APPROACH
Building on the lessons learned and successes from its previous commitment, Barclays has renewed its investment in Banking on Change in conjunction with Plan UK and CARE International UK, for an additional three years. Continuing to focus on the poorest people living on less than $2 a day, it aims to reach over 330,000 people, of whom 75% will be under 35 years old.
This second phase of Banking on Change will focus on implementing sustained and deeper interventions in a narrower range of countries. This will be delivered by: focusing expansion on youth by setting up youth savings groups; providing a wider range of more in-depth financial literacy, employability and entrepreneurship training; supporting the establishment and sustainability of income-generating activities; enabling group members to gain sustained employment as Village Agents or Franchisees; and scaling up linkages between mature savings groups and branches of Barclays.
Banking on Change directly delivers on Barclays' 5 Million Young Futures goal to support 5 million disadvantaged young people with financial, enterprise and employability skills to help them fulfill their potential. By linking informal groups to formal banking, it delivers on shared value for both the business and society. As part of a planned program of employee engagement, Barclays' employees will use their professional skills to run financial literacy sessions, mentor groups, and prepare them to link with formal bank services, so drawing on Barclays' core financial expertise and business skills to enhance the scalability and sustainability of this program.
ACTION PLAN
Over the next three years, Banking on Change builds on the foundations set up during phase 1:
Year 1:
- Carry-over around 153,000 established beneficiaries from Phase 1 to Phase 2, in 42 locations across 7 countries in Africa and India to begin advanced financial and enterprise skills training
- Review and develop support materials
-Identify 65 local partners who will support the establishment of youth savings groups
- Create 1,500 new youth savings groups
- Link 1,370 mature savings groups to Barclays' branches and launch linkage products in Zambia
Year 2:
- Launch the Banking on Change Charter (possibly at Davos 2014) setting out key principles for responsibly linking informal savings groups to formal bank services. Drawing on the Banking on Change experience, the Charter encourages others to adopt a similar model of financial inclusion
- Develop the youth savings group model and consult with other key stakeholders
- Create 5,000 new youth savings groups
- Support of the development of 24,600 income generating activities
- Fully implement Barclays' employee engagement in the program e.g. through enabling them to volunteer as mentors, business advisors, financial literacy trainers, and supporters preparing groups to link to a formal account.
Year 3:
- Reach the target of 10,000 youth savings groups established across all seven countries
- Reach target of 41,000 income generating activities by establishing a further 16,400
- Ensure savings and overdraft products operating in five countries
- Youth financial inclusion model promoted at external events (e.g. CYFI, CGAP)
- 100 active members of Charter to build a wider alliance of linkage partners
- Establish a clear business case for linkage of groups and transition of individuals established
Banking on Change, through savings-led microfinance, focuses on ensuring that the poorest members of society, predominantly under the age of 35, are financially included and have the skills to be economically independent. This is especially relevant at a time when financial exclusion and youth unemployment are two major issues facing the developing world.
Over 2.5 billion people are considered 'financially excluded,' with no access to financial services. In June 2012, the ILO reported that, '75 million young people are jobless. Of those working, more than 200 million earn less than two dollars a day.' In developing countries, small businesses account for over 45% of all employment. Their growth is vital to creating jobs and increasing prosperity, but they have great difficulty in gaining access to financial services to support this growth.
Large numbers of poorly educated young people establish livelihoods in the informal sector, but their money management and other skills are limited, as is access to financial services to meet their needs. According to a 2012 UNESCO report, financial inclusion is particularly low among youth, with only 4.2 million of the 1.2 billion young people between 15 and 24 estimated to have access to financial services. Despite this, only a relatively small part of conventional microfinance focuses on young people and savings as a path into financial inclusion.
SEEKING
Banking on Change aims to work in partnership and collaboration wherever possible. Through the development of the Charter, Banking on Change would like to reach out to the CGI network of corporates, governments, and NGOs to engage them in responsible financial inclusion and the principles of linkage. In particular Barclays is seeking: organizations who promote savings-led approaches for poor savers; organizations that directly link poor savers through new models of banking; and organizations that are developing new products or technologies to facilitate linkages.
OFFERING
Over the next three years, Banking on Change will launch a Charter aimed at encouraging other financial institutions, governments, and nonprofit organizations to adopt a model of responsible linkage. The Charter will set out the core principles that will ensure groups can be linked in a way that meets their needs and does no harm.
