Converting Dormant Bank Accounts into a Dynamic Force in Latin America

Schydlowsky, Daniel M.
Jul 2018
This paper discusses what are now known as dormant or “zombie” accounts, which have their origin in conditional transfer programs and other government programs that created accounts for beneficiaries at the respective state bank or in the banking system. The focus is on Peru, where these accounts were created at the Banco de la Nación. Based on statistical analysis, this paper adopts two definitions for an account to be “non-zombie”. On this basis, on the deposit side, for Juntos only 4 percent of accounts were found to be non-zombie; for Pension 65, only 0.2 percent; and for Beca 18, 32 percent. On the expenditures side, 10 percent qualified as non-zombie for Juntos and Pension 65, and above 90 percent for Beca 18. Although zombie accounts can evolve into non-zombie accounts, under current conditions the process is slow. While significant prima facie benefits can come from converting dormant accounts to digital wallets, a number of requirements need to be fulfilled first, including users’ requirements and minimum ecosystem requirements, and various sub-ecosystems must be integrated, such as payments between persons, digital payments to service institutions, and digital payments to businesses.