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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.
> Posted by Sonja E. Kelly, Fellow, CFI
I was thrilled when I opened the paper this week to the news of Michelle Bachelet’s victory in Chile. The first female president in Chile, first elected in 2006, is back in office after a one-term break. I have long admired her advocacy for those living in poverty, her tenacity, and her activism. However, her victory also means a question of what will happen to the admirable financial inclusion initiatives begun by the Piñera administration.
In many of my conversations with government employees in Chile in the past year I have heard some caveat to the effect of, “I’m not sure what we’ll be able to do in the coming months given the upcoming election.” Initiatives like electronic government-to-person (G2P) payments, for example, were pushed forward by people connected with the Piñera government, and if the new administration does not prioritize such initiatives, financial inclusion may receive less policy attention.
This highlights a larger issue of who “owns” government-initiated financial inclusion efforts. The answer matters because the leadership structure of government-led initiatives determines longevity. If financial inclusion policy is spearheaded by the Central Bank, and the Central Bank ministry is largely independent, financial inclusion initiatives are unlikely to change course with an administration change. If it is a Ministry of Finance-led push, however, financial inclusion may indeed be an administration-specific initiative.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
Peru is widely recognized as one of the best environments for microfinance and financial inclusion in the world. In fact it ranked first in this year’s Microscope on the Business Environment for Microfinance, out of 55 countries. But the prime movers of financial inclusion in the country are not satisfied. At a recent CFI-Oikocredit event they gathered to consider a new CFI-Oikocredit report, Opportunities and Obstacles to Financial Inclusion in Peru. The report shares insights from surveys and interviews with service providers, investors, policymakers, and other players working to advance inclusion in the country.
What’s the biggest opportunity for advancing financial inclusion in Peru? David Alvarez, an international consultant, lead author of the report and co-organizer of the event, asked the audience this question. Thirty-seven percent of the audience responded with financial education, while 30 percent chose mobile money – responses that confirmed the report study’s responses. When David polled the audience on the biggest challenge to inclusion in Peru, the top response was limited understanding of client needs, chosen by 30 percent of people, followed by financial education with 24 percent.
> Posted by Susy Cheston, Senior Advisor, CFI
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.”
The Financial Inclusion 2020 project has centered around a set of five roadmaps, each covering a major challenge in reaching full inclusion: financial capability, addressing customer needs, client protection, technology, and credit reporting. At the Financial Inclusion 2020 Global Forum in October, participants met in focused roundtable sessions to talk about moving the roadmap recommendations toward action. In this post we highlight some of the main takeaways from these roundtables.
1. What works? We need evidence! Many of the roundtables dreamed of a clearinghouse of case studies, research, country examples, and other evidence on the effectiveness of different approaches to technology, financial capability, and client protection. Part of the dream was a platform for governments and providers to share and disseminate their experiences.
2. We want metrics. Are our services customer-centric? Do we have effective client protection practices? Do we track complaints? Do we know who is or is not opting in to our services? And are we getting all the data we have into the hands of people who can use it to make our services better?
3. Who’s at the table? The drivers of financial inclusion within governments are not just bank regulators, but telecommunications, insurance, and utility regulators, and many ministries (finance, agriculture, social welfare, education, etc.).
> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI
On October 28, Alexia Latortue of the U.S. Treasury moderated the opening plenary of the Financial Inclusion 2020 Global Forum featuring two leaders in microinsurance, Michel Khalaf of MetLife and Martyn Parker of Swiss Re. One of Alexia’s remarks at the Global Forum deeply resonates with me today: “The occurrence of a risk event can set a family back an entire generation.” Among other things, she suggested, there are new and emerging risks linked to climate change.
Shortly after the Forum, we saw haunting evidence of this. On November 8, Typhoon Haiyan devastated much of the Visayas region in the Philippines, with the city of Tacloban being the hardest hit. Typhoon Haiyan is a reminder of why we must prepare to face natural disasters. Microinsurance is one form of advance preparation that can prove instrumental in the disaster rebuilding stage.
In a disaster prone country such as the Philippines, where over 41 percent of the population lives on under $2 per day, ensuring greater access to microinsurance could make an enormous impact. In the country’s rural areas, which encompass roughly half of Filipinos and about 80 percent of those living in poverty, agriculture is the primary source of income. Government data from 2009 indicates that poverty among fishermen is at 41 percent, with farmers close behind at 36 percent. Think about the opportunities for providing microinsurance to farmers and fishers, whose livelihoods and families depend on productive land and assets that can be tremendously affected by weather!
> Posted by Véronique Faber, Executive Director, Microinsurance Network
Three months ago, Jeremy Leach from Bankable Frontier Associates rightly asked in this same forum: “Microinsurance: Can the Cinderella of Financial Inclusion Join the Global Ball?” This question rang a bell with many practitioners and advocates in this field. Microinsurance is often the last service listed when talking about financial inclusion tools. However, credit, savings, and insurance work more effectively in combination rather than in sequence. In stimulating and maintaining financial inclusion, it is crucial that those with a limited income have a safety net preventing them from falling into poverty when hit by a crisis, catastrophic or lifecycle related, and become more resilient against future risks.
Since Leach’s blog post, the sector has been granted three wishes (by its fairy godmother or perhaps as a result of good common sense). If these wishes are used well, insurance for low-income people will be an integral part of any global financial inclusion strategy from now on.
The first wish came in the form of visibility and awareness raising. The opening panel at the Financial Inclusion 2020 Global Forum had representatives from MetLife and Swiss Re debating how financial inclusion factors like income growth, new technologies, and government prioritization play out in the context of insurance. For the rest of the conference, insurance was on every participant’s mind when thinking about the possibilities of what can be achieved in the next seven years. This is important because insurance is essential for sustainable development and financial inclusion.
> Posted by Elizabeth Davidson, Financial Inclusion 2020 Consultant
What’s Financial Inclusion 2020 going to do next? Since the conclusion of the FI2020 Global Forum just a few weeks ago, we’ve gotten this question a lot. For me, the more interesting question is, “What are you going to do?”
Over 140 Global Forum participants answered this question by filling out a postcard with their personal commitment to advancing financial inclusion.
Here’s a sampling of what financial inclusion leaders plan to do to advance to full financial inclusion by the year 2020.
“Partner with government and the development community to not only launch scalable and relevant products but also build usage to ensure true financial inclusion.”
“Foster stronger collaboration through best practices between developed and developing countries.”
Increasing collaboration emerged as a huge theme, with over one-third of respondents referencing their commitment to increase work with other financial inclusion stakeholders and more than 20 participants identifying collaboration as the key component of their commitment. For us, this is exciting: collaboration is a key tenet of FI2020. We believe collaboration among different kinds of actors will be a big part of the solution to reaching full financial inclusion.
> Posted by Dave Grace, Managing Partner, Dave Grace & Associates
This week I received my self-addressed postcard from the Financial Inclusion 2020 Global Forum reminding me of my personal commitment to help ensure the safety of consumers’ savings and rights as they join the financial system. My first reaction was how slow the post is, but on deeper reflection I recognized that the postcard arrived just at a time when I needed a reminder of my commitment.
In addition to the new connections made at the Global Forum, two comments stood out for me; one was rooted in the past and the other in the future.
Remembering the Past
When Michel Khalaf from MetLife described the company’s roots as an insurer for the working class and the legions of agents who went door-to-door collecting weekly premiums of $.05 or $.10 and dispensing financial advice, I instantly understood something important about my grandfather. Until then, I had just thought of him as a MetLife agent in the steel belt towns of the northeastern U.S. in the 1920s and 1930s. He left school at age nine to help the family make ends meet when his own father prematurely passed away. He first worked shoulder-to-shoulder in the coal mines with many other immigrants. His math skills and ability to work across ethnic groups enabled him to leave the mines and become a top agent for MetLife. He knew firsthand how dangerous the mining work was and how a temporary or permanent injury could be a huge setback for these vulnerable families. Once the Great Depression hit and people could not access their deposits in banks, many of his clients turned to my grandfather for financial help. He had some liquidity and became a de facto deposit insurer, paying people what he could and in the process becoming a larger creditor of the illiquid banks.
Anticipating the Future
While Michel Khalaf’s comments helped me piece together my own family history, what stood out more was the collective prediction by attendees in London that the most important story in the next five years will be the presence of a “bank run” on mobile money.
> Posted by Gino Picasso, CEO, GloboKas
First and foremost I would like to thank all that were involved in organizing and sponsoring the FI2020 Global Forum. It was really an excellent conference.
Like all the others who attended this conference, I have attended dozens of conferences and they are all pretty much the same. I get to see old friends, make some new friends, and exchange some ideas, but usually there is very little that is fresh. The FI2020 Global Forum stands out in my mind because I walked away with a fresh perspective on the work we are all doing.
Dr. Sendhil Mullainathan’s presentation was a highlight because he provided a fresh perspective on what I consider the most important issue we touched on at the conference: we need to know our customer. I do not want to minimize the many other speakers and discussions, because all of these helped advance our work in some way. However, I think that a key takeaway is that we all must learn a lot more about the real needs, wants, and drives of our customers. We cannot talk about the BoP and forget that just like any other large demographic, there are many things that segment this group into differentiated consumer groups. And, like Sendhil taught us, some consumer behaviors are driven by factors that we are only beginning to understand.
> Posted by Monique Cohen, Independent Advisor, Founder and Past President, Microfinance Opportunities
Addressing client needs, delivering appropriate products, ensuring consumer protection, and building people’s financial capabilities were themes repeatedly heard during FI2020. Taken together they represent important progress in the discourse around financial services for the poor. Not so long ago the mention of clients was limited to statistics; in particular, numbers of accounts. If you were in luck this data was differentiated by gender.
This new recognition that our clients are active not just passive players in our industry marks an important step forward. The concept of active clients emerged in numerous sessions during the FI2020 meeting. Alexia Latortue, formerly of CGAP, began by noting that designing products that would help clients mitigate shocks and loses is very important. For the poor to cope effectively with risk, physical presence, timeliness, and proximity to financial services is vital for enabling access. In one of the final sessions of the meeting, Innocent Ephraim from Vodacom echoed statements by others noting that listening to the clients is critical. Not doing so can be costly. He had been involved in launching a product based on what the provider thought was useful. The product bombed, forcing his team back to the drawing boards and to the identification of a product which made sense to the consumer because it reflected both their contexts and priorities.
While the client agenda in financial services is not new, it has only recently gained real traction. Despite the new thinking on this topic, the industry is still searching for common ground about what to do to become more client focused. Currently the stakeholders are struggling to define a common phrase book; our lexicon of many of the terms continues to be a work in progress. Everyone has her/his own meaning for financial capability and financial inclusion. The result can be confusing.