestic Product (GDP), compared to 23%. That is why the BBVA Microfinance Foundation works to offer savings products to low-income entrepreneurs, as well as loans and insurance, that are tailored to their needs.

There are two key factors that would help raise Latin America’s low savings rate: being able to make transactions free of charge, and being able to operate anywhere. For many of us that’s just normal, but for millions across the globe it is not just a challenge, but really a dream,” explains Paloma Pérez, head of BBVAMF’s Savings Products. “That is why digital banking is an ally in promoting savings, because it enables entrepreneurs to know how much money they have in their account to pay for their children’s school fees, or to pay a supplier without using cash.” The Foundation has developed a mobile banking app in Colombia making it easier for entrepreneurs to manage their money without having to travel to an actual branch office.

I have learned to save, thanks to the training I received. Saving is really important. If we don’t do it, how are we going to pay for the hospital if we get sick or pay for our children’s education?” exclaims Estela Rojas, a Peruvian entrepreneur served by BBVAMF; one of over 1.9 million people with a savings account in one of the Foundation’s six institutions across the region.

According to the Foundation’s Impact Assessment & Strategic Development department (MIDE), the challenge is to get these nearly two million clients to use savings accounts on a continuous basis. This would remove their risks related to handling cash (theft and losses), encourage more people in their community to save, and reduce transaction costs.

With this goal, the BBVAMF provides financial education to entrepreneurs to learn how to save and improve their lives. According to World Bank figures, only 13% of the adult population in the region saves through a financial institution, compared to 27% worldwide. A percentage that falls to 10% when we consider women (against 24% in the world as a whole) and to 11% in the case of young people (compared to18% worldwide).