Al-Amal Electronic Bank: An innovative solution to financial inclusion in the light of war
Beyond Al-Amal Bank application, the second place winner in the Arab Financial Inclusion Innovation Award 2019 Al-Amal Bank for Microfinance, Yemen. Al-Amal Bank’s finding of an innovative solution to the issue of financial inclusion in light of the war is one of the pivotal points for reaching large areas in Yemen. Although there are 17 local and foreign banks and the number of branches reaches 328، In addition to 12 microfinance institutions with a number of branches up to 106 branches، Yemen is still at the bottom of the list of countries in the Arab region in financial inclusion indicators, at a rate not exceeding 8% according to the Global Financial Inclusion Index for the years 2011 and 2014. . One of the reasons for the low indicators of financial inclusion in Yemen is that banks and microfinance institutions focus in providing their financial services on urban areas in which only about 30% of the population live, while rural areas are deprived of financial services in which 70% of the population lives and because to its lack of adequate infrastructure to provide financial services, such as telecommunications and Internet services, which are weak or unavailable in rural areas. However, the picture is completely different in the mobile phone sector, where official reports indicate that the number of mobile phone subscribers in Yemen reached about 18.6 million subscribers until mid-November 2019. In light of the war in Yemen since 2015 and the complete power outage in most of the Yemeni regions, people have increased their demand for buying mobile phones and tablets because of the information and entertainment services provided by these smart devices via the Internet, to become an alternative to the traditional media that people used to follow before the start of the war. Al-Amal Bank was not far from the negative effects of the war on Yemeni banks, which are now suffering from a suffocating liquidity crisis that has reduced the level of its services to customers, especially the merchant sector, not to mention the risks and high cost of providing financing services, especially for the small and micro-enterprise sector, whose risks increase in light of crises. . Al-Amal Microfinance Bank headed towards digital transformation by developing its banking services based on mobile applications in 2017, in order to contribute to the expansion of financial inclusion in Yemen for all segments of society by launching the electronic money service PYES (PYES- meaning money in the Yemeni colloquial dialect) coinciding with the Global trends in terms of electronic banking services and a contribution from Al-Amal Bank in addressing the problem of lack of liquidity. In the short and medium term, Al-Amal Bank seeks to make this service one of the main means of providing all banking services to customers within the “Al-Amal Electronic Bank” project within the framework of financial inclusion so that all the bank’s services will be as close as possible to customers and within their reach and through their mobile phones, thus providing Effort, time and cost
Al-Amal Electronic Bank won the second place in the Innovation Award for Arab Financial Inclusion for the year 2019 as it is in line with the three objectives of the award, which are represented in the following axes:
Increasing access to financial services within the framework of financial inclusion in Yemen Al-Amal Bank provides all its banking services through the PYes application, which include Islamic electronic finance, savings account, money transfer, rural areas service, expatriate remittances at competitive transfer rates, free electronic payment and bill payment services, and linking with e-commerce platforms. In addition to the customer’s use of the application on his mobile phone to conduct most of the operations, Al-Amal Bank provides the Base service through 3,300 service points spread throughout the Yemeni governorates and directorates to cover all urban and rural areas. Al-Amal Bank also provides the service of disbursing humanitarian aid from donor organizations through electronic accounts without the need to stand in the exchange queues at the aid disbursement center.
cost reduction Al-Amal Bank electronic services save customers the costs of moving to the bank’s branches to obtain the service. Also, Al-Amal Electronic Bank provides 100% free of charge all financing, savings and electronic payment operations. Funds transfers are made through the PYES service, with a commission that is 40% lower than traditional transfers in the market. The electronic account can be easily fed either through the nearest agent or service point or through the scratch cards of the telecommunications companies available in all the shops. As for expatriate transfers, fees for internal transfers in foreign currency are applied, not the transfer commission of international transfer companies, which saves the sender from the cost of transfers from abroad
Improving the service quality Al-Amal Bank is keen to serve its customers in the best way. The electronic services have contributed to improving the service by improving efficiency in terms of time, effort and cost. As we mentioned before, customers perform all operations through a mobile phone without the need to move, in addition to the spread of service points in the main urban and rural areas in all Yemeni directorates. It also provides a service to expatriates at a lower cost and more easily. Al-Amal Bank has developed a Customer Service System (CRM) to manage complaints and suggestions.
Since the bank’s clients are poor and low-income, the speed, ease and low cost in addition to integrated banking services represent an added value for them and an important incentive to exercise their right to obtain financial services like other groups of society, thus achieving the most important concepts of financial inclusion
Continuing earning customers’ trust and serve them in the best way Despite all the advantages offered by the electronic money service in Yemen and the availability of the legislative and technical environment necessary to provide it, the spread of the service on a large scale faces several challenges, the most important of which is the decline in customer confidence in the banking sector in general due to the problem of lack of liquidity that the banking sector suffers from due to the war Therefore, we have been keen not to impose any restrictions on moving customers’ savings, in addition to diversifying services and reducing their costs in a way that encourages customers to use them. We have also been keen to develop the service to suit all types of smart and regular mobile phones to overcome the cost of purchasing a mobile phone, which customers may consider as part of the cost of obtaining the service.
During the period 2020-2022, Al-Amal Bank plans to promote achieving higher indicators of financial inclusion in Yemen, especially in rural areas, by developing banking services that are compatible with the needs of rural residents, relying on the methodology of providing banking services outside bank branches through the network of financial agents (Exchange Shops). And the non-financial (merchants) as the most able to reach the depth of rural areas, in parallel with the expansion of electronic banking services that help in facilitating and accelerating the procedures for obtaining banking services in Yemen with the least time, effort and cost and with the aim of reaching the broader financial inclusion in Yemen.
About Al Amal Bank Al-Amal Bank is the first microfinance bank in Yemen and the Middle East and North Africa region. The bank was established by Law No. (23) of 2002 and officially started its activities in January 2009 under the supervision and control of the Central Bank of Yemen. Al-Amal Bank is a non-profit institution that seeks to provide sustainable financial services to poor groups in Yemen, and those with limited and low incomes – especially owners of small and micro enterprises – by providing comprehensive financial services that suit their needs. The total number of active Al-Amal Bank clients by the end of 2019 is 34,958 clients (29% of whom are women), with a financing portfolio of $13.5 million and a network of 18 branches employing 221 employees
Refrence: CGAP website