United commercial Bank Ltd. (UCB), one of the largest banks in Bangladesh, had mostly been focused on corporate banking. Therefore the bank had created a perception of being a traditional bank, lacking innovative services and an attitude that is disconnected from the public. To shift its imagery as a progressive brand and connect with a broader audience, it chose technology & innovation, financial inclusion and retail banking as key priorities.

So, the challenge was to take the first step towards including Bangladesh’s financial outcasts in the country’s growth and success story. UCB realized that existing banking solutions will not help bring the change.

So, the key objectives were:

- To develop solution/s that could encourage and enable the financially excluded to join the financial system.

- To shift brand perception by building a sustainable image as an innovative and empathetic brand that leads the drive for financial inclusivity in Bangladesh.

Lately, the banking sector of Bangladesh has expanded substantially considering the number of institutions, financial instruments, and volume of assets. However, the paradox is that Bangladesh has become one of the world’s five fastest growing economies while one-third of its population remain unbanked, i.e. excluded from the financial system. The obstacles hindering greater financial inclusion are e.g. the unbanked population’s lack of disposable income, the high cost of financial transactions and the banks’ low appetite to offer inclusive services. Hence, they remain an unexplored segment for the banks.

PricewaterCoopers estimates that Bangladesh could become the world's 28th largest economy by 2030, surpassing countries like Australia, Spain, South Africa, Malaysia. To make that a reality, the unbanked part of the population will play a key role. The moment they get financially included, economic growth will start flowing into the rural areas and Bangladesh could finally live up to its true potential.

Not having investible surplus appeared to be the biggest roadblock for financial inclusion of the unbanked farmers.

However, their only asset is their fresh produce, the unsold inventory at the end of each day, which either gets wasted or sold to middlemen at too low prices due to lack of access to storage facility. So, there’s a paradox that the farmers start each day with a commodity that has a certain value, but at the end of the day that same commodity loses almost all of its value even if the produce is still fresh and edible.

So, what if the farmers could sell their surplus of fresh produce, at a fair price while depositing their returns directly into their newly opened bank account?

Enter AgroBanking, the world’s first financial service designed to lift unbanked farmers’ out of poverty by transforming their unsold produce into bank account savings.

Primary audience:

Agriculture, the largest employment sector in Bangladesh, has 36 million farmers and most of them are financial outcasts.

Barriers:

- Unbanked farmers believe banks only serve the rich

- Small farmers grow vegetables and fruits in quantities insufficient for the wholesale market. Due to having no storage facilities, the fresh produce starts losing value from the moment it's harvested and the middlemen wait until they get a discount. This impacts the farmers' earnings and any hope to generate surplus for a bank account. When needed, loan sharks charge abnormal interest rate which further reinforces their vicious cycle of poverty.

- Both travel cost to faraway branches and time cost are too high.

Secondary audience:

General people who would see UCB as an inclusive brand.

Strategy:

To develop an eco-system where the farmers get fair price for their fresh produce and have the investible surplus for a bank account.

UCB doesn’t have branches in the rural areas. But they have UCash (mobile financial service brand) agent points and UCB Agent Banking outlets in some of the rural areas. To convert fresh produce into money, UCB partnered with Shwapno, the largest chain of superstores in Bangladesh.

The idea is to set up co-branded points of UCB and Shwapno, at either UCash or Agent Banking points and where none of these are available mobile vans are sent.

The co-branded points have two counters where Shwapno collects the fresh produce, gives out a token and upon submission of the token to the UCB counter, the money gets deposited into the farmer’s UCB account and the farmer receives an SMS notification. The price of produce gets fixed every morning basis the rate in the wholesale market. A few weeks prior to the launch, megaphone announcements and posters are pasted in the implementing areas.

Project AgroBanking democratized innovation to solve the farmers’ problem of accessing banking services and getting fair price for their fresh produce and that excited both the farmers and the general people of Bangladesh.

So far, AgroBanking has been launched in 102 locations and has opened 122,000 new bank accounts. A total of TK. 401.86 million (US$ 4.73 million) worth of fresh produce have been collected and transformed into savings so far. The fresh produce collected through AgroBanking contributes to 41% of Shwapno’s total sourcing of fresh produce (Confidential – not for publication). The solution also garnered US$ 1.5 million worth of PR both nationally and in international media.

An unexpected consequence is that AgroBnaking received interest from various stakeholders in different agro-based countries in Asia, Africa and LATAM to implement it in their countries. A solution made for poor farmers in Bangladesh could eventually become a solution for the world...