> Posted by Karen Firestone, President and CEO, Aureus Asset Management

The following post was originally published on the Harvard Business Review Blog Network.

Financial services firms want to reach more women; so I conclude from data presented by Pamela Grossman of Getty Images at SXSW this year. According to data collected by Getty, financial firms are buying 20 percent more stock photos of women today than they were five years ago. At the same time, the share of men shown in their advertising has declined.

Of course, we live in a wildly diverse world; we want to be inclusive and broad-minded ourselves; and we therefore want our providers of financial advice, energy, and technology to reflect those values. We prefer Morgan Stanley or Citigroup to be talking to all of us, showing us that they have transcended their traditional, mostly white and male clientele. According to Chris Edwards, former Group Creative Director for Arnold Worldwide, we also want visual evidence that the professionals at these firms are as diverse as the clientele they seek. Advertising images reinforce and extend these efforts.

Financial institutions portray women today as competent and self-confident, and often feature attractive, middle-aged advisers talking to couples in which the woman is similarly well dressed and clearly attentive. According to Dr. Emma Firestone, who has studied the audience perception and response to images and words in media and entertainment, from a cognitive perspective, “It makes sense for advertisers to present women as strong, well-educated consumers. This is appealing to women who see an attractive self-image reflected back at them, and to men, who are flattered by the idea that smart, self-possessed, and financially secure women are their own life partners.” Men are much more likely today, than decades ago, to be comfortable with and appreciate their spouses as full partners in their own financial decision-making – at the same time, imagery of supportive female financial advisers plays into comforting stereotypes of the woman-as-helpmeet, perhaps humanizing an industry consumers view as confusing or even threatening.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

8439582304_65373d394f_zAs you’re here on the CFI Blog, you’re likely familiar with microfinance. But was this the case back when you were in school? It’s April, which means we’re amidst the Month of Microfinance (MoMF), a student-led movement spotlighting microfinance and bridging the gap between students and the sector. This year’s MoMF spans activities engaging students, MFIs, and key industry players, including Kiva, the SEEP Network, and Truelift, supporting access to quality financial services for all and engaging the next generation of microfinance professionals.

Microfinance is increasingly taught in schools, but not everyone has access to a course. The Month of Microfinance offers students a platform to learn about the industry and in turn easily spread the word through their networks. For students looking to organize activities on campus, the MoMF team provides the resources to screen a movie, set-up informative displays, organize fundraisers, and spearhead guest speaker events. A number of MoMF contests conducive to online media conversation are underway. Kiva U, Citi Microfinance, and AboutMicrofinance are hosting a student video competition and an essay competition prompting participants to explore the topics of poverty alleviation, profit management, technology innovation, and gender equality.

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> Posted by V. McIntyre, Freelance Writer for the Harvard Kennedy School

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”

Enthusiasm for mobile money among the financial inclusion community is generally high, but like with most topics, when you pierce beyond the surface-level praises, the tone of the conversation becomes more mixed. As Harvard Business School professor Shawn Cole stated on day three of the HKS Executive Education course Rethinking Financial Inclusion, “Mobile money has been next year’s big thing for the last ten years.”

Comments on disappointing levels of mobile money services uptake are common, and are often paired with another dominant piece in the mobile money narrative: M-Pesa’s runaway success in Kenya. Since its introduction in 2007, M-Pesa has been taken up by 70 percent of the country’s population. And as the professors pointed out, of those who used M-Pesa in the last 12 months, 43 percent did not have formal bank accounts. This statistic exhibits how mobile money provides financial services to many who might not otherwise have them. The statistic also alludes to the question of whether the service is a good on-ramp to more financial services. Questions about on-ramps and services uptake are essential to the mobile money and financial inclusion conversations at the heart of discussions throughout the weeklong HKS program. Balancing such questions were conversations that illustrated clear, and perhaps surprising, benefits of mobile money.

Jenny Aker, a professor at Tufts University, cited a study that took place during a drought in Niger which showed that distributing government aid via mobile money versus cash not only cut costs, it increased diet diversity. In this case, when women received their government benefits through their phones, they had greater control over the use of the money, and this affected household decision-making. The study also demonstrated that with mobile money the distribution and receiving of funds was cheaper for government and the recipients.

In addition, mobile money helps users weather economic shocks. Tavneet Suri, MIT professor and scientific director of J-PAL Africa, presented the results of a study of several thousand Kenyans she conducted with William Jack of Georgetown University. It showed that M-Pesa users are better able to share risk through an increase in remittances received and a higher diversity of senders. A shock that reduces consumption of a non-user by 21 percent reduces consumption by M-Pesa users by only 11 percent. Mobile money dramatically increases the size and breadth of the user’s safety net: Suri estimates the insurance value of M-Pesa at around 3-4 percent of the user’s income.

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The huge potential for digital finance to reach the last mile of the financially excluded

> Posted by Peer Stein, Director, IFC Access to Finance Advisory 

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”

Last week’s seminar on digital finance at the 2014 World Bank Group / IMF Spring Meetings convened innovators, private sector leaders, and government representatives to discuss the potential innovative business models and new technologies have in reaching and empowering the financially excluded poor and small businesses faster and with greater scale, while contributing significantly to the World Bank Group goal of universal access to finance by year 2020. The session highlighted the diversity of business models that use technology to reach the excluded market segment, showcased by innovators from bKash in Bangladesh, Airtel Money-Africa, and Berlin-based Mobisol operating in rural East Africa.

I’d like to share three key points that emerged from the forum.

First, multi-stakeholder collaboration is a must.

None of the featured innovators is a traditional bank or financial institution but each one realizes the importance of partnering with banks and other players in this dynamic space. For example, bKash was born from a fusion of BRAC Bank and Money in Motion, and continues to operate as a subsidiary of BRAC Bank, holding 80 percent of the mobile money market in Bangladesh. With such an adoption success within two and a half years, recording 90,000 digital money agents and 11.6 million registered users, in the words of Kamal Quadir, CEO, “bKash is now a Bengali verb [synonymous with ‘to send money’].” Chidi Okpala, Director of Airtel Money-Africa, a mobile money service with an active base of 5 million customers, reinforced that one of the factors of success in this diverse market is the need to position your mobile money service for stakeholder collaboration rather than competition. The real competitor is cash. Walt Macnee, president of the MasterCard Center for Inclusive Growth, emphasized the company’s connecting and collaborative role focused on ensuring interoperable platforms among a diversity of players.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

A few days ago news broke that Facebook, the social media giant with over a billion users worldwide, is making preparations to begin offering international money transfer services. Although the development has been dismissed by Facebook as rumor, the prospect of this enormous network enabled for money transfer and the huge global need for this service makes this a story worth following.

The news, initially shared by the Financial Times and sourced from individuals involved in the proceedings, indicates that Facebook is weeks away from securing regulatory approval from Ireland’s central bank to allow its users to store money on the site and use it to pay others. Facebook’s headquarters for Europe, the Middle East, and Asia is in Dublin. If approved, Facebook would be permitted to issue units of stored monetary value represented as “claims” against the company. Regulation in this area pertaining to Europe would allow approval in Ireland to green light services throughout the entire continent. The Financial Times also mentions that Facebook has had discussions about potential partnerships with several start-ups that offer international money transfer services through both smartphone and online platforms.

Facebook’s reach is massive, 1.23 billion at the end of last year, and it’s becoming increasingly diverse. Last week, thanks to increases in internet access and mobile penetration, the company achieved a milestone in India: 100 million users. Some analysts say by the end of this year India will surpass the United States (with 180 million) as the country with the most Facebook users. The social media site is big elsewhere in Asia, too. It is the most popular social network service in all but six of the region’s countries. After the US and India, Facebook’s largest countries by-users include Brazil, Indonesia, Mexico, Turkey, the United Kingdom, and the Philippines. Facebook has a large presence in Africa, as well, with 13 million users in Egypt, 9.4 million in South Africa, 5.3 million in Nigeria, 1.8 million in Kenya, and 1.4 million in Ghana.

Like Facebook, remittances volumes are increasing on the whole around the world. In a new brief on remittances and migration released last week by the World Bank, it’s shown that remittances to developing countries reached about $404 billion in 2013, an increase of 3.5 percent over 2012. Annual growth is expected to increase to an annual average of 8.4 percent over the next three years. In 2013, India received the most international remittances with $70 billion, followed by China with $60 billion, and the Philippines with $25 billion.

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> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI

The Group of Twenty Finance Ministers and Central Bankers (G20) is targeting financial inclusion through the G20 Development Working Group (DWG), which is in the process of finalizing an agenda for its 2014 goals. The DWG focuses on developing an agenda for tackling development challenges, with the intent to remove constraints to sustainable growth and poverty alleviation. Recently, through our participation in InterAction’s G20/G8 Advocacy Alliance, CFI teamed up with other non-profits in the financial inclusion community to develop a set of recommendations for G20 leaders. While the Alliance and DWG span a diverse range of issues, our focus was, of course, on financial inclusion.

Our recommendations to the G20 were developed in coordination with CARE International UK, the Grameen Foundation, the Cherie Blair Foundation for Women, HelpAge USA, and the Microcredit Summit Campaign, among others. They urge governments to implement national strategies for financial capability and client protection, ensuring that these strategies and targets address a full suite of financial services and include underserved groups. You can read the full set of recommendations and contributing organizations here.

Last week we had the opportunity to discuss our recommendations with senior leadership from the Australian G20 presidency. As you may know, the G20 Presidency rotates each year, and this is Australia’s year. Each presidency takes a lead in setting the agenda and priorities, which are then discussed and (ideally) implemented by all G20 members.

The G20 Australian presidency issued a global development agenda, which was supported by the DWG. It highlighted two major outcomes for 2014 related to financial inclusion and remittances. We were happy to see an expressed desire to move beyond a focus on cost reduction for remittances, where there has been a great deal of progress, to maximizing the potential of remittances to increase financial inclusion.

During the meeting, our financial inclusion team brought three key points to the conversation: Read the rest of this entry »

> Posted by Jeffrey Riecke, Communications Associate, CFI

M-Pesa, the mobile money service success story that began in Kenya in 2007 is continuing its march, this time into the surprising location of Romania, raising the questions, what will the product look like in this new European market and how will it fare. At the end of last month Vodafone, the operator behind the new service and one of Romania’s largest telcos, began operations using the country’s 300 Vodafone Romania stores, participating retail outlets, and authorized agents.

M-Pesa operates via SMS phone messaging and offers the ability to make deposits and send and receive payments to people and businesses – potentially an attractive prospect to the third of Romanians who don’t have access to formal banking services. Across the country there are about 7 million people who transact mainly in cash. The just-launched mobile service is estimated to be accessible to about 6 million people, and Vodafone plans to increase its in-country distribution points to a total of 2,000 by the end of the year. Vodafone has 8.3 million clients out of Romania’s 21.3 million population, the vast majority being active mobile phone users. The mobile money market in Romania is currently underdeveloped.

Of course, just because M-Pesa has achieved significant uptake elsewhere doesn’t mean that will happen here, too. Since the service first launched in Kenya, new M-Pesa outfits have been established in a number of other countries including Tanzania, Afghanistan, and South Africa. Within the past twelve months, the service also launched in Egypt, India, Lesotho, and Mozambique. Across these markets results have been mixed, with operators struggling to emulate the immense success achieved in Kenya.

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> Posted by Alexandra Rizzi and Alyssa Passarelli, Deputy Director and Communications and Operations Assistant, the Smart Campaign

The Smart Campaign has worked tirelessly for over five years to embed the Client Protection Principles into the microfinance sector, and increasingly, the broader financial inclusion community. Yet until now, the Campaign has had minimal input from the very clients whose well-being drives the entire movement.

In order to better understand the concerns and experiences of the individuals who use microfinance, the Campaign has launched a client voice research and learning project. Through listening directly to clients, market stakeholders can raise awareness, dialogue with each other to identify potential issues, and in turn integrate this learning into their work. The Smart Campaign has a unique role in shining a light on potentially harmful or negative experiences that low-income users of financial services have had and bringing those experiences to the attention of those who can do something about them.

To conduct this project, the Campaign will be working with Daryl Collins and her team at Bankable Frontier Associates (BFA). BFA has conducted extensive global research with low-income households, including projects with an explicit focus on consumer protection. The client voice project will be conducted in four markets – Pakistan, Benin, and two others to be chosen this summer. The markets are selected based on geographic diversity as well as engagement by local stakeholders with the Smart Campaign. In Pakistan and Benin for example, the project is working closely with the Pakistan Microfinance Network and the Alafia Consortium, who have helped convene local stakeholders to give feedback on project design, research locations, and results. This ensures that the research has input and support at all stages from local expertise and will be used by those who are best placed to take action in response to the findings.

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> Posted by V. McIntyre, Freelance Writer for the Harvard Kennedy School

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”

“Know your client” is a popular phrase in conversations about financial inclusion and business in general. But where does such knowledge come from? Does it end with your client’s expressed needs and desires? Can it also incorporate behavioral research insights or consumer protections that the client may not even demand?

Shawn Cole of Harvard Business School opened the second day of “Rethinking Financial Inclusion” – a one-week program offered by Harvard Kennedy School Executive Education – with a question all providers might ask themselves when modifying existing products or developing new ones: “If you were the customer, would you go for that deal?”

Cole pointed out that products meant to “bank the unbanked” (i.e., first-time users) must be designed differently from products meant to tempt new customers away from competitors. He described the experience of First National Bank of South Africa in responding to government calls to encourage savings among the poor and draw black South Africans into the predominantly white formal banking sector. First National Bank decided to offer a lottery with large prizes to new depositors.

In debating whether a lottery would attract customers, participants cited examples from their own work, such as a mobile money account offering free insurance to savers who maintain a sufficient balance in their accounts. Recognizing that the poor are already saving, informally, the challenge is to develop products that draw them into the formal sector safely and responsibly. Another provider warned against complicated offers. “Structured products can be very esoteric.”

The concerns participants voiced fell into two categories: ones that apply to anyone (e.g. for nearly everyone a flashy new product loses its luster after the third page of terms and conditions), and ones that are specific to the poor (e.g. how do you draw people into banking, when even walking into the building itself is intimidating?). Both sets of concerns underline the need for financial capability development and customer-centered product innovation. The potential interest in formal financial products may be there, but uptake is obstructed by consumers’ lack of confidence, or poor understanding of the products’ components, or inability to surmount intimidating “barriers to entry” such as small print. Read the rest of this entry »

> Posted by Elisabeth Rhyne, Managing Director, CFI

I was recently asked to give a talk at the University of Pennsylvania’s 8th (!) annual Microfinance Conference. This year’s theme, “Microfinance Beyond Its Roots” set me in search of ways in which the microfinance industry is moving into areas beyond its original microcredit core. Of course, this process has been going on for a long time, and so there are many topics to choose from.

I decided to look at health care, partly because, as every staff member of a microfinance institution knows, health setbacks are one of the most frequent sources of repayment problems among low income clients. As they learned about the health vulnerabilities of their clients, microfinance organizations began to invest in experiments, bringing their businesslike approach to bear on a challenge that is often dealt with in heavily subsidized, non-market ways. Today, many of these programs have matured and grown, even as new ideas are being tested.

I looked among the organizations belonging to the Microfinance CEO Working Group, and I found that nearly all have something exciting going on in health care. Approaches include some combination of direct health care service provision, health insurance coverage, and education. Many are using technology as a means of reaching people at scale and low cost.

The meetings associated with group lending provide a convenient and cost-effective platform for health services, and adding a health component to group microcredit is probably the earliest and most widespread model. Health education was perhaps the starting point, as pioneered by Freedom from Hunger and also implemented by Opportunity International. Today the services often reach farther (while health education continues to be important). ProMujer, for example, directly employs nurses and other health practitioners to staff fixed and mobile clinics available to ProMujer members. They focus on maternal and reproductive health, as well as screening for the chronic diseases that are increasingly major health issues in Latin America. Hundreds of thousands of women get access to health care through ProMujer’s efforts.

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