You are currently browsing the tag archive for the ‘Financial Inclusion 2020’ tag.

> 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.

Read the rest of this entry »

> Posted by Annalisa Bianchessi, Microinsurance Network

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.

Although Africa has 17 percent of the world’s pastures and arable land, the value of premiums for agricultural insurance in Africa represents less than 0.7 percent of the world’s total. This remarkably low figure is deplorable when one considers that about 60 percent of the active population in Africa is working in the agricultural sector and that with the advent of climate change the risks in agricultural activities are becoming even more frequent and severe. The agriculture insurance sector in Africa is also unevenly distributed, with sector development in West Africa restricted to a handful of countries such as Nigeria, Benin, Senegal, Burkina Faso, Mali, and Ghana. Should governments intervene to support the development of the agricultural insurance sector in Africa?

For smallholder farmers, agriculture insurance offsets risks associated with weather fluctuations. This risk reduction can make it more likely that a farmer will qualify for credit and thus invest in the tools and resources (e.g. seed, fertilizer, labor) needed prior to harvest that would potentially increase crop yields. Furthermore, it also provides farmers with the peace of mind required to invest savings into businesses and increases their confidence to engage in contracts with buyers and processors.

According to Ismaïla Diakité, President of COPROCUMA, a farmer cooperative in Mali, and spokesperson for a network of 500 cooperatives representing over 500,000 Malian farmers, “Microinsurance is an avenue for the people of Mali to develop our country.” Ismaïla recalls that a few years back, COPROCUMA had taken out a loan to sow 10,000 hectares of sesame seed. However due to bad weather the crop failed, and the cooperative and farmers ended up in debt. It was then that they realized the value of insurance. While very lucky (the lending institution cancelled their debt), the farmers embarked on an agriculture insurance scheme, which today is compulsory for all members of their cooperative. Ismaïla says, “Our main objective is to ensure the survival of our farmers, their life and their livelihood.” To this end, he believes that insurance is an essential part of the benefits that the cooperative needs to offer the farmers. When asked whether all farmers are happy with the compulsory insurance scheme he says, “A farmer cannot see the importance of microinsurance until he can see the bigger picture. In the sector I work in there will never be unanimous agreement on anything. However a few years into the insurance scheme, 80 percent of farmers in Mali are now convinced of the importance of agriculture microinsurance.” Read the rest of this entry »

> Posted by Jeffrey Riecke, Communications Associate, CFI

How can governments best regulate to advance financial inclusion? Effective regulation is often brought up when discussing essential components for expanding banking services. Like all industries, the world of financial services requires rules to ensure protection and fair practices. However, when it comes to advancing financial inclusion, the most effective way to handle regulation is not unanimous or even widely defined.

In recent years, more governments have taken steps to advance financial inclusion. Many have developed national inclusion strategies. A number have enacted regulation pertaining to new products and services, like mobile money. For government payment systems, such as social welfare benefits, some have switched over to electronic methods. Though on the whole, regulation struggles to keep pace with the increasingly complex services landscape, and progress is limited.

In the following video, global leaders discuss the role of regulation in financial inclusion, and how coordination within governments and between sectors can lead to more informed and enabling regulation and services environments.

Read the rest of this entry »

> Posted by Richard Leftley, Chief Executive Officer, MicroEnsure

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.

Last year a statistic was released claiming that there are 6 billion phones in circulation around the world. It is clear that mobile-based delivery channels are perhaps one of the greatest opportunities in working to achieve human and market development goals, including financial inclusion.

Microinsurance is one of the great beneficiaries of mobile-based payments and service delivery innovations, as shown by the rapid growth of mobile microinsurance (MMI) products from an estimated 20 in 2006 to 84 in 2013. Today much of the growth in microinsurance is through partnerships with mobile network operators that are keen to increase sales and retain customers. But demand side obstacles persist and pose a significant challenge to growth and sustainability. Many products are available that are sound and beneficial, but clients are not picking them up. Why is that?

mobile phone

Over the past nine years we have provided microinsurance to millions of clients via a range of distribution channels including banks and microfinance institutions, SACCOs, cooperatives, and even churches. However, our real breakthrough came when we realized that no one wakes up wanting to buy insurance, but people do wake up worried about the risks they face. Through our work with mobile network operators, we have demonstrated that the mass market will radically change their consumer behavior in return for free insurance that addresses their risk.

Recently I stopped a man in the street and asked him if he wanted to buy life insurance. However hard I tried I could not make the sale, but when I asked him how much money he sent home to his mother every month, he became excited about a product that would keep providing that remittance to his mother if he had an accident and died.

Our ability to provide great microinsurance products is driven by our capacity to consider the needs and attitudes of our clients and then integrate these types of insights about choice and value into each product.

Read the rest of this entry »

> Posted by Jeffrey Riecke, Communications Associate, CFI

Corporate social responsibility or profitability? Why are more and more financial services providers expanding their focus to include banking the unbanked? After all, many of those without formal financial services don’t have incomes to support big or frequently-used products, and their circumstances often present challenges for access, risk, and other services dimensions.

Industry activity in recent years, organizational objectives aside, has demonstrated the potential for sustainable and profitable investment in financial inclusion. Advancements in product design, technology, and risk management, and trends in demographics and incomes are making it increasingly possible for commercial financial services providers, as well as stakeholders in adjacent industries like telcos and technology providers, to support inclusion.

In the following video, global leaders discuss how financial inclusion is not only good for individuals, markets, and countries, but also good business.

Read the rest of this entry »

> 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.”

This post is the second in a series of two posts from Pina on financial inclusion for persons with disabilities. Pina’s first post can be found here.

A study by the Martin Prosperity Institute in Canada estimates the buying power influenced by persons with disabilities (PWDs) is in excess of $US 26 billion in Canada. The same market is estimated to exceed $1 trillion in the United States by 2021. It is clear that PWDs represent a significant market in North America, but I believe they hold similar if not equal potential around the world. The World Health Organization estimates that 15 percent of the world’s population, over 1 billion people worldwide, live with a disability. This number is largely concentrated in developing economies, and is projected to increase considerably as the global population ages – a trend that has been highlighted in CFI’s demographic research. Engaging PWDs is essential when developing policies, standards, or products, or when selecting technologies for providing access to financial services. Otherwise, we risk excluding a population that can be viable consumers of financial products. Most importantly, culture needs to be shifted to embrace and recognize that PWDs have the ability to positively impact economic prosperity and that, along with the rest of society, must have equal access to education, employment, and financial independence.

How can financial services providers make a difference? It’s not rocket science. From including PWDs in the development of products and services, to the selection of technologies that are accessible to PWDs, financial services providers have a diversity of options for taking action and resources for understanding how to do so.

Engaging PWDs in Product Development

Financial services providers would not develop a product without getting input from their consumers. So why not include PWDs in the research conducted for product development or improvement? In Britain, Lloyds Banking Group convened a cross financial services sector focus group comprised of over 25 customer facing organizations and industry/regulatory bodies to discuss how to better respond to the needs of their customers suffering from dementia. After surveying caretakers and consumers, the consensus of the focus group, which included Business Disability Forum Partners: Allianz; Barclays; RBS; Santander; and Members: Aviva; HSBC; Legal and General; and Zurich, resulted in the creation of a charter on dementia-friendly financial services. This charter is intended to help financial services institutions recognize, understand, and respond to the needs of customers living with dementia and their caretakers and is an example of an institution that identified an obstacle in access by current and potential clients, conducted research within that client segment, and found a way to address it.

Read the rest of this entry »

> 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.

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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