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> Posted by Center Staff

Good morning! Freshly published is the latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. Among the stories in this week’s edition are the World Council receiving a USAID award to catalyze affordable housing in Haiti, a multi-partner initiative to train women across Nigeria to become mobile banking agents, and Tanzania setting a new financial inclusion goal. Here are a few more details:

  • The World Council with support from USAID and others will work directly with financial institutions and housing developers to help expand affordable housing financial products and services in Haiti.
  • The Cherie Blair Foundation for Women is working with FirstBank to provide technical, business, and financial literacy training to 2,500 women across Nigeria to become agents for FirstBank’s mobile banking platform.
  • Last week Tanzania set a new goal of extending financial services access to 75 percent of the population in 2016 – as a follow-up to the goal of 55 percent in 2016, which was surpassed in 2014.

For more information on these and other stories, read the latest issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at ezuehlke@accion.org.

> Posted by Sonja E. Kelly, Fellow, CFI

Financial Inclusion 2020 Blog Series banner imageFinancial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

Tuesday marked a historic day for Peru: the country launched its National Financial Inclusion Strategy. While Peru has been lauded in the past for its environment for financial inclusion, its public-private sector partnerships, and its leadership in conversations on international banking standards, this national strategy elevates Peru’s commitment to financial inclusion to a new level. In particular, we want to celebrate the strategy’s commitments to consumer protection, financial literacy, and the inclusion of vulnerable people.

Analysis of the World Bank Global Findex this year revealed that countries that have a national strategy (not merely a commitment or stand-alone programs) for financial inclusion saw twice as much bank account access growth in the last three years compared to countries that did not have a national strategy. For Peru, this is great news, as according to the same data source, less than 30 percent of adults in the country had access to an account in 2014.

The path to financial inclusion articulated in the strategy, however, is not focused on access to accounts, making Peru an outlier among its peers that have implemented national strategies. Instead, Peru has oriented its strategy toward improving systems for accessing a range of products and promoting supportive consumer protection, financial education, and attention to the most vulnerable. The national strategy has seven different lines of action: Read the rest of this entry »

> Posted by Eric Zuehlke, Web and Communications Director, CFI

One theme we come across repeatedly at CFI is the discrepancy between financial services access and usage. A central tenet of our vision of financial inclusion is that access isn’t enough; financial services need to meet client needs and actually be used. One example is mobile banking. As is now well known, millions are now accessing financial services for the first time with mobile payment platforms through telcos. As our By the Numbers report found, however, the proportion of financial services accounts that are mobile is much smaller for the world in general – East Africa is the outlier.

I just returned from an exciting two-week assignment through Accion’s Ambassador program with Akiba Commercial Bank in Tanzania. I met with Akiba staff, visited branch offices, and talked with clients. (You can read about my experiences, including a trip to Zanzibar and terrifying/awesome motorcycle taxi trips on the Ambassador blog.) Since I was in the region with the world’s highest adoption of mobile banking, I wanted to take the opportunity to learn more about how Akiba’s mobile banking experience has worked out, both from staff and client perspectives. Has adoption and usage met expectations? What kind of feedback was Akiba hearing from clients? What challenges was Akiba facing with their mobile platform?

Read the rest of this entry »

> Posted by Kim Wilson, the Fletcher School, Tufts University

Today, I used my smartphone to pound tiny nails into a wall. The procedure worked well enough to hang a small picture, but it cracked my phone case.

I wasn’t trying to go digital by using a mobile device. I simply could not find the proper tool – a hammer. The episode made me think that going hammer-lite would be silly for a pounding task. I really needed a hammer. If I were trying to tighten a screw, a task I just had to do on a door handle, I suppose I could go screwdriver-lite. I could try to wedge a tag of the broken phone casing into the screw’s octagonal chamber, then give it a twist. It might work. But an Allen wrench might work better.

So, in financial inclusion why are we trying to go “cash-lite?” Cash can be a sturdy pair of pliers that turn income into neat, countable paper stacks – one pushed into the desk drawer for buying groceries and another plopped into a tin for evenings out. Cash can also be a wrench, torqued just so, to help us make sure that we have enough coins to pay the parking attendant or enough paper to pay ourselves when we feel the need to devise a personal austerity plan.

As customers, we really don’t want to go wrench-lite, hammer-lite, or even cash-lite. We just want the best tools possible.

Though the financial inclusion industry trumpets customer-centricity – putting the customer at the center of our decisions about how to best serve them – how it goes about this endeavor is baffling. One might presume that a good method would be to ask the customer what task she wants to perform and then find or make the best tools to help her, as this video suggests. But, for the most part, that’s not our way. We constantly urge – “get an account, go cash-lite” – ignoring a lack in evidence that otherwise might prove: going digital increases income equality, growth, and customer happiness. In fact, the opposite has been documented.

Read the rest of this entry »

> Posted by Center Staff

Good morning! It’s the start of another week, which means there’s a new issue of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. This week’s issue includes stories on the Islamic Development Bank supporting the Sustainable Development Goals (SDGs), the Bill & Melinda Gates Foundation’s research on bitcoin and blockchain technology, and the Reserve Bank of India (RBI) creating a new financial inclusion committee. Here are a few more details:

  • Last week the Islamic Development Bank’s Chief Economist asserted the importance of Islamic finance in achieving the SDGs and the Bank pledged over $150 billion over the next 15 years towards achieving them.
  • An interview with CoinDesk highlights the Gates Foundation’s recent research on how blockchain technology might be helpful as a means of settlement between payment systems and in international remittances.
  • The RBI created a committee to devise a five-year measurable action plan for financial inclusion covering areas such as payments, deposits, credit, social security transfers, pensions, insurance, and consumer protection.

For more information on these and other stories, read the sixth issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at ezuehlke@accion.org.

Financial Inclusion 2020 Blog Series banner imageFinancial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

PERC, a “think and do tank” advancing financial inclusion through information services, has been effective in addressing credit invisibility by advocating the use of alternative data in credit reporting, including in Australia, Brazil, China, Kenya, and the U.S. We invited Michael Turner, PERC’s CEO, to submit an opinion piece, and are publishing the results in a three-part series. Part one and two can be found here and here; the following is part three.

Misperceptions abound about how to impact credit information sharing in emerging markets. Let me weigh in on this debate and set the record straight.

  • Technology is not the problem. There are abundant and affordable platforms to enable robust information sharing in even the most extreme environments.
  • Scoring models are not the problem. FICO, SAS, Dunn and Bradstreet, and a host of multi-national credit bureaus and lenders have plenty of smart mathematicians, computer scientists, statisticians, and others with lots of letters behind their surnames to ensure innovation in this space. The breakthrough that will move markets won’t be found here.
  • End-user capacity and incentives are not the problem. Many pro-poor lenders are already using automated underwriting solutions and can quickly assimilate new data or new scoring models.

So if investing in the technology, risk modeling, and end-user trenches aren’t going to galvanize things, let alone revolutionize them, in which trenches will the revolution begin? The answer lies further upstream, in the consumer and commercial credit ecosystems.

The answer is data access.

This is a deceptively simple response and raises a number of related questions. Which data is both predictive of credit worthiness and covers broad segments of the unbanked and underserved populations? Who owns it? Can traditional credit bureaus access this data? Why haven’t they so far? Are other parties needed to provide lenders access to this data? How can data subjects (people) access and “port” their data from mobile payment systems the same way they can carry their credit report information?

Read the rest of this entry »

> Posted by Magauta Mphahlele, CEO, National Debt Mediation Association (NDMA)

A few weeks ago, South Africa’s Department of Trade and Industry published new proposed regulations pertaining to the National Credit Act limiting fees and interest rates on short-term and unsecured loans along with credit cards. The public may lodge comments to the draft regulations up until 30 days after its publishing date of June 25th. The intelligence used to inform the proposals have not been released so it is not clear what policy, cost, or operational factors were taken into consideration to arrive at the outlined changes. Meanwhile, the microfinance industry in the country, which has been lobbying for the flexibility to charge significantly higher interest rates and fees, seeks to understand the regulators’ rationale.

The draft regulations were published after a protracted court battle where one of the industry associations representing micro-lenders requested the court to force the regulator and policymakers to review the fees requirements of the National Credit Act. The fees and interest rates hadn’t been reviewed since the Act became effective in 2007 – a concern when taking into account factors like inflation.

Credit providers have responded with dismay and concern about the proposed changes, especially the interest rate caps on unsecured loans. They have expressed the fear that the proposed interest and fee changes will affect the cost of administering credit, reduce profits, and constrict access to credit for borrowers. Other commentators have viewed the reductions favorably considering consumers are already over-indebted to a large extent and the interest rate cycle is predicted to start trending upwards. On this blog a few months ago, I shared that in 2014, the National Credit Regulator (NCR) Credit Bureau Monitor revealed that out of South Africa’s roughly 23 million credit active individuals, about 11 million have impaired records.

Read the rest of this entry »

> Posted by Elisabeth Rhyne and Sonja E. Kelly, CFI

We are looking for four research fellows to explore some of the most relevant and exciting questions facing the financial inclusion community. Interested?

Before answering, some background. A few months ago we articulated some ambitious unanswered questions that we think will propel financial inclusion forward, and offered the space for you to contribute questions, too (many thanks to those of you who made suggestions!). Since the Center for Financial Inclusion at Accion is committed to figuring out what is working in financial inclusion and worth replicating, we have made it a priority to partner this year with researchers to explore some of these questions in greater detail.

And that’s where you come in.

We are looking for researchers who are interested in becoming fellows for the Center for Financial Inclusion at Accion’s brand new Fellows Program. The Fellows Program will empower independent researchers to systematically analyze some of the most important and critical challenges facing the industry. This year, we are selecting four fellows to explore the following topics:

  • What are the conditions for “on-ramps” to lead to deeper inclusion? With the World Bank’s commitment to Universal Financial Access and the Better Than Cash Alliance’s pursuit of G2P payments, both of which focus on connecting people to transaction accounts, the next question is how (and whether) such connections lead to greater inclusion, through either active account usage or access to additional products. What cases demonstrate successful on-ramps and what factors or strategies enabled deeper inclusion to take place? Research could examine one or several examples.

Read the rest of this entry »

> Posted by Center Staff

fi2020 issue five

Good afternoon! Freshly published is this week’s Financial Inclusion 2020 News Feed, sharing the big news in banking the unbanked. Among its stories are a new partnership between MetLife Foundation and Opportunity International to expand financing and skills training in rural China, the launch of a World Food Programme initiative that integrates climate risk reduction with financial services, and the release of the first annual Consumer Banking PACE Index, which gauges bank performance to consumer expectations. Here are a few more details:

  • MetLife Foundation and Opportunity International have embarked on a three-year partnership to support thousands of small businesses in rural China with financial services and business development training via banks, mobile vans, and rural service centers.
  • The World Food Programme launched the R4 Rural Resilience Initiative, which helps smallholder famers in Zambia navigate environmental demands using index-based agricultural insurance, improved natural resource management, credit, savings, and productive safety nets.
  • The new Consumer Banking PACE Index, drawing on input from over 9,000 consumers, examines bank performance in a handful of countries around the world to conclude that, among other findings, fair and transparent pricing falls below consumer expectations, and trust in banks remains an issue.

For more information on these and other stories, read the fifth issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to us at ezuehlke@accion.org.

> Posted by Eric Zuehlke, Web and Communications Director, CFI

The following post was originally published on the Accion Ambassadors blog.

At some point during our walk down the dusty, uneven road packed with minibuses and motorcycles inches away from hitting me, unfamiliar music and sounds blasting from unseen speakers, people selling everything from plastic toys to Adidas shorts to cell phones to furniture, and a profusion of life and color all around, I thought to myself, “This is exactly what I was hoping to see in Tanzania.”

My fellow Accion Ambassador Javier and I were walking with a staff member from Akiba’s headquarters office and Dominik, the assistant branch manager at Akiba’s Temeke branch. Akiba is a commercial microfinance institution based in Dar es Salaam with branches throughout Tanzania. The four of us were off to visit clients down the street from the branch office. Before our walk, Dominik shared some background on Akiba’s work and their clients.

While every Akiba client has a deposit account, not every client has a loan. So for example, the Temeke branch serves over 4,000 clients – 2,100 have a loan while around 2,000 only have deposit accounts. However, “savings is a big problem,” Dominik tells us. “People are not saving regularly.” This is partially because Akiba has only recently promoted savings as part of their client outreach and education. The Temeke branch’s clients are all in the neighborhood and are food vendors, manage their own clothing or cell phone shops, or own other small businesses. The branch’s clients tend to be at Akiba’s “medium” level, with loans ranging from 20 million to 50 million shillings (about US$10,000 to US$25,000 – a much higher amount than I was expecting to be normal). Group solidarity loans are also popular and are smaller loans ranging from 200,000 to 5 million shillings (US$100 to US$2,500).

Read the rest of this entry »

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.
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