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> Posted by Center Staff

Yesterday a digital finance event in Bogota hosted by the Colombian government and the Better Than Cash Alliance celebrated a pioneering business-to-business electronic banking program that’s led to over 300,000 Colombian coffee farmers receiving access to formal banking services. Launched in 2006 by the Colombian Coffee Growers Federation (FNC), the Smart Coffee ID Card program offers the farmers represented by FNC with a dual identification/e-banking card that can be used for payments, debits, and savings. It now encompasses over 8 million transactions totaling nearly $1 billion. The event launched a Better Than Cash Alliance case study on the Smart Coffee ID Card program, which finds that the FNC initiative is a benchmark example of how transitioning from cash to e-payments in emerging economies can lead to increased safety, productivity, growth, and greater quality of life.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Last week global leaders across industries gathered in the tiny mountain town of Davos, Switzerland for the 2015 World Economic Forum (WEF). (Though you probably already knew that, given the annual event’s ever-swelling stature and press.) The WEF fosters strategic dialogues in the hopes of developing ideas, insights, and partnerships around the most pressing issues and transformations reshaping our world. This year’s WEF included sessions from Jack Ma of Alibaba on the future of commerce, German Chancellor Angela Merkel on global responsibilities in a digital age, IMF Director Christine Lagarde on global monetary policy, former Israeli President Shimon Peres on political affairs affecting the region, and Bill Gates on sustainable future development. Of course we were following the topic of financial inclusion, and the action that got underway made it a week worth noting. Here’s a snapshot of some of the financial inclusion happenings at Davos.

In the “Inclusive Growth in a Digital Age” session held on Wednesday, a panel, which included MasterCard CEO Ajay Banga, considered how our age of digitization can confront income and wealth inequality, support investments in education and work-based training, and address vulnerable employment. Among the points of discussion was mobile phone penetration leveraged for financial services access. A full video recording of the session is available, here.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Obtaining a mortgage is often the single largest transaction a person will ever make. Despite this, about half of Americans actively consider only one lender or broker before taking out their mortgage. Why? A new report from the U.S. Consumer Financial Protection Bureau (CFPB) details this phenomenon and some of the factors in play, especially consumer confidence. Tuesday, at an event releasing the report, CFPB Director Richard Cordray put the reality into stark and relatable terms, positing that many individuals spend more time shopping around for a TV or other household appliance than they do looking for a good mortgage. He remarked, “When you are spending a lot of money, you are literally betting the house on the choices you are making.” At the event, Cordray launched a suite of tools from the CFPB to empower informed decision-making. The hope is that these tools will ultimately get Americans to… shop.

Cordray recommends that mortgage seekers fill out applications with multiple lenders to see which one offers the best deal. Filing multiple applications doesn’t hurt one’s credit score, contrary to popular belief; multiple credit checks from potential lenders within a certain time window (generally 14-45 days) are considered a single inquiry. The CFPB report, which is based on new data in the National Survey of Mortgage Borrowers, found that 77 percent of borrowers only apply with a single lender.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Islamic finance is expected to expand substantially in 2015, from 2014’s total of $2.1 trillion to $2.5 trillion, according to figures released last week by the Al-Huda Centre of Islamic Banking and Economics. In 2011, the industry had assets of about $1 trillion. Islamic microfinance, the segment of Sharia-compliant services targeting clients at the base of the pyramid, only occupies a small slice of the pie, at 1 percent of all Islamic finance globally. However this uptick in Sharia-compliant finance, as well as encouraging recent support for the 650 million Muslims living on less than 2 dollars a day, suggest a rising tide for Islamic microfinance.

The industry findings indicate that not only did Islamic finance surpass the $2 trillion landmark in 2014, it gained traction in nascent markets and entered new ones. Markets still green in offering Islamic finance that showed growth in 2014 include Morocco, Tunisia, Azerbaijan, Libya, and several non-Muslim-majority countries including Nigeria, Tanzania, and South Africa. Among the new markets where Islamic finance took root last year are Australia, Brazil, and China. Globally, there are 1,500 organizations working in Islamic finance across 90 countries – 40 percent of which are non-Muslim-majority countries. The expansion of Islamic finance opens the door for the many Muslims whose beliefs preclude them from accepting finance with interest rates and fee structures outlawed by Sharia doctrine.

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> Posted by Ana Ruth Medina, Lead Specialist, Accion

It is not a secret that, in Latin America, we are behind in terms of savings culture. Too few microfinance institutions offer savings. Among the savings accounts that do exist, dormancy is widespread. Compared to other regions, the average deposit in Latin America is quite large¹, illustrating that the institutions that do offer savings aren’t necessarily serving the underserved client segment. For the last four years, Accion partnered with financial institutions in Latin America, in a project funded by the Bill & Melinda Gates Foundation, in order to mobilize savings at the base of the pyramid (BoP). The objective of this project, beyond impacting the lives of thousands of clients, of course, was to strengthen the institutional capacity within Accion’s partner organizations to expand beyond their focus on lending. How successful were we?

Some overarching results of the project included: four new savings products (one received the 2013 Accenture Prize for Innovation); implementation of institution-wide communication, education and brand models; and creation of distribution channels for deposits (including ATM’s, non-banking correspondents, and branches specialized in savings). Best of all: enrollment of more than 700,000 new and active savings clients.

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> Posted by Miranda Beshara and Natasha Tynes, Editorial Team, CGAP Arabic Microfinance Gateway

Microfinance in the Middle East and North Africa (MENA) is currently facing a number of challenges that are stifling its growth. On November 19, we attended the Governance Working Group (GWG) call on governance challenges in microfinance institutions (MFIs) in the Arab region organized and hosted by Accion’s Center for Financial Inclusion (CFI). A total of 11 participants representing global MFI governance expertise and initiatives discussed key governance challenges facing MFIs in the region – many of which we captured for the CGAP Arabic Microfinance Gateway while live tweeting from the call.

Several of the call participants were recently engaged in the provision of technical assistance to MFI boards in the Arab region. Karla Brom, a financial consultant, gave a corporate governance workshop at Sanabel’s tenth annual conference. She noticed that risk management and its relation to governance is a key challenge facing the sustainable growth of many MFIs in the region.

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> Posted by Madeleine Dy, International Programs Manager, Water.org

More than 100 leaders from the water, sanitation, and finance sectors came together October 21-22, 2014 for the second East Africa WaterCredit Forum in Nairobi to share progress made and to brainstorm lasting solutions to the water and sanitation crisis affecting East Africa. In Kenya, for example, access to safe water supplies is 59 percent and access to improved sanitation is 32 percent.

Water.org, in partnership with The MasterCard Foundation, convened the Forum, part of Water.org’s five-year collaboration with the Foundation to bring safe water and sanitation to economically challenged communities in East Africa through the WaterCredit approach. Since 2010, the WaterCredit initiative in Kenya and Uganda has empowered almost 115,000 people to obtain financing from seven financial institutions (FIs) for long‐term, sustainable water and sanitation solutions.

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> Posted by Sumaiya Sajjad, Program Manager, Financial Inclusion, The MasterCard Foundation

In Luxembourg recently, I took part in the European Microfinance Week, whose theme this year was “Developing Markets Better”. The event brought together an excellent group of people from various organizations around the world involved in financial inclusion. On the evening before the formal opening of the conference, Accion’s Center for Financial Inclusion hosted a special cocktail reception where I helped to launch the Accion Africa Board Fellowship program – proudly supported by The MasterCard Foundation.

This program aligns strongly with our Foundation’s goal of promoting financial inclusion in order to help catalyze prosperity and reduce inequality in developing countries. As part of that work, we recognize the critical importance of building capacity at all levels of the financial services industry – especially in that segment of the industry serving the poor. We’ve found that strong, committed, and capable leadership can have the most catalyzing effect on entire organizations, improving the quality of their work, and benefiting the clients they serve.

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> Posted by Ariel Schwartz, Senior Editor, Co.Exist

The following post was originally published on Fast Company’s Co.Exist.


The challenge was simple, or so it seemed: Pay my bills and complete a handful of money-related errands before my work shift began at noon. It was harder than I ever could have imagined.

In reality, I wasn’t handling my own finances; I was participating in a simulation of what it’s like to be one of the underbanked—that is, to be one of the 7.7 percent of Americans with limited access to traditional banking services. The Financial Solutions Lab, a spin-off of the Center for Financial Services Innovation (CFSI), put on the simulation for a group of entrepreneurs, nonprofit employees, and banking executives so that they could come up with new product ideas for addressing the challenges of cash flow management.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Last week the Bangko Sentral ng Pilipinas (BSP) announced substantial increases throughout the country’s microfinance market: growth in the volume of loans dispersed to microentrepreneurs, in the number of microcredit institutions offering savings services, and in the return on equity of rural banks with microfinance operations. Concerning regulation and institutional support, the recently released 2014 Global Microscope found that the Philippines has the best environment in Asia for financial inclusion.

In 2014, loans extended to microentrepreneurs in the Philippines totaled P9.3 billion (US$209 million) as of June, according to figures reported by BSP Governor Amando M. Tetangco Jr. at the recent Citi Microentrepreneurship Awards in Manila – a roughly 7 percent increase over last year’s figure. On savings, in early 2012 only 22 banks in the country offered micro-deposit accounts. Now, 69 of the Philippines’ 183 banks with microcredit operations take deposits, with a total of 1.7 million micro-deposit accounts. Beyond credit and savings, 86 of the country’s institutions offering microcredit also provide microinsurance and 26 provide electronic banking services.

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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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