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Banca Monte dei Paschi di Siena - Granting the Underserved - Financial solutions supporting social inclusion

Added on 22-03-2013

Company

Banca Monte dei Paschi di Siena

Year

2007

Business challenge

Access to finance is a basic service that is essential for citizens to be economically and socially integrated in today's society and a prerequisite for employment, economic growth, poverty reduction and social inclusion.

Monte dei Paschi di Siena (MPS) is aware of a potential business case to be developed by creating sound market chances for the underserved segments (migrants, temporary workers, micro enterprises, low income families, etc.).  In addition, MPS shares with all of the Sienese public entities and a number of local non-profit organisations the need to address social marginalization by targeting special banking offers to individuals lacking suitable legal-property guarantees.

Description

MPS believes that working with the underserved potential customers is key to enhancing and valuing its customer base, which is a core strategic objective of the Business Plan ending in 2009.  Therefore some specific workshops were developed to address financial inclusion.  Dialogue and engagement programmes were also set with consumer associations, local authorities and a variety of other relevant stakeholders with the aim of better understanding the needs of the potential recipients.

A set of new soft propositions (Fuori Serie is the products family brand) were then tailored.  These include:

  • The possibility for fixed-term workers to suspend repayments in periods of inactivity
  • Home-loans are offered at favourable conditions to young couples
  • First Italian bank to propose to elderly consumers a reverse annuity mortgage as a complementary contribution pension earnings
  • A full package of products and services at low-cost conditions are issued to migrants (free of charge remittances as an example)
  • Simple user's guidelines are available to retail customers to facilitate their understanding of basic banking services

In addition, a financial company was also established to better support the traditional MPS efforts in the microcredit business area.

The new company, named "Microcredito di Solidarietà", is a joint venture between MPS and a variety of Sienese public and non-profit institutions.  Its staff is made of 10 former MPS employees, now retired, and it relies on the support of some 30 "listening centres" were volunteers first establish dealings with the needy.  Small loans (€2,000 to €10,000) are then granted at fixed interest rate (4.5%) with no collateral, zero cost and repayments that are tailor-made and modular.

Impact

  • Adjusting to fit with the peculiarities of "non standard" customers
  • Product cost reduction to make these really accessible
  • Developing innovative marketing and advertising strategies
  • Stakeholder engagement which made some of the processes more complex

Challenges/Lessons learned:

  • Marketing specialists are more sensitive towards the needs of low income people
  • Migrants account today for over 10% of new MPS customers
  • 150 human cases were addressed with some €350,000 of small loans granted by Microcredito di Solidarietà during its first year of life

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