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> Posted by the Smart Campaign
Next Thursday we’re launching the Client Voices project, our four-country research investigation that went to the source and directly asked clients about their experiences with financial providers and their thoughts on what constitutes good and bad treatment.
The four studied countries are Benin, Georgia, Pakistan, and Peru. You might have seen our spotlighting the release of the Benin and Pakistan country reports here on the blog in the fall. On Thursday, we’re sharing those for Georgia and Peru, as well as a “synthesis report” that summarizes and analyses the key findings, takeaways, and recommendations across the four comprehensive country reports.
We have a few launch event opportunities for you to participate in. But first, we wanted to give you a glimpse into what’ll be released on Thursday…
Transparency. One of the overarching findings across the studied countries was that clients have an inadequate understanding of the basic aspects of their microfinance products. For example, in Benin, Pakistan, and Peru, 50 percent, 49 percent, and 43 percent of respondents indicated that they either somewhat or didn’t at all understand loan terms at the time of taking out their loan. Even when institutions are following mandated disclosure rules, this lack of understanding persists.
> Posted by Elisabeth Rhyne, Managing Director, CFI
The following post was originally published last Friday on MasterCard’s Inclusion Hub.
When the Basel Committee speaks, everyone involved in the financial world pays attention. In their new report, it attempts to come to terms with financial inclusion.
As the global regulatory framework for banks, Basel III has no doubt featured in side conversations at Davos. Banking authorities around the world must make shifts to maintain the Committee’s concern with financial system stability, while opening the way for financial inclusion to advance. The new report is called “Guidance on the application of the core principles for effective banking supervision to the regulation and supervision of institutions relevant to financial inclusion.”
….If that title grabs you, you might be one of those people who can actually read the document’s carefully worded prose.
In response to the guidance, I would like to share four broad observations, not so much about the specific guidance – which is generally sound – but about the challenges involved in adapting the work of banking authorities to the new world of financial inclusion.
The guidance is uneven in its coverage of new types of financial inclusion providers
The report goes deep on microfinance. It discusses, but has not yet fully explored, digital financial services, big data and new forms of consumer credit.
The implicit assumption throughout the report is that the biggest financial inclusion challenge is credit risk coming from small lenders. This underplays the extent to which financial inclusion also involves large non-financial corporations like telecoms companies and major retail chains. The techniques these players deploy may require supervisory approaches different than those for smaller institutions.
The latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are: the Alliance for Financial Inclusion (AFI) released the 2015 AFI Global Policy Forum Report, distilling the happenings of the network’s largest and most diverse forum to date; new startup PayJoy is attempting to solve the financing problem surrounding the 2 billion individuals globally who have access to the internet but can’t afford a smartphone; The Guardian spotlights how mobile money supported healthcare workers during the fight against Ebola in Sierra Leone. Here are a few more details:
- The 2015 AFI Global Policy Forum brought together over 500 senior financial inclusion policymakers, regulators, international organizations, and private sector partners in Maputo, Mozambique. Highlights from the forum include the adoption of the Maputo Accord, making SME finance a larger priority for the network, and sessions on green finance and gender.
- PayJoy, beginning an initial roll-out in California, is offering an alternative to the tech industry’s equivalent of payday lenders who charge upwards of 500 percent interest on loans to buy smartphones. PayJoy covers 80 percent of the cost of a phone at 50 to 100 percent interest, and if individuals aren’t able to make their monthly installments, the phone locks until the payment is received.
- In Sierra Leone, payment to healthcare workers combating Ebola was originally largely disbursed inefficiently in the form of cash, resulting in incidences of workers not being paid for months at a time, which caused disruptions to both healthcare and public trust in the system. NetHope, a consortium of NGOs working in IT, enrolled workers into an automated mobile money-based payment system using an open source facial recognition software.
For more information on these and other stories, read the latest issue of the FI2020 News Feed here. This is the final issue of the News Feed. Though if you have any stories or initiatives that you think we should cover on the blog or via our other social media channels, email your ideas to Jeffrey Riecke at firstname.lastname@example.org.
> Posted by Maria Otero, Board Member, Oxfam America and former President and CEO, Accion
This article was originally published by Quartz.
This week’s climate change agreement is a major milestone that will shape our future, and CFI would like to mark the occasion by offering these reflections by former Accion President and CEO, Maria Otero, on the importance of climate action for the well-being of people living at the base of the pyramid. The post was written a few days before the convening in Paris. It is heartening to note that such a positive step forward has emerged.
On Dec. 10, 1948 representatives from around the world met in Paris to sign the United Nations Universal Declaration of Human Rights in the aftermath of World War II. Sixty-seven years later, representatives from around the world are meeting there again to negotiate another monumental agreement: an international deal on climate change.
It may not seem like these global events are related but, in fact, climate change is one of the greatest human-rights challenges of our time. The signers of the Universal Declaration agreed that all people have the right to basic sustenance, protection, and freedom; including rights to food, health, shelter, and self-determination.
From the devastation caused by Typhoon Haiyan in the Philippines, to the severe drought exacerbating the refugee crisis in Syria, extreme weather continues to result in severe, and often irreversible, social and economic harm to millions of people around the world. From hunger to homelessness, forced displacement, and loss of livelihoods, human rights are in jeopardy.
And so, in the spirit of what their predecessors achieved 67 years ago, negotiators at the climate talks in Paris must not only deliver a global deal that curbs climate change, but also one that upholds human rights.
In its recent report, “Extreme Carbon Inequality,” Oxfam looks at consumption emissions of rich and poor citizens in different countries based on data from the World Bank, Organization for Economic Co-operation and Development (OECD), and the Centre for Global Development climate-change vulnerability index. We estimate that the world’s richest 10% produce half of carbon emissions, while the poorest 3.5 billion account for just a tenth.
Click here to read the rest of this article on Quartz.
> Posted by Hannah Sherman, Project Associate, CFI
Last month, CFI hosted the first-ever FI2020 Week, a week of global conversation to advance financial inclusion. We are pleased to announce that the week was a success, including 34 partners, over 300 participating organizations, and over 700 participants in hosted conversations, and resulting in over 100 calls to action. A new Financial Inclusion 2020 e-magazine sums up the week, with a focus on event highlights, social media activity, and calls to action.
As we synthesized the many conversations across the globe in this e-magazine, we found a few themes emerging. First and foremost, there was global recognition of the role that partnerships play in moving forward financial inclusion. Participants discussed partnerships between government institutions, between the public and private sector, between researchers and providers, between banks and fintech companies, and more as essential to reaching financial inclusion. Second, there continued to be enthusiasm about the role that new technology plays and will continue to play in accelerating financial inclusion. Finally, and encouragingly, a number of conversations underscored the importance of financial capability-building, with a focus on how clients better understand their financial lives and make more healthy financial decisions as an important part of inclusion.
> Posted by Center Staff
On Tuesday, the Smart Campaign recognized five Indian financial institutions with Smart Certification, acknowledging their high standards of client care: Arohan, Grameen Koota, Janalakshmi, Sonata, and Utkarsh.
The Smart Campaign’s Client Protection Certification Program contains a core set of standards against which institutions are evaluated by independent, third-party evaluators. Smart Certification publicly recognizes institutions providing financial services to low-income clients with a standard of care that upholds the microfinance industry’s seven Client Protection Principles. The Principles cover such critical practices as transparency, fair and respectful treatment, responsible pricing, and prevention of over-indebtedness. This is the third year in a row that the Campaign has recognized Smart-Certified Indian institutions at the annual Inclusive Finance India Summit in New Delhi.
Arohan Financial Services is a Kolkata-based MFI operating in five states and serving over 400,000 clients. Grameen Koota serves more than 673,000 rural clients through 222 branches located across the country. This is Grameen Koota’s recertification, as it was first Smart Certified two years ago, and through a recertification check-in, it has been able to extend the validity of its certificate for two years. Janalakshmi Financial Services is India’s largest urban microfinance organization, operating in 15 states through 229 branches, and has recently been awarded a Small Finance Bank licence by the RBI. Based in Lucknow, Sonata Finance has become one of the fastest-growing NBFC MFIs in northern India, with a network of 162 branches. Utkarsh Micro Finance serves over 170,000 clients through 92 branches in the northern states of India and has also recently been granted a Small Finance Bank license. Read the rest of this entry »
> Posted by Jessie Fisher and Robyn Robertson, Good Return
Globally 1.2 billion people live in extreme poverty, with women and girls disproportionately affected. Increasing access to technology creates opportunities in education, expanded informational resources, employment, entrepreneurship, and financial services – all of which can help break the cycle of poverty.
These are not new or debated ideas. However, in the realm of financial services, in order to harness advancements in technology and achieve greater and more meaningful inclusion of women, we still need to better understand their preferences and behaviors and the social context they inhabit.
This is where quality gender-based data, which has almost entirely been lacking in financial inclusion, plays a key role.
For example, to ensure we understand a new market, we must ask ourselves questions like: Have we invested the time and resources needed to meaningfully engage with both men and women? Have we considered the time needed to build trust in these communities (especially if they have had disappointing experiences with other organizations in the past)?
Satisfying such considerations isn’t simple or easy. We may also need to travel further to reach women clients, and provide safe spaces for them to speak openly about their lives and the things they would like to change.
> Posted by Susy Cheston and Sonja E. Kelly, CFI
Aging 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!
> Posted by ideas42
The following post was originally published on the ideas42 blog.
It’s simply a fact that many products, policies, and services created specifically to benefit everyday people are either under-used or not used at all. Whether it’s helpful savings tools, financial aid for education, or comprehensive health insurance plans, many of us simply never enroll or use them despite intending to do so. So what’s going on?
One major factor is that most of these underutilized programs have been designed according to a “traditional” view of human behavior, in which designers assume that we always take the time to consider all of our options, choose what’s rationally the best option for us, and then act on it.
Behavioral science, however, breaks from this traditional model. We find that in reality, we don’t always carefully compare our options, if we even think about them at all. Likewise, if we do make a good choice, we may not necessarily follow through on it. So in order for solutions to be truly effective, they must be designed for how people really are, rather than how we imagine they should be.
This was one of the main things ideas42 kept in mind when approaching the problem of low retirement contribution rates in Mexico. Regular readers of our blog may remember that under the current pension system, Mexican workers stand to retire on just 40 percent of their current salary, unless they make additional individual contributions—yet the overwhelming majority of Mexicans aren’t taking these crucial steps to improve their savings.