By Carmen Elena Pineda, Banking and Financial Lawyer at the Central Reserve Bank of El Salvador

Since 2015, El Salvador has enabled banks, cooperative banks and savings and credit societies to offer their operations and services through financial correspondents. This approach has expanded access to financial services, particularly in rural areas. Recent expansion to the regulation of financial correspondents is expected to further boost financial inclusion, notably regarding digital financial services.

In El Salvador, the use of financial correspondents to deliver banking services was codified in 2015 through the approval of “Technical Standards for Conducting Operations and Providing Services through Physical, Digital and Mobile Financial Correspondents and Financial Correspondents Administrators.”

The policy has proven successful in driving access to financial and payment services, particularly in hard-to-reach areas. A 2022 National Survey on Access and Use of Financial Products and Services, conducted by the Central Reserve Bank of El Salvador with the support of AFI, found that 23% of respondents had used financial correspondents in the previous 12 months. 

Today, financial institutions use financial correspondents to carry out a wide range of operations. These include:

• Collection services
• Receiving documents for opening bank accounts
• Receiving documents to grant loans
• Disbursing loans
• Receiving loan payments
• Withdrawals or credits to deposit accounts
• National wire transfers
• Payments of wire transfers from abroad, including family remittances
• Receipt and delivery of documentation for the opening of electronic money registration, accreditation, and withdrawal of cash
• Opening and closing deposits in saving accounts
• Withdrawals or credits to saving accounts

In 2022, two new forms of financial correspondents were incorporated:

• Digital financial correspondents, who provide web applications or applications for mobile devices
• Mobile financial correspondents, who provide mobile banking services

By expanding regulations to allow financial correspondents to operate through more service channels, we expect to see a further expansion in their use, and a positive impact on financial inclusion, especially in rural areas.