After decades of very low banking penetration, the Peruvian banking market appears to be poised for growth.
Up to now, around 70% of Peruvians have been outside of the official banking system, making banking penetration one of the lowest in Latin America. Why? Few have a regular job, and most don’t qualify for a bank account, with 34% of the population living in extreme poverty. Today, there are only 12 million debit cards for a population of 30 million. Total consumer and business loans in the financial system represent 25% of GDP in Peru, compared to the Latin American regional average of 50%. And in more economically developed countries like Chile, we see loans representing 70-80% of GDP.
But conditions are changing. Peruvian GDP per capita is expected to rise to US$ 5,593 in 2011 from US$ 4,363 in 2009, ranking the country seventh in Latin American economies. And with economic growth anticipated, banks are actively targeting unbanked Peruvian consumers with banking products and services, particularly with credit, debit and prepaid cards.
With a third of Peru’s population living in the capital city of Lima, banks are now challenged with offering banking services outside the capital, where infrastructure is very poor. This is being done increasingly via cell phones, which are used by more than 70% of the population.
Indeed we're seeing a growth in mobile and other non-traditional banking services in Peru. Banco de Crédito del Perú [BCP] and Banco Internacional del Perú [Interbank], two FICO clients, have extensive third-party bank agent locations where their customers can top-up prepaid cell phones, carry out limited banking transactions and pay bills.
Of course, application fraud continues to pose a challenge locally. Many card applicants have addresses that are difficult to verify, and cell phone usage is replacing rather than complementing land-line service. Peruvian banks are looking for more innovative ways to verify the applicant’s identity and contactability. We expect that this need will foster some of the most sophisticated responses to application fraud.
If you’re interested in learning more about the Peruvian market, Cards International recently published a great article, "Peruvian cards market set for growth." (Note that their website requires registration to download this article.)