World’s best bank for financial inclusion 2019: BBVA

Awards for Excellence 2019

The first of the UN’s 17 Sustainable Development Goals is ‘no poverty’, and financial inclusion is a vital step on that journey. 

One bank has committed itself to making that goal a reality through its microfinance foundation, its own responsible banking activities and a dedicated research centre: BBVA, which wins the award for the world’s best bank for financial inclusion.

BBVA’s microfinance foundation was established in 2007 and it has already disbursed $12 billion to five million people in five Latin American countries. By 2030 it expects to have granted more than $25 billion to reduce poverty. 

But early on, financing loans was seen as not enough and the foundation and the bank more broadly started focusing on financial education.

It required a different approach in different countries. 

“In Peru and Mexico, we saw people coming from rural areas to the city to find work, and when accessing the financial system, they were being offered credit cards but did not understand how to use them responsibly,” says Lidia del Pozo, director for community investment and social projects. 

“In Spain and the US on the other hand, people were already in the financial system but were using more sophisticated products, which they did not know how to use.”

Over the last 10 years the bank has invested €80 million in training, reaching 13 million people through in-person or online workshops.

What sets BBVA apart from its peers, many of whom are also committed to financial inclusion, is the detailed focus on the impact of its efforts. Over a decade, the bank has homed in on what creates long-term change for those it trains or finances through the foundation or the bank.

To help them do so, BBVA launched the Centre for Financial Education and Capability in 2017 and asked organizations including the World Bank and the Centre for Financial Inclusion to serve on an advisory board to collect and promote research on the impact of targeted inclusive finance efforts globally. 

While the bank had already tailored its training to suit different genders, socio-economic backgrounds and communities, it became clear that training also needed to be done in the moment of decision-making. 

“It’s why it’s very challenging to teach children about financial inclusion; they aren’t making decisions yet, so can’t put what they are learning into practice,” points out del Pozo. 

To better give clients hands-on practice, the bank has ‘gamified’ several of its training programmes for both adults and children. It also supports good financial decisions through programmes such as the Blue Elf contest in the US, where 100 organizations find and reward individuals who have improved their financial health.

We make sure customers understand what the pros and cons of a mortgage are and what a future financial plan will need in order for payments to be made. It’s not about just selling a mortgage – Lidia del Pozo

Another realization that arose from BBVA’s research was the need to move from focusing on financial health to focusing on financial security. At the end of 2018, BBVA had 8.4 million low-income customers, many of whom would not be able to weather an unexpected financial demand. 

“It’s about preparing for the unexpected and planning for the future,” says del Pozo. 

And that sentiment extends to all of BBVA’s clients now.

In Spain, BBVA includes financial education in all of its products so that all customers can better plan for the future. 

“We make sure customers understand what the pros and cons of a mortgage are and what a future financial plan will need in order for payments to be made. It’s not about just selling a mortgage,” says del Pozo. 

The bank also uses digital technology to bring responsible access to banking in Colombia, Mexico and Peru. In Mexico, the bank has an application called Tandas that serves informal saving and investment groups in the country. 

SDG number eight, ‘decent work and economic growth’, is also intrinsically linked to ending poverty and to financial inclusion. A large part of BBVA’s financial inclusion work involves helping entrepreneurs and small businesses. 

“We served 2.1 million low-income entrepreneurs last year – 57% of which are women,” says Tula Ducasse, head of public affairs at the BBVA Microfinance Foundation. 

Social impact assessment is also carried out by the foundation. 

“We track the increase in their sales, income and assets – 23% annually – and we also track volatility and measurements such as whether their access to health and education is improving,” says Ducasse. “These social impact measurements inform our strategy.” 

The bank knows, for example, that 34% of the foundation’s customers manage to escape poverty after two years of working with the foundation. 

In the same vein of preparing clients for future financial challenges, the foundation developed a programme with UN Environment and Colombia’s Institute of Agroindustrial Sciences and the Environment to show the impact of climate change and open a conversation about investing in energy-saving and irrigation technology.

In Colombia, the bank has a four-year school for entrepreneurs that serves 70,000 children every year, which the Colombian government has now adopted. The foundation serves one million small businesses in the country with credit, savings, insurance and financial education. It has been crucial for a country where conflict has resulted in large sections of its youth being both uneducated and unemployed.