PRODUCTS AND SERVICES
Depending on the level of development of the industry and regulations in each country, this offer is slowly being expanded through the use of credit cards for business supplies, the lengthening of loan repayment periods, and the inclusion of other instruments such as financial leasing and commercial paper (called factoring in Spanish). An extremely interesting experience that is taking place in several countries in Latin America is the introduction of financing arrangements based on production or value chains, normally in the agricultural sectors. Along these same lines, the application of the aforementioned commercial paper has a bearing on the agricultural sector in countries with a scarcely developed financial system and which use this product to finance the small producers that supply established companies, as happens in certain countries in Central Asia.
Microfinance is also taking its first steps in Islamic countries, experiencing a growing demand. The offer is centred on a small group of countries, above all Indonesia, Bangladesh and Pakistan, which account for 80% of this offer, with NGOs being mainly the ones that consider products of this nature. Institutions offer credit, savings and insurance products that uphold the financial principles of Sharia law.
It is to be hoped that these finance instruments will be extended in the near future at a pace that is in step with the development of the industry and legislation. This process would affect both those that already exist in certain countries, such as financial leasing or commercial paper, as well as those others that are commonplace in more developed financial systems, as are leasing plans that include maintenance and accounts payable financing (known as confirming in Spanish).
On the liabilities side, the products are the usual ones for sight accounts, fixed-term savings and term deposits. The most significant aspect within this sphere is not the enlargement of the range, but the fact there is an increasing number of institutions capable of and interested in managing the funds of people with low incomes, with the ramifications that this has by introducing financial flows into the system and driving banking penetration.
Services are spreading more slowly, with the exception being migrant remittances, which are recording sharp growth in terms of their channelling through regulated and supervised financial institutions, with the Latin American experience being a good example. The underlying benefit that stems from offering this service, besides the possible reduction in cost, lies in the fact that it helps to retain part of these financial resources within the system and thereby encourage banking penetration and the availability of credit in the migrants’ home communities.
Services such as the direct debit payment of public services and others are finding it difficult to achieve widespread acceptance despite their considerable interest for financial institutions in countries such as Spain, given their ability to reinforce customer loyalty, as well as the convenience involved for users.