Thank you for your question.
Scotiabank's involvement in microfinance started when we purchased a bank in Peru. Peru is the most developed country in terms of microfinance, with a long, long history. As we've built the microfinance business inside Scotiabank, we've used the Peruvian model to expand to the Dominican Republic, Haiti, Chile, and other markets.
I just spoke at the University of Ottawa before coming here, and some of the students asked how microfinance works; does it look like traditional banking? I explained that as a Canadian with 25 years of banking experience in Canada, two years ago going to Peru and seeing our microfinance business for the first time was quite enlightening for me too. I am fascinated by the opportunities it provides to allow entrepreneurs to provide a living for families and create jobs.
The way microfinance works is quite different from what we would know as branch banking. In our case, our officers travel by motorcycle to the communities where customers live and work. They go with pen and paper, and they will actually have a discussion with the business owner about who they're selling to, how much their sales are, how much they are paying in supplies, how much the utilities are. Financial statements aren't common in this business, so the officer actually has to figure out how much this business makes and how much they can afford to pay. Based on that knowledge, they'll make a decision around the lending criteria.
That same officer is also responsible for collecting the loans. So on another day they'll go back on their motorcycle to the community to collect as well. Obviously we don't condone or engage in any kind of predatory collection practices.
We have a very, very large distribution network of branches and kiosks in retail stores and a number of non-traditional distribution outlets that we'd be used to here in Canada—places where people can go to make their payments. We make it very easy for them to find an outlet to make a payment.
Not to belabour it, but the business that is fascinating to me and is going to transform the world is the mobile bank—the bank that's held in a cellphone. Increasingly we will be able to distribute loans onto the phone, and people will be able to make payments, again, through these distribution outlets, through the phones.