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> Posted by Susy Cheston, Senior Advisor, CFI

Visitors to our FI2020 Progress Report on Client Protection will have noted our poor math skills. (This is the section of the report that assesses global progress to date in advancing fair treatment for lower-income financial services clients.) We rated regulators a 6 on consumer protection and providers a 3—and somehow averaged those out to a 5. Our averaging skills make even less sense when you consider the three legs of the client protection stool—providers, regulators, and consumers—and realize that consumers are not even on the radar, rightfully earning a 1 at best in terms of their capacity to advocate on their own behalf. So why the optimism?

We were certainly swayed by the impressive momentum among a range of actors at the global level—including policy and private sector initiatives—toward improved consumer protection. But it’s what happens at the national level that really counts. The World Bank’s 2014 Global Survey on Consumer Protection and Financial Literacy reports that some form of legal framework for financial consumer protection is in place in 112 out of 114 economies surveyed. We are not so Pollyannaish as to think that having a legal framework is equivalent to having a regulatory and supervisory system that protects consumers well, but we do think it’s a good step in the right direction.

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> Posted by Center Staff

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 United Nations (U.N.) General Assembly held a side event last week on youth financial inclusion; the Microfinance Gateway spotlighted resilience, for both households and financial institutions, in the realm of financial inclusion; and the Global Banking Alliance for Women (GBA), in collaboration with the Inter-American Development Bank (IDB) and Data2XCARE, released a report on the value of data to women’s financial inclusion. Here are a few more details:

  • The U.N. General Assembly side event focused on the importance of financial inclusion for youth, including youth entrepreneurs, and it was asserted that the energy and dynamism of young people will be integral in achieving the newly adopted 2030 Sustainable Development Goals. Fifty-four percent of youth between 15-24 don’t have a bank account.
  • Resilience, or the ability to anticipate, adapt to, and/or recover from adverse situations, is a key lens for considering financial inclusion. Microfinance Gateway’s spotlight shares industry work on resilience from Freedom from Hunger, ILO, IMF, Making Finance Work for Africa, Microinsurance Network, and MicroSave.
  • GBA, IDB, and Data2XCARE’s new report, based on interviews with over 50 financial inclusion stakeholders, makes the case for sex-disaggregated data – how this data could inform better policies and private sector action – and discusses the challenges to its collection and use.

For more information on these and other stories, read the latest issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at

> Posted by Sonja E. Kelly, Fellow, CFI

The following post draws observations from the just-released FI2020 Progress Report on Technology. See the full report to explore other topics and cast your vote on global progress in advancing financial inclusion.

Technology innovation is dramatically changing the financial services landscape—and quickly. No longer are simple 2G/SMS-based payments the talk of the financial inclusion community. Instead, a range of platforms and products and services promise that as we move into the future, the costs of providing services will be lower, and the base of the pyramid will be within reach for mainstream financial services providers.

The world in which these innovations are mainstreamed is one where the agent network concerns we have today will be gone. In the cash-lite or cash-free world that technology providers are seeking, there will, in fact, be few to no agents, as people will receive money electronically and spend it electronically without ever converting it to cash. When is the last time you went to a banking agent?

Consider the following innovations that allow important financial transactions to take place without a detour through cash. (For a more comprehensive list of innovations, see the FI2020 Progress Report on Technology.)

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Today the Center for Financial Inclusion (CFI) is proud to launch the Financial Inclusion 2020 Progress Report, an interactive website that portrays the recent progress and unmet challenges on the path to global financial inclusion.

When we began the FI2020 project in 2011, we hoped to create a sense of both urgency and possibility. We believed that enabling everyone in the world to gain access to quality financial services was a goal of major development significance. We also saw that with many active players and the promise that digitization would enable many more people to be reached at lower cost, it was no longer simply wishful thinking to call for full inclusion within a reasonable time frame. Global financial inclusion had entered the realm of the possible.

Today, in 2015, we are both astonished by the progress and daunted by the gaps that remain. Global Findex data shows 700 million new accounts in the three years from 2011 to 2014, reducing the number of unbanked worldwide from 2.5 to 2 billion. National governments have created ambitious financial inclusion strategies, the FinTech industry is exploding with $12 billion in global investments in 2014 alone, and the World Bank has a plan for reaching universal financial access to transaction accounts by 2020.

Our quantitative review, By the Numbersrevealed that if the current trajectory of expansion in accounts continues, many countries will achieve full account access by 2020. The rails are being laid at a rapid rate, and there is great momentum toward universal access. But access to an account is not the same thing as financial inclusion, and progress toward meaningful financial inclusion, in which people actively use a full range of services, is lagging. The passengers – customers – are often still waiting at the station for services that take them where they want to go.

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> Posted by Susy Cheston, Senior Advisor, CFI

In three days the Center for Financial Inclusion will unveil the FI2020 Progress Report. In it, we define progress made toward financial inclusion and make predictions about the most critical issues facing the industry.

This web-based report has been a year in the making, the result of FI2020’s monitoring of industry trends, interviews with experts, and an analysis of financial inclusion data from both the supply and demand side. We organized the report around the five areas identified in the 2013 Roadmap to Financial Inclusion: Addressing Customer Needs, Client Protection, Credit Reporting & Data, Financial Capability, and Technology.

Perhaps the most fun—and most debatable—aspect of the report is the rating we will reveal for each area, marking where we are on the road to financial inclusion along these five dimensions. The financial inclusion community around the world will have the opportunity to weigh in with their vote – and we expect there will be some disagreement with our opinions. We hope you will not only mark your own rating, but also leave comments with your views. Most of all, we hope this thought exercise will help focus all of our attention on how to close the gaps to get to a 10 in each area.

To offer a sneak preview of the content, I thought I would reveal how we rated progress made on client protection:

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> Posted by Sonja E. Kelly, CFI

A couple months ago we announced a new program coming out of the Center for Financial Inclusion and Accion designed to produce actionable research for the microfinance and financial inclusion industry. We’ve been busy since, overwhelmed by the positive response we had to our announcement, and torn between many high-quality research proposals.

In recent days we selected four fellows to carry out research that we think will have an influence on the future of financial inclusion. Without further adieu, I would like to introduce you to…
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> Posted by Center Staff

Credit reporting systems are a critical component of a financial system’s infrastructure. They facilitate access to credit for all who can use it, protect clients from overindebtedness, and help providers manage risk and decrease costs. What’s the state of credit reporting in the Middle East and North Africa (MENA) region? That’s the focus of the Arab Credit Reporting Guide, a new resource from the Arab Monetary Fund (AMF) and the International Finance Corporation (IFC). The guide was launched earlier this week alongside a meeting between the region’s central banks’ governors. In short, the guide finds that MENA countries have come a long way in developing credit reporting systems in recent years, but there’s still a long way to go.

The guide examines the region – 19 countries in total – in the context of global trends and best practices in credit reporting. A regional overview sheds light on credit reporting as well as credit access and risk management in MENA, while the guide also provides detailed investigations into the practices and progress of individual countries. A composite index comprised of the key elements for a comprehensive credit information sharing system is applied to each of the studied countries, offering a quantified status on credit reporting in each.

What were the big findings?
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> Posted by Kai Hsu, Director of Administration & Finance, Positive Planet China

Over the past five years, peer-to-peer lending (P2P) has grown rapidly. Now more commonly referred to as “marketplace lending” because of the large range of institutions, intermediaries, and non-“peer” parties involved, the industry is poised to continue its year-on-year triple-digit growth. The breakneck speed of P2P’s growth seems natural given the many advantages it offers. As an industry, focus has gradually moved from a community of individuals lending directly to other individuals (often within affinity groups), and has evolved into a powerful engine of technical efficiency. Today, P2P is viewed in many different ways: a potential agent of financial inclusion; an innovation in big data analytics and credit risk evaluation; an efficient mechanism for loan matching without the often burdensome capital and regulatory requirements of banks; an innovative operational model leveraging the cost savings of online platforms; a new asset class for retail and institutional investors; and the list goes on.

This change has also attracted banks that are eager to be cut into the action as well. Banks have made equity stakes in P2P businesses in the past, such as Barclays’ 49 percent investment in South Africa’s RainFin and Credit Suisse’s $25 million note to Prodigy Finance. However, 2015 seems to be the breakout year for P2P into mainstream finance. In June, Goldman Sachs announced plans to enter the consumer lending space through an online platform, akin to what Lending Club and Prosper offer in the U.S. Several days later, Morgan Stanley featured an optimistic report on P2P lending on its home page. In August, Standard Chartered led a $207 million C-round of funding for Chinese P2P company Dianrong.

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> Posted by Anne H. Hastings, Manager, Microfinance CEO Working Group

At a time when microfinance has fallen out of favor in mainstream development circles and when investors are asking to see metrics showing the impact of their funding, it is especially important to base our discussions of poverty outreach on empirical research. Grameen Foundation and the International Finance Corporation (IFC) recently published a study that does just this. Factors Influencing Poverty Outreach Among Microfinance Institutions in Latin America (available in English and Spanish) takes a close look at poverty outreach data from 14 microfinance institutions (MFIs) across six Latin American countries and is the first study of its kind in the region. The information analyzed includes data from Progress out of Poverty Index® (PPI®) surveys and a range of other relevant client profile variables such as socio-demographics and credit disbursement details.

The findings are important. In-depth interviews with the MFIs surfaced an interesting hypothesis that was supported by the data. High levels of competition and over-indebtedness of clients, two interlinked factors, seemed to be driving MFIs to pursue poorer clients. In regions where wealthier clients are already served by commercial banks (e.g., urban areas), MFIs service poorer clients, likely in order to avoid the pitfalls of over-indebtedness and to seek untapped markets. However, the MFIs service relatively wealthier clients in regions that have a higher rate of unbanked (e.g., rural areas). It seems, in others words, that MFIs tend to focus first on whomever is excluded regardless of poverty level, but some will extend their poverty outreach when there is greater penetration among the formerly excluded.

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> Posted by Nikhil Gehani, Marketing and Communications Manager, MIX

The importance of data in strategic decision-making cannot be overstated – especially in the era of ‘big data’. Yet, as the inclusive finance community continues its efforts to shift more people from unbanked to banked, improving both data quality and data regularity remains a pressing issue. While there certainly has been progress in data and measurement overall, a more nuanced picture is needed to identify specific opportunities for industry players to increase the reach and quality of financial services for underserved populations.

Current data platforms, including the World Bank’s Global Findex and the IMF’s Financial Access Survey, are beginning to fill the gaps in national measures of financial inclusion. Now, the next iteration of financial inclusion data is needed to enable local industry actors – policymakers, regulators, and operators – to assess the gaps and opportunities at the state, district, and township-level. With that in mind, MIX’s FINclusion Lab recently sought out high-quality, subnational data to answer key questions related to supply and demand for financial services in underserved areas. Questions like: How does geographic proximity impact usage of financial services? And: How effective are non-traditional providers in increasing access to financial services in rural areas?

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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.

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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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