‘Cell Phones Will Flatten the Andes’

> Posted by Bruce J. MacDonald, Vice President, Communications & Operations, CFI

(Photo by Damon Jacoby ©2015)

In New York yesterday to celebrate the launch of the FI2020 Progress Report (and Accion’s and Citi’s 50-year partnership, and the awarding of the first Accion Edward W. Claugus Award – Accion never does anything by halves…), we had the privilege of an audience with Dr. Daniel Schydlowsky.

Dr. Schydlowsky, recipient of said award, hardly needs introducing. As Superintendent of Banking, Insurance & Private Pension Fund Administrators for Peru, and as chair of the Alliance for Financial Inclusion, he symbolizes the gold standard of financial inclusion regulation. Scratch that – he is the gold standard. Peru has ranked at the top of the Economist Intelligence Unit’s Global Microscope report for seven consecutive years. And to paraphrase the old E.F. Hutton TV ad, when Daniel Schydlowsky speaks, people listen. “We can perfectly well keep banking systems safe, and still do something for inclusion,” he said, explaining his philosophy of regulation (and thereby, perhaps, Peru’s standing). “Indeed, the more we include, the safer we’re making the banking system.”

Like our new Progress Report, Schydlowsky outlined his view of what lies ahead and what he’s excited about. First up: The promise of new loan-origination techniques. Making microloans is an artisanal craft, and thus expensive. But he is optimistic about the promise of new developments: big data, customer-relationship tools, and psychometric training (again, as is our Progress Report). Come to Peru, he urged innovators, where you will find a willing partner and audience.

Bigger yet is the promise of cell phone banking, he says, describing it as the greatest technological change to occur since the creation of paper money. “Cell phones will flatten the Andes,” he claims. “Roads can’t get in there, but cell phones can.” He sees no issue on the consumer side of the equation; success will depend on the willingness of distributors and suppliers to corner grocery stores to accept electronic payment. “When we succeed in doing that,” he predicted, “we will have won the war.”

Third, reducing social conflict is paramount. In Peru, issues such as mining and water rights and the violence that ensues over them is not, he infers, someone else’s problem. “When there’s conflict, people make losses. When they make losses, they don’t pay the banks back.”

Through his role as head of ASBA, the Asociación de Supervisores Bancarios de las Américas, Schydlowsky is beginning a charge to put social conflict high on regulator’s agendas. Meanwhile, Peru is building the Equator Principles (a risk management framework pertaining to environmental and social risks) into regulation – as well as elevating it to the status of “Equator Plus,” as he describes it, by incorporating adherence to the principles into legal contracts. Any investment project of $10m or more into the country has to comply with those principles. The goal? “We expect Peru’s climate for investment is going to get better, because we’re going to have less conflict.”

Fourth, the challenge remains on how to engage and include the very base of the pyramid. Drawing a detailed picture of ‘únicos’, a new trend where some 20 families join together in an informal credit union, operating outside the formal sector – and prefer to remain that way – he asks how we can help them grow,  and to diffuse the culture, “…because that is the very essence of financial education.”

“People can learn very quickly if they’re motivated,” he says. And then he cautions: “But if you put this on a computer, there will be no learning.”

We talk about this, too – in the Financial Capability section of the FI2020 Progress Report. We urge you to take a look.

Photo by Damon Jacoby ©2015

Have you read?

Rating Progress on Financial Inclusion on a Scale of 1 to 10

FI2020 Week to Convene Global Conversations on How to Achieve Full Financial Inclusion by 2020

New FI2020 E-Magazine: Three Essential Debates

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