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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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> 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 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

The following post was originally published on Next Billion.

The Financial Inclusion 2020 Global Forum, in October 2013, was an opportunity for hundreds of leaders to come together and dedicate themselves to quality financial access for all, while at the same time proclaiming that global access is, in fact, within the realm of the possible. The Forum itself generated many action ideas, forged new relationships between actors and created a surge in momentum.

Since October, we at the Center for Financial Inclusion have been in a (very welcome) quiet phase, during which we are laying the groundwork for the next big push. Over the past few months we have been busy following up on some of the most fascinating insights that came out of the FI2020 process. I’d like to mention a few here – and describe how these insights can make a difference in the quest for global financial inclusion by 2020.

Aging and Financial Inclusion

One of the biggest “Aha!” insights for us came from our Mapping the Invisible Market work, which revealed the rapid growth of older population segments, especially among middle-income countries. In these countries, including much of Latin America and Asia, the over-65 age cohort will rise within a decade or two from about 5 percent of the population to about 15 percent, putting great stress on traditional systems for supporting later life.

We are sure that such changes will have big implications for financial inclusion, and so we decided to team up with HelpAge International, one of the premier global organizations dedicated to aging. When we contacted HelpAge, it had just released its “Global Age Watch Index, 2013,” a ranking of countries on the basis of quality of life for older people. HelpAge has done important analysis on income strategies actually used by people as they age, and it knows that these strategies are more diverse and creative than stereotypes might suggest. CFI and HelpAge will work together to dig deeper into the financial services needs related to aging and preparation for later life. We will also look at the financial barriers older clients face, whether these are physical limitations (related to acquired disabilities), policies (such as arbitrary age cut-offs), or susceptibility to fraud and abuse. We will focus this research in Latin America. We are convinced that the life-course lens on financial inclusion will reveal a wide range of opportunities to advance inclusion. Read the rest of this entry »

> 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.”

On February 23, Rohini Pande opened classroom sessions of  “Rethinking Financial Inclusion” – a one-week program offered by Harvard Kennedy School Executive Education – by drawing a distinction between two models of change: the magic bullet and penicillin. The magic bullet is an unstoppable cure-all. It takes down whatever problem you set your sights on. Penicillin is the product of many cycles of experimentation, refinement, and the occasional stroke of luck. (Researchers found the best strand of the penicillin fungus on a moldy cantaloupe from an Illinois market.) Magic bullets solve problems in German folk tales, penicillin in the real world.

Pande spoke to a group of 45 participants – leaders of government ministries, MFIs, banks, and NGOs from 29 countries (click here for a breakdown). She said that the hope that microcredit could, by itself, lift very different poor populations out of poverty – a hope initially bolstered by quick spread and high repayment rates – appears to have included some magical thinking. Given microcredit’s disappointing performance according to metrics such as new business creation and development indicators, the challenge now is to put it through a penicillin-style process of trial, error, and re-trial – including testing its effects in combination with a broader range of products.

The penicillin metaphor allowed Pande to place early emphasis on the value of evidence-driven (re)design in policy, a theme that would be frequently revisited throughout the week. By citing the rising use of rigorous evaluations as a policy instrument, she turned the moral of the cautionary tale from a statement about microcredit specifically to a much more general maxim: “Don’t trust the quick and easy result.”

The other products that the “Rethinking Financial Inclusion” program promised to focus on, such as savings and insurance facilities and new payments mechanisms, must also be put through the same process of experimentation and evaluation, Pande said.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Jeroo Billimoria of Global Money Week, a worldwide child and youth financial empowerment movement, recently said, “Want to ensure poor children mature into poor adults? Make sure they spend all their leftover cash.” To me, that simple statement captures the obvious case for advancing financial inclusion for children and youth. Youth save at dismal rates and lack adequate access to formal financial services. Global Money Week, expected to span 112 countries, 485 organizations, and 2 million children, aims to combat this reality.

The weeklong movement, now in its third year, is led by Child & Youth Finance International (CYFI), a global network working towards the financial inclusion and economic empowerment of children and youth. Global Money Week’s participants range from central banks, to government ministers, schools, NGOs, the media, and children. Its activities include bank visits, educational events, expert discussions, online engagements, and the launching of new research and initiatives.

One of the new reports launched in coincidence with Global Money Week is Banking a New Generation: Developing Responsible Retail Banking Products for Children and Youth, a joint-publication from MasterCard and Child & Youth Finance International. The publication is designed to support financial institutions, NGOs, and governments in collaboratively developing financial products and services appropriate for children and youth. Among the publication’s content are guiding principles for appropriate child and youth products, the case for financial institutions investing in this client segment, and considerations for the product development process.

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> Posted by Pina D’Intino, Senior Manager, Scotiabank

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

In 1998, I unexpectedly lost my sight as a result of a medical complication. One of the first things that struck me was the impact this disability had on my day-to-day living, including my ability to independently and confidentially access and conduct my banking. Thankfully, I was still employed and could continue to save and invest towards the purchase of a home and ultimately plan for retirement. However, this proved to be much more difficult than I imagined.

Today, 15 years later, and after acquiring sufficient skills to use a screen reader, I am able to access my retail accounts for basic banking but am still unable to effectively use tools with my screen reader that will allow me to estimate the cost of purchasing a home or what my mortgage would be, nor am I able to independently use simple investment or trade tools that would allow my savings to grow. All this despite the evolving technical enablers and my digital literacy increasing.

As more and more branches are moving towards self-service tools, it has become harder to meet in person with a financial advisor. And yet, I cannot independently access information that would allow me to make informed decisions, cannot independently conduct or monitor my investments, and need someone to read to me the complex and lengthy application forms that I need to complete. Furthermore, if I go to a branch with someone else, at times, the staff will not allow me to include the person in the conversation unless a proxy or power of attorney is on file for them to disclose any personal information. At other times, they will speak to the person who comes with me, rather than speaking to me directly. Read the rest of this entry »

> Posted by Center Staff

The following post was originally published on the CGAP Microfinance Gateway.

In follow up to the Financial Inclusion 2020 Global Forum in October, Susy Cheston, Senior Advisor at the Center for Financial Inclusion (CFI), shares key takeaways from the event and what the ongoing impact of this gathering will be leading up to the year 2020.

The Financial Inclusion 2020 Global Forum was a new event in the industry. Why did CFI organize this event?

Our overall goal for the FI2020 Global Forum was to put forward a vision of full financial inclusion for all by 2020, bringing together the leaders from the private and public sectors who can make that vision a reality. Part of the premise was that these different stakeholders don’t often talk with each other, and that there was value in enabling people who ordinarily work on separate aspects of financial inclusion to hear from each other and become more aware of how their own work fits into the broader picture.

Full financial inclusion by the year 2020 is an audacious goal. Did participants agree it was an achievable one?

Very much so. Participants were very optimistic, especially in light of recent innovations in technology, product development, and regulation.

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> Posted by Jeffrey Riecke, Communications Assistant, CFI

A few weeks ago Tanzania launched a National Financial Inclusion Framework, which includes the ambitious goal of expanding access to more than half the country’s population by 2016. As of 2012, 17 percent of Tanzanians had access to formal financial services accounts, compared to an average of 24 percent for all of Sub-Saharan Africa.

H.M. Queen Máxima of the Netherlands in her role as UN Special Advocate on Inclusive Finance for Development joined the framework’s launch event, and emphasized how the effort builds on the country’s recent national commitments. At the G20 Leaders Summit in 2012, Tanzania was one of 17 countries that pledged to create a national financial inclusion strategy. It was also one of the first countries to make a Maya Declaration commitment.

Despite disappointing account ownership figures, the country has achieved progress in other areas. Between September 2012 and 2013, access to mobile money services increased from 63 to 90 percent nationally, with nearly 43 percent of the population actively using a mobile money service.

The national framework, alongside the goal of 50 percent account ownership by 2016, aims to achieve 50 percent regular usage, 25 percent of adults with at least two weeks’ worth of income in formal savings accounts, and 25 percent of adults with electronic personal financial records.

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> Posted by Center Staff

We’re pleased to introduce you to our online interactive Global Forum Roundup. This one-time “magazine” includes key messages from the plenary sessions and roundtables on the Roadmap to Financial Inclusion, personal commitments from many participants, resource links, and FI2020′s plans for 2014 and beyond.

Click on any photo within the magazine to watch session videos and other content.

To view the magazine, click here or on the image below. A PDF version of this Roundup is available here.

Read the rest of this entry »

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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.

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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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