Toespraak van Prinses Máxima, Global Alliance for Values on Banking, Triodos Bank te Zeist, 3 maart 2009

3 maart 2009

De toespraak is uitgesproken in het Engels.

Your Royal Highnesses, Ladies and gentlemen,

It is a great pleasure to address such a distinguished group of people today. The initiative to start the Global Alliance for Banking on Values could hardly be more timely. It comes during a time where the role of banks - for good or bad - is higher on the public agenda than ever before. I would like to thank Triodos Bank, Shore Bank and BRAC for their kind invitation to contribute to this crucial debate. And I welcome the opportunity to share some thoughts, not only from the perspective of a previous banker, but specifically from my experience over the last three years as a member of the UN Advisors Group on Inclusive Financial Sectors.

I don't intend to dwell for too long on the financial crisis, given that I'm talking to a room of financial experts.  Having said that, only now we are starting to have some insight in the real extent of the consequences of the last months.  In any case, one thing is clear - the core values of banking; trust, building sustainable and long-term relationships, and offering products that add real value, are more relevant than ever. And neglecting these values seems to be at the heart of the causes for the crisis.

Over the last few months it has become more evident how important it is to have and develop a sound inclusive financial system in a country that, not only promotes growth and reduces income inequality, but also gives its customers financial services they really need and can afford. Because with it, we can safeguard our people's savings, and protect the financial system as a whole.

I understand the Global Alliance of Banking on Values has ambitious goals; to set inspiring examples of what banking can really do. Examples that will encourage the expansion of the boundaries of mainstream finance and contribute to social innovation in the financial sector. To combine strength, capacities and resources to tackle the global challenges facing people and the planet, and to drive a more responsible and sustainable economy.

Financial institutions can be catalysts of change.  In the past three years I have seen the power of microfinance banks to change people's lives, and to benefit communities and societies as a whole. I am delighted to see that some of the leading microfinance banks are founding members of this Alliance.

Research tells us time and again that a sound financial sector is an essential part of the development process.  Financial development, and improving access to finance, accelerates economic growth, reduces poverty and income inequality. 

Access to a wide variety of financial services and products - from loans and savings, to insurance products and remittances can be a powerful tool to generate income, build capital and protect people against risks. However, over 2 billion people remain excluded from the financial services that we take for granted. The possibility to save in a savings account for example, equally as important as access to credits, has also been lagging. Only 20% of the world population has access to a savings account against more than 90% in the OECD countries. Needless to say, that microfinance institutions that offered saving products to their clients are weathering this crisis much better than the ones that are not deposit based like the case of Acleda in Cambodia.

When we talk about financial inclusion, one issue is key. While access to financial services is crucial, it requires informed consumers who understand the obligation they are undertaking and have the ability to fulfil it.  If people are borrowing money, they depend on a lender treating them fairly, with clear and transparent loan terms.  The current global financial crisis is in part due to the absence of these factors, and to overzealous marketing of inappropriate loan products to vulnerable consumers, many of whom did not fully understand what they were getting themselves into.  There's an appropriate role for the government in establishing "light touch" but adequate, market regulation, and establishing and promoting effective programs that inform consumers about financial services: financial education. And it is the role of banks and microfinance institutions to have consumer protection and transparency written into the DNA of their organization.

I was in Paraguay last year when somebody from an MFI said something I will never forget. He said: "It is not about increasing market share and trying to get as many products sold to the customers out there, but it is about giving the product that the consumer needs and that they can afford. Knowing your customer, not on a scoring basis, but really knowing that this client has the capacity to pay back his loan." 

There are numerous examples of this kind of responsible stewardship elsewhere. One of the members of this Global Alliance, Mr. Solorzano from Banex in Nicaragua, told me last year that Banex has installed an ombudsman who deals with client complaints as part of a programme for client protection.

This is a core value that I am sure is a key principle for the founding members of this Alliance. And I sincerely hope that financial education will be on your agenda as well.

The times we are living in, and the challenges we face, require integrated solutions. Trying to alleviate poverty will not work unless we address climate change, the need for clean energy, clean drinking water, sanitation and sufficient and healthy food.

Banks have a pivotal role to play in this. I think part of the value of this Alliance lies in fostering shared learning; for instance, microfinance banks can learn more about environmental finance and work on building solutions for financing rural solar energy, small hydro power, solutions for clean drinking water and sanitation.

Two billion people globally do not have access to finance. They also do not have access to electricity, oil or gas to cook food and for a daily living. This perpetuates the poverty trap and undermines attempts to achieve the UN Millennium Development Goals while putting pressure on economically-important ecosystems such as forest for fuel and charcoal. This is a huge challenge, but can also be a business opportunity to build alternative energy systems and healthy environments. I think microfinance banks can play a huge role here.

BRAC in Bangladesh, also a member of this Alliance, promotes solar energy for rural households who live in the 50,000 villages outside of the national power grid. Through microenterprise loans, villagers choose from a selection of home packages that can provide up to four hours of power each night and are capable of running a couple of light bulbs and mobile phone chargers. To date BRAC has successfully installed almost 37,000 solar panels bringing sustainable energy to 180,000 people living in remote rural areas.

We have also seen some strong business cases using microfinance for sanitation and waste management activities. Showing that adequate water and sanitation to people not only translates in environmental and health gains, but it can also yield economic gains. SEWA in Gujarat, India, for example, has formed a for-profit company with women's Self Help Groups, by training them through an external agency to be barefoot engineers. The skills have enabled the women to not only provide services for the water and sanitation needs of the villagers but also to address the broader infrastructure needs they may have.

I can cite similar examples of microfinance involved with water irrigation systems, healthy and efficient cooking stoves, water filtering systems, etc.

Banks in developed countries too, have much to learn from microfinance banks about how to efficiently and effectively provide microfinance. Even now, in the US as well as Western Europe, there is a significant group of underserved people who want to start small businesses but can't access the finance to do it.  

So what is the role of governments and regulators in all of this? In my work for the UN Advisors Group on Inclusive Financial Sectors over the last three years, we talked to regulators and governments of many different countries.  A subject that came up consistently was whether there should be a ceiling on interest rates for microcredits. Our argument would be, and this has been proven in many countries, that market-forces like competition drive down interest rates over time. If governments chose to regulate interest rates and set ceilings, they limit commercial growth of microfinance institutions, stifle competition and increased efficiency and ultimately restrict access to finance for more people.

However, this argument is more difficult to make in the exceptional cases where microfinance institutions see profit as an end in itself rather than a means to an end. It is hard to explain why shareholders of a microfinance institution should earn extraordinary profits at the expense of poor people paying extremely high interest rates. In the end this is about balance. Balance between all financial institutions' stakeholders is essential- from clients and shareholders to co-workers and management. 

In the current climate, the roles of the banks in this Alliance could be to set an example for the financial industry as a whole to follow; to show how this balance between stakeholders and the balance between people, planet and profit can work as a successful business model.

Ladies and gentlemen,

We need to go back to basics. Back to the traditional banking activity of acting as an intermediary between the saver and the borrower, back to a strong relationship between the customers and the financial institution that serves them, and back to a thorough assessment of how much a customer can really handle as a loan, giving him the opportunity to improve his life and give back his dignity.

We also need banks that drive the social and environmental change the world needs to meet the greatest challenges of our time. I hope this group of frontrunners will play a leading role in that task and that many will join you in your mission. I wish you all the wisdom and vision to make this Global Alliance into a starting point for connecting values to banking.

Thank you very much.