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> Posted by Center Staff
Freshly published is the latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. Among the stories in this week’s edition are the launch of the Citi Mobile Challenge in the Asia-Pacific region, the kick-off of this year’s microTracker survey on the microenterprise industry in the United States, and a blog post series from Ericsson on financial inclusion in Iraq. Here are a few more details:
- Following successful Citi Mobile Challenges in other regions, the Asia-Pacific iteration invites developers to submit innovative mobile banking solutions for a chance at taking their technologies into production with the support of Citi and its partners.
- The U.S. Microenterprise Census’s online microTracker survey is open, collecting and counting data on the microenterprise industry in areas including client reach, lending volume, and performance efficiency.
- A new post series on Ericsson’s “M-Commerce: the Call for Change Blog” spotlights the financing landscape in Iraq, which serves only 11 percent of adults in the country, targeting action areas like regulation, interoperability, and mobile money.
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 email@example.com.
> 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.
> Posted by Sonja Kelly, Fellow, CFI
If there’s one thing we’ve learned in taking a close look at financial inclusion efforts around the world, it’s that context matters. That’s why we are excited to be part of the team releasing the Global Microscope 2014: The Enabling Environment for Financial Inclusion. The Microscope is carried out by the Economist Intelligence Unit (EIU) with sponsorship and guidance from the Multilateral Investment Fund of the IDB, CAF, and Citi. The Microscope evaluates the environment for financial inclusion in 55 different countries and provides powerful signals to policymakers in each country on their progress. Which countries topped the list and which have the most room to grow?
We’ll tell you, but first, it’s important to know what the results mean. Each country inspected in the Microscope is assessed on 12 indicators that consider best practices in national regulatory environments and institutional support for providers serving clients at the base of the pyramid. Indicators range from government support for financial inclusion, to supervision of microfinance and other financial products, the status of credit reporting, regulations governing mobile banking and, last but not least, consumer protection.
This year is an important one in the publication’s eight year history because the focus shifted from microfinance to the environment for financial inclusion, a process that involved adapting the framework to account for today’s diversity of providers and products. What we were surprised by, however, was just how little a difference this made in the rankings. We charted last year’s results on the microfinance environment against this year’s results on the financial inclusion environment and we found a very high correlation between the two (see figure below). Environments that are enabling for microfinance are often environments that are enabling for financial inclusion. Six countries from last year’s top 10 were in this year’s top ten. Read the rest of this entry »
> Posted by Tyler Owens, CFI Staff
The current era of financial services for the poor is marked by the growth of high-tech delivery mechanisms, innovative start-ups, new socially responsible investing models, and more traditional banks growing their portfolios of base-of-the-pyramid clients. Different players in increasingly crowded markets often collide in trying to win over more clients. Just one recent example is the newly public Alibaba, which has issued more than $16 billion in small loans over the last three years through its SME loan company AliFinance. The result of all this can lead one to question the role that traditional MFIs will play in the years and decades ahead. What will be their unique value proposition and how will they earn and maintain market share and the loyalty of their clients?
There is evidence that microfinance industry practitioners and stakeholders are not prioritizing questions of relevance and long-term customer retention. All too often, thinking strategically about the place of an MFI in a rapidly changing financial services landscape takes a back seat to the daily crush of competition and loan book performance. The 2014 Microfinance Banana Skins report—which is built on surveys of industry practitioners and insiders—concluded that the most urgent risks the industry faces are those of day-to-day business operations, such as credit control, competition, and management quality. The report went on to say that “longer term risks associated with the survival and evolution of the industry such as technological change, product development and funding are considered to be less urgent – and are less well defined.” It concluded that paying scant attention to long-term risks in the industry—at a crucial point in its development—may be a serious risk in itself.
> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI
A few weeks ago J.P. Morgan made a $30 million commitment to create the Financial Solutions Lab, a move representative of the growing recognition among all financial stakeholders of the importance of financial capability.
The Financial Solutions Lab, a five-year initiative, will be managed by the Center for Financial Services Innovation (CFSI) and it seeks to bring together experts in behavioral economics, design, technology, and nonprofit services in order to develop innovative and scalable financial products and services that strengthen client financial capability and well-being. Ideo.org and ideas42 are to serve as strategic partners on the initiative. By bringing these stakeholders together, the Lab aims to identify new ways in which customers can improve credit behavior, increase savings, and build assets.
> Posted by Jeffrey Riecke, Communications Associate, CFI
What’s the percentage of MFI clients worldwide that are LGBT? How about the percentage of staff at MFIs? Broader yet, how inclusive is the financial services industry of queer and trans people?
As you’d probably guess, concrete answers to these questions aren’t available. And even raising the issue is controversial in many countries. Over the past year anti-gay legislation was enacted in Russia, Nigeria, Uganda, and India. The notion of financial institutions working towards LGBT-inclusive operations is far off in many countries.
But here in the U.S. (and in other areas worldwide) change is happening, as demonstrated at the Out on the Street Summit last week in New York City. The event, part of the Out on the Street initiative, featured senior leadership from some of the largest financial services providers in the world, including Michael Corbat, CEO of Citigroup, and Ajay Banga, President and CEO of MasterCard. Held on May 1, the event focused on business opportunities and leadership strategies for and within the LGBT community, as well as the financial services industry’s role in advancing LGBT equality.
> Posted by Center Staff
Expanding financial inclusion to the 2.5 billion unbanked individuals around the world is essential, but why does it matter, and is it possible in the next six years?
In recent years, the inclusion movement has achieved critical support and rapid progress. Last year universal financial access by 2020 was endorsed by World Bank President Jim Kim. Technology-enabled business models are catalyzing outreach, building on infrastructure like the mobile phones now accessible to six of the world’s seven billion people.
In the following video, global financial inclusion leaders explore the questions of whether financial inclusion is possible by 2020, and why we should work towards that goal.
> 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.
Bob Annibale, Global Director, Citi Community Development and Microfinance, shares his views on the lead up to the FI2020 Global Forum, as well as reflecting upon the panel discussion ‘Global Trends & Emerging Markets’.
Please share with us Citi’s perspective on the lead up to this Global Forum
What led us to this point is a convergence of a number of organizations that have been working together originally on traditional microfinance. As that grew, some of the original microfinance institutions became banks, cooperatives, credit unions, and other players that were trying to work on some similar issues with the same communities. In other words, it was a bigger discussion.
We then found other players like mobile operators and the card companies becoming interested in financial inclusion, or becoming interested in businesses that will probably expand financial inclusion. They didn’t come at it with a goal of financial inclusion necessarily, but the work that they’re doing is leading towards that.
So, we realized we needed to convene a wider range of organizations than we had before. And that was the discussion that led us with Accion and CFI to come up with a goal for financial inclusion. With the goal of 2020, it’s hopefully far enough off for us to do something, but it’s not so far off that it seems a pipedream. With the belief that there can be exponential growth using new technology and a much wider range of institutions, it has become an ambitious target for financial inclusion.
Emerging markets and banks
I don’t think that many of the banks that are not already in emerging economy/developing countries are suddenly going to become active. We don’t see new banks or international banks in Dhaka or Chittagong or in Hanoi or Kinshasa. And it is an awareness among local banks too that there is probably another way other than the old model of the bricks and mortars branches to expand access. Read the rest of this entry »
> Posted by Jeffrey Riecke, Communications Assistant, CFI
Peru ranks as the developing country with the best environment for microfinance, followed by Bolivia, Pakistan, the Philippines, and Kenya, in that order. Latin America and the Caribbean is ranked as the best region in the world for microfinance, followed by Sub-Saharan Africa, Asia, Eastern Europe and Central Asia, and lastly the Middle East and North Africa. Globally, the microfinance industry is improving, fueled largely by an increase in credit bureaus, improving client protection, and the spread of regulatory frameworks for mobile banking.
These are a few of the big takeaways from the Global Microscope on the Microfinance Business Environment 2013, which was launched yesterday in Guadalajara at the IDB’s 2013 Foromic conference. Now in its seventh year, the Global Microscope annual series examines the environment for microfinance – and increasingly financial inclusion – by considering the national regulatory environment and the corresponding institutional framework.
Originally developed by the Economist Intelligence Unit in collaboration with the Multilateral Investment Fund and CAF, this year’s study is also sponsored by Citi Microfinance and CFI. This year’s report scores 55 countries, and in general, the global picture is promising. Since last year, 30 countries improved their scores, 19 fell back, and the scores of six countries remained the same. The majority of improvements this year came from advancements in institutional frameworks. The scores for regulatory framework and practices mostly declined.
As a region, Latin America and the Caribbean countries claimed half the slots in the global top ten, with Peru maintaining its previous ranking as the top country in part through improvements in regulation for mobile banking. Unlike the rising score for Peru, Bolivia’s score fell, due to restrictive new legislation, although not far enough to dislodge Bolivia from its number 2 ranking.