You are currently browsing the category archive for the ‘Client Protection’ category.

> Posted by the Smart Campaign

To date, 44 financial institutions around the world have been certified as meeting the Smart Campaign’s standards for consumer protection. Those institutions, which adhere to the Campaign’s Client Protection Principles including transparency, fair and respectful treatment, responsible pricing, and prevention of over-indebtedness, collectively serve more than 22 million low-income clients.

Recently, the Campaign invited the heads of certified institutions to share their experiences with certification. In a series of video interviews, the CEOs discussed why they elected to engage in the process, what they learned, how and why it improved their business, how investors have reacted, and what it has meant for their customers.

We invite you to take a look at the video, above or here, to learn first-hand about their rationale for undergoing certification and what it has meant to their operations. And of course feel free to share it with your network.

For more information about the Campaign, please visit the website.

> Posted by Joshua Goldstein aka Mr. Provocative

In the seventh Client Protection Principle, the Smart Campaign lays out the way that financial services providers should handle complaints: 1) Effective client feedback mechanisms are in place; 2) Clients are aware of how to submit complaints and do so as needed; and, 3) Complaints are handled promptly and adequately.

Seems easy and straightforward enough. But making this process truly client friendly is truly a daunting challenge. On the “demand side,” poor customers may feel ill-equipped to pose questions to company representatives who come from a different class, caste, or ethnicity. The Smart Campaign’s Client Voice research found as much in both Asian and African markets. It may be psychologically next to impossible—even in the most client friendly institution.

And if the psychological issue is not an obstacle, the technical and procedural challenges may be opaque enough to lead to failure anyway.

Even educated and savvy consumers can get lost in the complex maze of call center options delivered by that hideously cheerful computer voice – you know the one. “Lower touch” often means “no touch.” And even if a well-meaning customer service representative finally answers the phone and tries to help, he or she may be just a cog in a far flung system – unable to get the needed answers.

Read the rest of this entry »

> Posted by Susy Cheston and Sonja E. Kelly, CFI

2652377697_7cd2f08d4e_oAging is an issue that we all hope to face personally, if we haven’t already. As we prepare to participate in European Microfinance Week, we are more convinced than ever that this is a critical topic for the financial inclusion community to address. (If you are planning to be at European Microfinance Week too, make sure to check out our panel on the Sustainable Development Goals and financial inclusion!) In Europe, the aging of the population is well acknowledged. With average life expectancy in Europe among the highest in the world, at 77 years, the proportion of the population reaching older age is naturally growing. About 25 percent of Europe’s population is now over the age of 60, and that percentage is set to rise. The aging of the population is well understood in Europe, but what is less recognized is that the middle and lower-middle income countries of the world – the countries that encompass most of the world’s population – are already beginning to experience the same older age population boom. In most middle income countries, from Mexico to China, over-60s are the fastest growing cohort of the population. Aging is a product of successful development. Increased life expectancy, better family planning mechanisms, and higher quality of life all contribute to growth in the proportion of the population that is older.

Aging is a reality, but can it also represent an opportunity for financial institutions? The smart money is on providers who recognize that the answer is yes, and work to figure out how to respond.

We’ve created a list of activities, some practical and some research-oriented, we think would be valuable to close the gaps in financial inclusion for older people and for younger people who want to prepare for their older age. And, frankly, we would love for you to steal these ideas!

Read the rest of this entry »

> Posted by Rafe Mazer, Financial Sector Specialist, CGAP

CGAP recently launched a Mystery Shopping Technical Guide, based on our experiences sending lower-income consumers to seek financial products in markets as diverse as Ghana, Kenya, Malaysia, Mexico, Peru, and the Philippines.

The method of training actual consumers to conduct mystery shopping has proven helpful to understand the challenges they face in achieving financial access and receiving quality product advice. In several markets we found that sales staff often restrict information on fees and charges and do not provide consumers with the lowest cost product option that matches their needs. For example, in Mexico and Peru we saw sales staff who neglected to offer low-fee savings products available at their institution, while in Ghana sales staff never mentioned the APR of a loan, as they are required by law to do. In Malaysia, insurance sales staff did not use the mandatory Customer Fact Find Form which helps assess customers’ needs and product suitability.

These findings are not surprising to those who study client protection and financial advice, and studies in markets such as the U.S. and India have found similar issues with sales staff. All of this raises a fairly important question of “Can we fix financial advice from frontline bank staff?” Or is the incentive to mis-sell too great and monitoring a sufficient number of individual sales practices too burdensome? This is a discussion I have had with regulators. How do you use policy to drive behavior change in a market? The short answer is that it’s not easy; the long answer is that behaviorally-informed policies, product regulation, and market monitoring tools can help.

But what about the committed leadership of organizations that have signed on to the Smart Campaign (which include providers we have visited during these mystery shopping exercises)? If mystery shopping shows that sales staff do not always keep the customer’s best interests in mind, can we fix this with provider or industry-level changes in sales practices or perhaps through sales staff training? I would like to take advantage of this forum to hear from providers who have implemented policies to fix sales staff misconduct so we can start to document good practices for monitoring sales staff behavior. To help kick things off, here are a few ideas from my side, based on our mystery shopping work:

Read the rest of this entry »

> Posted by Elisabeth Rhyne, Managing Director, CFI

Sub-Saharan African countries may be leading the world in mobile money and growth in access to accounts, but the state of financial consumer protection in Africa is in urgent need of attention.

In the EIU Global Microscope’s 2014 overall rating of the policy environment for financial inclusion, African countries scored very close to the global average (44 SSA vs. 46 Global out of a possible 100). However, these countries were substantially below the average on consumer protection indicators – market conduct (27 SSA vs. 43 Global) and grievance redress (35 SSA vs. 45 Global).

These numbers have human consequences. The Smart Campaign commissioned research in two African countries – Benin and Uganda – which revealed the frequently harsh environment in which microfinance is conducted. In Uganda, research on what happens to clients who default showed that, lacking regulatory oversight and the calming influence of credit reference bureaus, lenders in Uganda feel compelled to resort to practices such as rapid confiscation of a borrower’s assets. They are afraid that if they do not act quickly, the borrower may flee. In the research on client experiences from Benin, clients reported major gaps in trust and transparency. For example, many reported being surprised by fees that were not explained or expected, having no place to turn when problems arose, or being publicly shamed for late payments.

The research pointed to very low trust on both sides between providers and customers. In fact, in Smart Campaign conversations with African microfinance institutions about consumer protection, one of the most frequently asked questions is, “Who will protect us (the lenders) from them (the borrowers)?”

Read the rest of this entry »

> Posted by Center Staff

Last week, FI2020 Week created a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world participated in more than 30 events and shared their voices over social media, with #FI2020. As part of the week, global financial inclusion leaders offered calls to action. We started to provide highlights, but found that every single contributor had an important perspective to add, so this post includes all of their voices.

If there were any doubts about the potential to achieve global financial inclusion, it would be dispelled by the passion and sense of opportunity in the calls to action that were posted last week as part of FI2020 Week. A visionary tone was set by the inaugural posting by Ajay Banga of MasterCard, who declared that “financial inclusion is both economic and social inclusion and necessary for the future well-being of our planet.” Jean-Claude Masangu Mulongo, former Governor of the Central Bank of the Democratic Republic of the Congo, draws the link between financial inclusion, economic growth, and poverty reduction, while also—appropriately, given his role–noting the link to financial stability. Yves Moury of Fundación Capital heightens the urgency by stating that “poverty is the greatest scandal of our times,” and Martin Burt of Fundación Paraguaya adds that “poverty elimination must be the endgame of all financial inclusion strategies.”

This strong sense of social mission comes out in a call from Dr. William Derban of Fidelity Bank Ghana to “leave no one behind” in the march toward inclusion. Michael Miebach of MasterCard also talks about meeting the needs of all members of society, including women, and Bindu Ananth of IFMR Trust mentions smallholder farmers as another group that is often excluded. In light of breakthroughs in technology, Sonja Kelly of the Center for Financial Inclusion urges us to reach out to those who are traditionally excluded from technology, and not just early adopters. As Larry Reed of the Microcredit Summit Campaign puts it, “We need to approach the challenge with the end in mind, designing a system that can sustainably reach clients in the most remote areas and who transact in the smallest sums.”

Read the rest of this entry »

> Posted by the Smart Campaign

What are microfinance clients’ thoughts on fair treatment from financial services providers? We explored this question in the context of Benin in a previous post, spotlighting results from the Smart Campaign’s Client Voices project. Now, let’s turn to another country investigated in the project: Pakistan.

The Client Voices project went directly to current and former microfinance clients and asked them about their experiences with their financial providers as well as their thoughts on what constitutes good and bad treatment. The project included qualitative and quantitative research in four diverse markets: Benin, Pakistan, Georgia, and Peru. Research partner Bankable Frontier Associates (BFA) began its investigation in March 2014. It conducted surveys, focus groups, in-depth discussions, and photo association exercises.

So, what did we find in Pakistan?

Clients report satisfaction with financial providers, but do not have long-term relationships with them. In Pakistan, a country with a relatively advanced client protection environment, 85 percent of clients reported that they are either very or somewhat satisfied in their borrowing and savings experiences. In fact, only 5 percent of clients reported experiencing a consumer protection problem. (This compares to roughly 13 percent of clients in Benin.) However, clients in Pakistan usually only stay with their provider for a short period. On average, the studied clients had been borrowing with their current provider for just one year. Our research suggests that MFIs are weak at fostering long-term relationships with their clients compared to the other institutions, like savings groups, NGOs, and private schools. When asked about the future, clients indicated they’d rather start fresh with a new provider or discontinue borrowing altogether. Reasons cited included rigid repayment structures, lack of respect/empathy from loan officers, and being publicly disparaged in front of their neighbors.

Read the rest of this entry »

> Posted by Michael Miebach, President, Middle East and Africa, MasterCard

FI2020 Week is a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world are participating in more than 30 events and sharing their voices over social media, with #FI2020.

FI2020 Week offers a good opportunity to review the findings in the FI2020 Progress Report and to consider actions the global community needs to take to advance financial inclusion. This is of particular interest to me as I work every day to expand MasterCard’s payments platform in the Middle East and Africa, and in a volunteer capacity, I also serve on the board of directors of Accion.

The report asserts that it’s not enough to “build the rails” to enable payment and transaction access, but that “providers, regulators and support institutions need to ensure that the financial services that follow provide value and quality to the passengers who climb aboard.” Here is where interoperability is essential—if last mile customers are to benefit. Banks, telcos, merchants, and governments must be connected—despite different rules and technologies—in a way that is seamless to the user. From a customer perspective, that means ubiquity, safety, and utility—the trifecta of success in financial inclusion. It won’t work if all the stakeholders are competing to create their own end-to-end solutions, or operating in silos. It won’t work if we are creating islands, where the unbanked transact with each other and where data is used in proprietary ways to support individual business models, rather than being shared as a public good.

Now, a parent in Zimbabwe sends money to his daughter studying at university in South Africa using a mobile money operator connected to the global banking system. All he needs to do is go to an EcoCash agent and top up his mobile money account. His daughter then accesses the funds using a MasterCard debit card linked to the same EcoCash mobile money account to purchase text books, and pay university fees as well as other day-to-day expenses while at university in South Africa. This is ubiquity, safety, and utility put into action.
Read the rest of this entry »

> Posted by Gloria Grandolini, Senior Director, Finance and Markets Global Practice, the World Bank Group

FI2020 Week is a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world are participating in more than 30 events and sharing their voices over social media, with #FI2020.

Despite significant progress and the increased technical and financial resources devoted to financial inclusion, 2 billion people worldwide still lack access to regulated financial services.

As I read the FI2020 Progress Report and cast my vote on how the world is doing on the five aspects of financial inclusion the FI2020 report covers, I’m reminded of the recent Global Policy Forum of the Alliance for Financial Inclusion (AFI), where I had rich discussions with AFI members regarding how to meet challenges to expanding access to financial services.

The successes and obstacles which AFI members shared echo many of the points identified in the FI2020 Progress report as shaping the future of financial inclusion.

These hurdles can be distilled into five main challenges:

Financial literacy and capability. Countries must develop financial capability programs to ensure people can make sound financial decisions, select financial products which best fit their needs, and know how to use related channels, such as ATMs or mobile banking. Recent World Bank Group Financial Capability Surveys in Morocco and Mozambique, and studies on remittance services among migrants in France and Italy, show that a lack of awareness prevents people from using suitable financial products and services. Behavioral insights are leading to more effective – and lower cost – financial literacy efforts, which can improve uptake of new accounts and increase savings, including through tailored SMS texts.

Read the rest of this entry »

> Posted by Susy Cheston, Senior Advisor, CFI

Of the 700 million new accounts that the Global Findex reports were opened from 2011 to 2014:

  • Banks and other financial institutions accounted for 550 million;
  • Mobile network operators accounted for 100-240 million, depending on your source and methodology;
  • Microfinance institutions accounted for 50 million.

These numbers are rough and involve some overlap—but they point to the continued importance of commercial banks in financial inclusion. Put another way, of the 3.2 billion accounts reported in the 2014 Findex, 3.1 billion were accounts with a financial institution.

That’s why I was so interested in hearing what the commercial bankers had to say at an Institute of International Finance (IIF) roundtable held in Lima on October 9 alongside the International Monetary Fund (IMF) / World Bank meetings. The strategies they discussed for reaching the BoP were not new to those immersed in the financial inclusion world, but it was heartening to hear their commitment to putting those strategies into operation. Here are a few of the points from the discussion:

Use data to understand customers. Now more than ever, there is a wealth of available data to help us better understand customers at the base of the pyramid. These new customer insights are opening up new practices – from on-boarding, to cross-selling, to risk management. Data analytics can also enable cost reductions on credit and insurance. For example, ecommerce platforms for small manufacturers can facilitate credit offers and then arrange for automatic repayment from the ecommerce activity itself. This innovative use of data allows financing at half the cost.

Read the rest of this entry »

Enter your email

Join 1,559 other followers

Financial Inclusion 2020 News Feed

Each week the FI2020 team at CFI highlights compelling stories and content on all things financial inclusion from across the web. Click here to visit the news feed.

Visit the CFI Website

Twitter Updates


Founding Sponsor

Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.


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.

Get every new post delivered to your Inbox.

Join 1,559 other followers