INCLUSIVE FINANCING: ACCESS TO BANKING SERVICES
- Dr. Toufic A. Choudhury* Background and Definition 1. It is well recognized that well-functioning financial systems are essential for economic development. Well-functioning financial systems are by definition efficient, allocating funds to their most productive uses. It also covers other vital purposes such as offering savings, payment, and risk management products to as large a set of participants as possible, seeking out and financing good growth opportunities wherever they may be. The policy makers, practitioners and researchers have so far emphasized efficiency and stability aspects of financial systems and ignored the broader access to financial services. However, the current development theories increasingly project the role of access to financial services, the lack of which is often the critical element underlying income inequality as well as slower growth. 2. Financial market imperfections that limit access to finance play an important role in perpetuating inequalities. If financial market frictions are not addressed, redistribution may have to be endlessly repeated, which could result in damaging disincentives to work and save. Not only that, sometimes financial exclusion can lead to social exclusion. In contrast, building inclusive financial systems focuses on equalizing opportunities. Hence addressing financial market imperfections that expand individual opportunities creates positive, not negative, incentive effects. 3. In its landmark research titled “Building Inclusive Financial Sector for Development” (2006), popularly known as the Blue Book, the United Nations (UN) had raised the basic question: “Why are so many bankable people unbanked?” “Who are bankable unbanked?” It is estimated that globally over two billion people are currently excluded from access to financial services. Financial Inclusion has become an issue of worldwide concern, relevant equally in economies of the under developed, developing and developed nations. Building an Inclusive Financial Sector has gained growing global recognition bringing to the fore the need for development strategies that touch all lives, instead of a select few.
* The paper writer is a faculty member of BIBM. The paper has been prepared for presentation in a seminar on Inclusive Financing organized by PKSF on the occasion of its 20th Anniversary and Development Fair 2010. The seminar will be held on November 09, 2010.
Why does Inclusive Financial Sector development matter? Access to a well – functioning financial system can economically and socially empower individuals, in particular poor people, allowing them to better integrate into the economy of their countries, actively contribute to their development and protect themselves against economic shocks. Creation and expansion of financial services targeted to poor and low-income populations can play a vital role in enhancing financial access. Inclusive financial sectors- those in which no segment of the population is excluded from accessing financial services – can contribute to attaining the goals contained in the United Nations Millennium Declaration, such as halving the proportion of people in the world who live in extreme poverty by 2015.
An Inclusive Financial Sector, the Blue Book says, would provide access to credit for all “bankanble” people and firms, to insurance for all insurable people and firms and to savings and payment services for everyone. Rangarajan Committee On Financial Inclusion (RBI, 2008) has argued that an open and efficient society is always characterized by the unrestrained access to public goods and services. As banking services are in the nature of public goods, financial inclusion should therefore be viewed as availability of banking and payment services to the entire population without discrimination of any type. Finally, the Rangarajan Committee has defined financial inclusion as “delivery of banking services and credit at an affordable cost to the vast sections of disadvantaged and low income groups. The various financial services include saving, loans, insurance, payments, remittance facilities and financial counseling/advisory services by the formal financial system.” FINANCIAL INCLUSION Savings
Bank Accounts Financial Inclusion Financial advice
Payment and Remittance Affordable Credit Source: RBI, 2008. 2
Siddique, et. al (2010) argues that financial inclusion does not restrict itself to deposit and credit. It includes financial awareness, knowledge about banks and banking channels, facilities provided by banks and the advantages of using the banking route. It involves educating people financially, making them financially literate. So, inclusive financial sector is built upon financial literacy and financial capability on the part of the consumers and availability of suitable product and services on the part of the financial service providers.
Inclusive finance VS Microfinance 7. Many development practitioners and financial institutions believe that there is a paradigm shift from microfinance to inclusive finance – from supporting discrete microfinance institutions (MFIs) and initiatives to building inclusive financial sectors. Inclusive finance recognizes that a continuum of financial services providers work within their comparative advantages to serve poor and low-income people and micro and small enterprises. Building inclusive financial sectors includes but is not limited to strengthening micorfinance and MFIs. Microfinance has been defined as the provision of diverse financial services to poor and low-income people. Retail financial service providers that serve this market segment are increasingly more difficult to define with one common term. They include NGOs, private commercial banks, state-owned banks, non-bank financial institutions (such as finance companies and insurance companies) credit unions and credit and savings cooperatives. While each of them plays an important role in inclusive finance, many of them could not be considered MFIs in the technical sense. (However, for the purpose of this paper, we mean and measure financial inclusion only in the sense of banking inclusion as banks are the mainstay of financial systems of the developing countries like Bangladesh).
Extent and Indicators of Financial Inclusion/Exclusion 8. It is generally observed that the degree of financial exclusion in developed countries is much less than what is seen in the developing countries. This is also reflected in wording as the term “financial exclusion” is widely used in the context of developed countries whereas financial inclusion is more frequently applied in case of developing
countries. One recent review of national surveys reported that 89.6 per cent of the population of 15 countries in the European Union had a bank account, with country proportions ranging from 99.1 per cent in Denmark to 70.4 per cent in Italy. The comparable figure of the United States was 91.0 per cent. World Bank (2008) shows, in most developing countries less than half the population has an account with a financial institution, and in many countries less than one in five households does. Survey data on the access of firms to finance indicate that less than 20 percent of small firms use external finance, about half the rate of large firms. And at least 40 percent of firms report that access to and cost of finance is an obstacle to their growth.
Extent of financial inclusion can be assessed in a number of ways. An important measure of financial inclusion is to count the number of people who own a bank account. A person holding a bank account is considered to have elementary banking knowledge. Thus a count of the number of bank accounts gives an idea of the percentage of people who are aware of banking and what percentage still needs to be included. This is why the most commonly used indicator has been the number of bank accounts (per 1000 people). However financial inclusion does not end with opening of bank accounts. What matters ultimately is the availability of banking services and access to finance by the mass people. Some other indicators, have also been developed to capture the financial inclusion such as number of bank branches (per million/per thousand people), number of ATMs (per million/per thousand people), bank credit as percentage of GDP, bank deposit as percentage of GDP etc. Since a country’s position or rankings changes with the changes in indicators a comprehensive measure in the form of index was developed by Sarma (2008), which is built on separate indicators representing three dimensions namely banking penetration, availability of banking services, and degree of usage of banking services. A World Bank study (2000) measured access to finance in terms of demographic branch penetration, demographic ATM penetration, deposit accounts per 1000 people, loan accounts per 1,000 people, geographic branch penetration, and geographic ATM penetration.
One recent compilation of available data for some developing countries is given below. Table 1: Percentage of Population with a bank account Country (Location) Botswana Brazil (Urban) Colombia (Bogota) Djibouti Lesotho Mexico City Namibia South Africa Swaziland Tanzania Bangladesh India Pakistan Percentage with an Account 47.0 43.0 39.0 24.8 17.0 21.3 28.4 31.7 35.3 6.4 25.5 44.3 17.1
Source: Building Inclusive financial Sector Development. United Nations. 2006.
In another study, an index of financial inclusion has been developed by Sarma (2008) for 55 countries including Bangladesh. The three dimensions included in that index are banking penetration, availability of services and usage of services. The following table shows the result for some selected countries. As is evident from the table that Bangladesh stands quite low in the list with a rank of 43 out of 55 countries. Table 2: Index of Financial Inclusion (IFI) – using data on three dimensions of financial inclusion (2004) Country Spain France Malaysia Singapore Thailand India Philippines Pakistan Bangladesh Argentina Mexico Uganda Madagascar
Source: Sarma. M. (2008).
Who are Excluded and Why? 10. Access to financial services - financial inclusion - implies an absence of obstacles to the use of these services, whether the obstacles are price or non-price barriers. It is important to distinguish between access to - the possibility to use - and actual use of financial services. Exclusion can be voluntary, where a person or business has access to services but no need to use them, or involuntary, where price barriers or discrimination, for example, bar access. Failure to make this distinction can complicate efforts to define and measure access. Users of formal financial services Voluntary Self-exclusion Population No need
Cultural / religious reasons not to use / indirect access
Insufficient income / high risk Non-users of formal financial services Involuntary exclusion Discrimination
Contractual / informational framework
Price / product features
Source: Finance for All? The World Bank, 2008.
11. For promoting financial inclusion, we have to address the issue of exclusion of people who desire the use of financial services, but are denied access to the same. There are a variety of reasons for financial exclusion. From the demand side, lack of awareness, low income/assets, social exclusion, and illiteracy act as barriers. From the supply side, distance from the branch, branch timings, cumbersome documentation and procedures, unsuitable products, staff attitudes are common reasons for exclusion. All these result in higher transaction cost and lower profitability. On the other hand, the ease of availability of informal credit sources makes these popular even if costlier. 12. Who are the Excluded? Usha Thorat (2007) opines, in the Indian context, the financially excluded sections largely comprise marginal farmers, landless labourers, oral lessees, self-employed and unorganized sector enterprises, urban slum dwellers,
migrants, ethnic minorities and socially excluded groups, senior citizens and women. While there are pockets of large excluded population in urban areas, the rural areas contain most of the financially excluded population. International Experiences 13. It may be worthwhile to have a look at the international experience in tackling the problem of financial exclusion. United Kingdom: In U.K. financial exclusion is concentrated in certain geographical areas. According to HM Treasury estimate, the country has a relatively high number of households and individuals of 12% without bank accounts. The Financial Inclusion Task Force in UK has identified three priority areas for the purpose of financial inclusion, viz., access to banking, access to affordable credit and access to free face-to face money advice. UK has established a Financial Inclusion Fund to promote financial inclusion and assigned responsibility to banks and credit unions in removing financial exclusion. Basic bank no frills accounts have been introduced. A Post Office Card Account (POCA) has been created for those who are unable or unwilling to access a basic bank account. The concept of a savings gateway has been piloted. This offers those on low-income employment £1 from the state for every £1 they invest, up to a maximum of £25 per month. In addition, the Community Finance Learning Initiatives (CFLIs) were also introduced with a view to promoting basic financial literacy among housing association tenants. Most important, the British Bankers’ Association has developed a concrete guideline which banks consider and implement while addressing the problem of financial exclusion according to their own business models. (appendix – 1). United States of America: In USA between 9.5% and 20% of households lack a bank account. Around 22% of low income families do not have either a current or savings accounts. A civil rights law, namely Community Reinvestment Act (CRA) in the United States prohibits discrimination by banks against low and moderate income neighborhoods. The CRA imposes an affirmative and continuing obligations on banks to serve the needs for credit and banking services of all the communities in which they are chartered. In fact, numerous studies conducted by Federal Reserve and Harvard University demonstrated that CRA lending is a win-win proposition and profitable to banks. Apart form the CRA experiment, the State of New York Banking Department, with the objective of making available the low cost banking services to consumers,
made mandatory that each banking institution shall offer basic banking account and in case of credit unions the basic share draft account, which is in the nature of low cost account with minimum facilities. An interesting feature of basic banking account scheme is the element of transparency i.e. the banking institution should, prior to opening the account, furnish a written disclosure to the account holder describing the main features of the scheme i.e. the initial deposit amount required to open the account, minimum balance to be maintained, charge per periodic cycle for use of such account, maximum number of withdrawal transactions without any additional charge and other charges imposed on transactions for availing electronic facility not operated by the account holder’s banking institution. Canada: In 2003, legislation entitled “Access to Basic Banking Services Regulation” was introduced in the country to ensure that all Canadians could obtain personal bank accounts without difficulty. Financial institutions are required to open personal bank accounts as well as cash most Government cheques at no charge (even to noncustomers) for any individual that meets basic requirements. The Federal Government also introduced legislation-requiring banks to offer a standard low cost bank account with a basket of services. Germany: In Germany, during 1995, the banking industry endorsed a joint recommendation entitled “Current Accounts for Everyone”, undertaking to provide current accounts on demand. There have been two reports (1996 and 2000) on the effects of this voluntary undertaking. The results have so far been positive. France: The 1984 Banking Act made access to a bank account a legal right in France. Any person refused a bank account can apply to the Bank of France, which will nominate an institution to provide the bank account. In addition, in 1992, French banks signed a charter committing them to opening a bank account at an affordable cost with related payment facilities. India: On all India basis 59 percent of the adult population in the country have bank accounts – in other words, 41 percent of the population is unbanked. In rural areas, the coverage is 39 percent against 60 percent in urban areas. The extent of exclusion from credit markets is much more, as number of loan accounts constituted only 14 percent of adult population. In rural areas, the coverage is 9.5 percent against 14 percent in
urban areas. The Reserve Bank of India has undertaken a number of measures for attracting the financially excluded population into the structured financial system. These are: No-Frills Accounts and General Purpose Credit Cards (i) In November 2005, banks were advised to make available a basic banking ‘nofrills’ account with low or nil minimum balances as well as charges to expand the outreach of such accounts to vast sections of the population. In order to ensure that persons belonging to low income group, both in urban and rural areas do not encounter difficulties in opening bank accounts, the know your customer (KYC) procedure for opening accounts has been simplified. The simplified procedure allows introduction by a customer on whom full KYC drill has been followed
(iii) Banks have been asked to consider introduction of a General Purpose Credit Card (GCC) facility up to Rs. 25,000/- at their rural and semi urban branches. The credit facility is in the nature of revolving credit entitling the holder to withdraw up to the limit sanctioned. Based on assessment of household cash flows, the limits are sanctioned without insistence on security or purpose.
Adoption of Districts for 100% Financial Inclusion (i) The State Level Bankers Committee (SLBC) identifies one district for 100% financial inclusion. Responsibility is given to the banks in the area for ensuring that all those who wanted to have a bank account are provided with one by allocating the villages among the different banks. Bank staff or their agents who are usually local NGOs or village volunteers contact the households at their doorstep. In some cases banks have provided, in association with insurance companies, innovative insurance policies at affordable cost, covering life disability and health cover.
Use of Intermediaries as Agents in Microfinance (i) The Reserve Bank permitted banks to utilise the services of non-governmental organizations (NGOs/SHGs), microfinance institutions (other than Non-Banking Financial Companies) and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and business correspondent (BC) models.
Use of ICT Solutions for Enhancing Outreach of Banks (i) The Reserve Bank has been encouraging the use of ICT solutions by banks for enhancing their outreach with the help of their Business Correspondents (BCs). Mobile phones have also been developed to serve as card readers. Account holders are issued smart cards, which have their photographs and finger impressions.
Financial Literacy and Credit Counseling (i) Each SLBC convener has been asked to set up a credit-counseling center in one district as a pilot and extend it to all other districts in due course. A Centre for Financial Education & Excellence has been set up in RBI’s College of Agricultural Banking at Pune.
Bangladesh Scenario: 14. The approach to Financial Inclusion in developing countries such as Bangladesh is somewhat different from the developed countries. In case of developed countries, the focus is on the relatively small share of population not having access to banks or the formal payment system. Whereas in Bangladesh, we are looking at the majority who are excluded. In this regard, Dr. Atiur Rahman, Governor, Bangladesh Bank in his Joesph Mubiru Memorial Lecture (held at the Central Bank of Uganda on November 20, 2009) has reiterated, “Financial Inclusion is a high Policy Priority in Bangladesh, for faster and more inclusive growth (Bangladesh Bank Quarterly, October – December, 2009)*. According to the Governor, in view of no widely adopted uniform definition, financial inclusion is reckoned in Bangladesh as access to financial services from: a) Officially regulated and supervised entities (banks and financial institutions licensed by Bangladesh Bank, MFIs licensed by the Micro-credit Regulatory Authority, registered co-operatives), and b) Official entities themselves (post offices offering savings, money transfer and insurance services, national savings bureaus).
* Interested readers may also consult the deliberations given by the Governor, Bangladesh Bank at the FT Sustainable Banking Conference held at London on June 03, 2010 and at the Bangladesh Economic Association Bi-annual conference held at Dhaka on April, 2010
The current status of financial inclusion has also been presented in the Governor’s lecture, as reproduced below: Table 3: Status of Financial Inclusion in Bangladesh
Adult Year Population* (millions) Population per bank branch (millions) Number of bank deposit A/Cs (millions) Deposit A/Cs as % of adult population Number of members in MFIs MFI members as % of adult Number of Cooperative members in members as cooperatives % of adult (millions) population Financial Inclusion** as % of adult population
Notes: * Adult population is defined by BBS as population 15 years and above ** Financial Inclusion is measured here as – [(No. of bank deposit A/Cs + No. of MFI members + No. of members in cooperatives)/Adult population]*100. Post offices and government savings bureaus not included as these offer no credit services. Source: Dr. Atiur Rahman (2009). In terms of above table, despite substantial bank branch expansion and increase of membership of MFIs and other institutions, about 25 percent of adult population is still financially excluded. In terms of banking credit related indicators also, the state of financial inclusion is not encouraging. For example, in Bangladesh, the access of people involved in agriculture who mostly live in rural areas to banking services is not sufficient with respect to their contribution to GDP. In FY09 the share of agriculture sector in GDP was 22 percent whereas the share of advances in total advances to this sector stood at 7 percent as of June 2009. A substantial proportion of the households, specially in rural areas, is still outside the coverage of the formal banking system and is therefore, unable to access mainstream financial products such as bank accounts and low cost loans. In terms of opening bank branches, it has been made mandatory that one in five branches must be in rural areas to encourage bank business there. In spite
of the existence of 58 percent of total bank branches in rural area, the shares of rural bank branches in total deposits and advances were 13 percent and 8 percent respectively as of June 2009 which indicates a very low exposure of rural people to the formal banking system. Policy Environment for Inclusive Banking: Recent Measures 15. BB has taken strong initiatives in recent times to widen the coverage of banking services, especially by including the disadvantaged section of the society in the formal financial system. Along with moral suasion, a number of policy measures covering both deposit and credit products, some of which are very innovative for our banking system, have been taken in this regard. A summary of such regulations is presented below. i) BB is' making a big effort in increasing availability of the highest quality banking services to the farmer. As per regulations, any farmer showing his/her National Identity Card/Birth Registration Certificate and Agriculture Inputs Assistance Card issued by the Agriculture Extension Department can open a bank account by keeping only 10 taka as initial deposit and banks do not require filling the Know Your Customer (KYC) form for this purpose. No condition of maintaining a minimum balance will be applicable in this regard and also these accounts will remain free of any additional charge or fees. ii) To provide all range of banking services through SME service center and to ensure smooth and increasing amount of credit flow in the priority sectors like SME and Agriculture, BB has issued license to all those centers as "SME/Agricultural Branch". The regulation states that at least 50% of deposit of all these branches must be invested in SME/Agriculture sector and these branches must be set up in such areas outside the divisional cities and upazilas where no banking service is available. iii) Easy and effective access to banking service for physically incapable people has been made mandatory by the BB through a recently issued circular. Banks, for this purpose are directed to designate an official as 'Focal Point' at each branch of a bank. iv) Natural calamities and disaster affect our agricultural production including crop sector very badly and have become a regular phenomenon. BB responds to these types of situations by relaxing the conditions of loan repayment e.g. extension of the loan period, availability of fresh facilities for the farmers. One such arrangement has been made in the last year for 'Aila' affected farmers. 12
BB has introduced a 3 years term revolving crop credit limit system to ensure smooth and continuous flow of agricultural credit. Under this system, farmers engaged in successive crop production will avail credit facility without requiring redocumentation. Documentation process has to be made as simple as possible and credit approval power shall be delegated to the respective branch manager.
BB has made participation in agricultural/rural program mandatory for all the commercial banks including PCBs and FCBs. As per this regulation, each bank will have to allocate a certain percentage of its total loan portfolio for disbursing in agricultural sector at the beginning of every financial year and each bank has to inform BB its targeted amount of rural credit. Target by the banks in this regard must be realistic and implementable and must be regularly monitored by the banks. Banks having no rural branch will disburse agricultural credit through linkage program with NGOs /MFIs.
vii) One of the most innovative steps taken by BB in recent times is the provision of agricultural credit for the sharecroppers. A detailed guideline has been issued by the BB to facilitate agricultural credit for the farmers identified as sharecroppers. viii) In order to ensure a smooth and increasing flow of credit towards the priority sector, a number of refinancing schemes, some of which are managed by the BB, are being operated in our country. Three such refinancing schemes are built up for SME sector. These are refinancing scheme of BB, Funds from IDA and ADB. BB gives emphasis on developing women entrepreneurship. To this end, 15% of all three refinancing fund have been allocated for the women entrepreneurs involved in SME business. A detailed set of operational procedures for financing women entrepreneurs has also been effected. ix) Bangladesh Bank is encouraging creative partnership between banks, MFIs, mobile phone and smart card technology platforms for innovating cost effective financial services packages for various client segments. Further, BB has been urging banks and financial institutions to embrace specific commitment to financial inclusion as a CSR obligation. x) In the recent past, Bangladesh Bank organized a cross country banking sector road show to connect and interact with the general people, providing information and receiving feedback about deposit, lending, remittance and payment services, building up general financial literacy and awareness against money laundering and illegal hundi channels in remittance delivery.
16. Concluding Remarks The policies and measures which have been undertaken so far in Bangladesh in the context of inclusive banking are of course essential and in the right directions and have already started creating positive impacts. For example, by this time, government owned commercial and specialized banks have so far opened 90 lakh 10 Taka farmers’ accounts. It is obvious that opening of these accounts will help our government to migrate from paper based payments of state benefits (which is really very timeconsuming and sometimes inhuman on the part of beneficiaries) to direct payment into accounts. Ultimately, these accounts are expected to play a key role in stimulating demand for other financial products. The Financial Inclusion Task-force data of U.K, 2008, shows that many “basic” bank account holders go on to buy other products, with at least one in five opening of savings accounts. Toynbee Hall Research (2008) showed that some 25% of “basic” bank account holders had gone on to take up another financial product. In the context of Bangladesh also, it is expected that these farmers account can facilitate a transaction to higher level of financial transition, which in turn can lead to greater financial inclusion. Therefore, keeping all those farmers’ accounts “operational/active” poses a great challenge for the banking community and regulator of the country. Other than farmers’ account, there are some other issues which should also be taken into consideration for effectively addressing the challenges for ensuring sustainable inclusive banking in the country.. These are: i) The inclusive banking measures are fully regulatory driven. These are not really spontaneous initiatives on the part of banks and financial institutions, without which sustainability of inclusive banking cannot be established. ii) The measures so far taken are still not fully able to address the demand side problems of the financially excluded sections of the population. Financial exclusion is not only a supply – side problem. iii) Banking approaches to the financially excluded people are to be changed. Here, banks should go to the public, rather than customers coming to them. iv) v) Women focus of the inclusive banking measures must be maintained. Initiatives in regard to financial literacy and establishment of credit – counseling centres are very necessary, but these are absent in the Bangladesh context. Not
only for excluded people, even the financial service providers should also undergo extensive and continuous training on financial inclusion. This subject matter (financial inclusion) should be incorporated as a key segment of the initial training received by frontline branch and other customer contact staff. vi) Like mandatory agriculture/rural finance programmes, all banks operating in Bangladesh may be asked to participate in financial inclusion program for which the responsibility of different unbaked/underbanked districts/areas should be allocated among the banks on the basis of some rational criteria. vii) Finally instead of giving piecemeal directives, the central bank should provide a detailed guidelines of inclusive banking to all formal banks and financial institutions. References British Bankers’ Association and Toynbee Hall. Developing Inclusive Banking. London. 2008. Leeladhar, V. “Taking Banking Services to the Common Man – Financial Inclusion.” RBI Bulletin, 2005. Rahman, Atiur. “Financial Inclusion: The Next Chapter”. Bangladesh Bank Governor’s input in the Financial Inclusion panel of the FT Sustainable Banking Conference, held at London on June 03, 2010.] Rahman, Atiur. “Financial Inclusion as tool for combating Poverty: Joesph Mubiru Memorial Lecture”. Bangladesh Bank Quarterly, October – December, 2009. Rahman, Atiur. “Promoting Financial Inclusion for Poverty Reduction with Inclusive Growth”, Bazlur Rahman Memorial Lecture delivered at BEA Bi-annual Conference on April, 2010. Reserve Bank of India, Report of the Committee on Financial Inclusion. 2008. Sarma, Mandira. Index of Financial Inclusion. Indian Council for Research on International Economic Relations. June- 2008. Siddique, M. M, et. al. “Financial Inclusion and Rural Banking: The Case of Bangladesh”. A keynote presented in a workshop held at BIBM on April 11, 2010. Thorat, Usha. “Financial Inclusion: The Indian Experience.” RBI Bulletin, July – 2007. United Nations (UN), Building Inclusive Financial Sector for Development. 2006. World Bank, Finance for All. A World Bank Policy Research Report, 2008.
Appendix – 1 British Bankers’ Association Guidelines for Supporting Access to Banking The guidelines are primarily intended to be read by those developing policy within banks ad it is expected that the ideas they convey will be incorporated into banks’ internal policies and procedures where it is felt they will result in an improved experience for customers. • • • Staff should understand the causes and effects of financial exclusion and how this may affect customers and their finances Staff should be able to communicate effectively with those who are new to banking Bank policy and procedures should acknowledge and compensate for difficulties some customers may face in providing standard ID and AV and staff should be able to support customers to negotiate these barriers • • Staff should be able to recognize and take into account the needs that may arise from low levels of financial capability Staff should be aware of their local community and be able to signpost customers to appropriate sources of support The intention is not to produce uniformity, but to provide starting points and ideas which banks can consider and implement according to their own business mode.