Paper

Strategic Alliances to Scale Up Financial Services in Rural Areas

Using strategic partnerships to improve financial services delivery in rural markets

This paper aims to analyze the motives of selected rural finance institutions (RFIs) in the alliances they form with other commercial and non-profit organizations. It examines how strategic alliances relieve the constraints to access and delivery of financial services in rural markets. The analysis:

  • Identifies the types of RFIs that are effective in helping formal sector entities to penetrate rural markets;
  • Highlights the new financial products (such as international remittances and micro-insurance services) that result from these alliances;
  • Notes the objectives of different models of strategic alliances.

It states that:

  • Strategic alliances comprise a new theme in rural finance and the duration of experiences of RFIs vary widely;
  • Those alliances with longer duration enable measurement of the nexus between strategic alliances and scaling up, whereas those with shorter duration allow only for indicative trends.

The study:

  • Focuses on the experiences of selected RFIs, primarily in Guatemala and the Philippines, while also providing examples from Ghana and India;
  • Examines how they employ strategic alliances and development partnerships to overcome obstacles to scaling-up access through introducing new products and expansion in market coverage.

The study concludes that alliances and partnerships enabled RFIs to access significant new capital resources, manage transaction costs, acquire technical and management skills, link up to banking technology and infrastructure, and provide an expanded array of financial products and services.

About this Publication

By Gallardo, J., Goldberg, M. & Randhawa, B.
Published