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> Posted by Carol Caruso, Senior Vice President, Channels and Technology, Accion

Guatemala presents great potential to advance financial inclusion through the adoption of digital financial services (DFS). Only 22 percent of the population has a bank account with a formal financial institution – in most cases one of the three largest commercial banks – while almost every Guatemalan household has a mobile phone (8.8 million unique subscribers among a total population of 15.5 million). Yet most financial transactions are still conducted at bank branches. The logistics challenge of reaching isolated rural communities results in high distribution costs for the banking sector, hence it is no surprise that in 2012 Fitch Rating described the banking system as highly inefficient.

Some innovation in delivering financial services has taken place in the last few years. A few banks have implemented agent networks and the three mobile network operators now offer mobile financial services. But the results achieved are far from what the players and the supervisory authority were expecting in terms of usage and increased financial inclusion. For example, the leading mobile money service, Tigo Cash, is being used by MFIs in a limited way. Instead of empowering clients to use the available mobile wallet, clients primarily use Tigo agents for cash-in/cash-out transactions. While this over-the-counter (OTC) service through an expanded distribution channel has benefits and works in nascent environments, it is far below the potential of DFS in Guatemala.

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> Posted by Rishabh Khosla and Vikas Raj, Senior Investment Analyst and Senior Investment Officer, Accion Venture Lab

In May, India’s new government, led by Narendra Modi, was elected in a landslide. Popular frustration with the Congress Party’s increasingly ineffectual 10-year reign, made most visible by persistently low GDP growth, allowed for one of the most lopsided victories in Indian history, and the first time a non-Congress candidate had an outright majority in parliament. Wisely, Modi focused his election campaign rhetoric on economic issues and more efficient governance to revive GDP growth. The markets have reacted positively: the bell-weather BSE stock-index is up 20 percent since the start of the year. Two weeks ago, the government finally proposed a budget for the next year – the first real concrete recommendations for the economy since coming to power two months ago.

India is a key market for financial inclusion investors like Accion Venture Lab because of the size, depth, and strength of its entrepreneurial pool, as well as the persistent lack of financial services for the poor. Despite the huge success of microfinance in India, two-thirds of the working-age population lacks a bank account, mobile payments have yet to take off, and access to credit for small and medium enterprises (SMEs) remains abysmal.

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> Posted by Sonja E. Kelly, Fellow, CFI

We are in full World Cup fervor in the Accion offices around the world, with jerseys making appearances at global staff meetings, water cooler conversations centering on surprise advancements (and eliminations), and a high incidence of lingering trips to the conference room screen to check scores in between meetings and deadlines. You could say things are getting a little heated as the group of teams still in the running gets smaller.

There have been a few attempts to use this global competition as an opportunity to better understand our world. The Wall Street Journal published a “World Cup of Everything Else,” where countries can be matched up on categories from the hottest weather to the biggest eaters of seafood, and Dean Karlan produced a set of predictions based on population, poverty level, and interest in soccer to assess which country would experience the greatest increase in happiness with a World Cup victory (spoiler: Nigeria would have had the most aggregate happiness if it had won the tournament).

But what if the World Cup were a competition based on financial inclusion indicators? If we were to create a bracket where the country with the highest level of financial inclusion advanced, the European countries would all advance, which in my opinion wouldn’t be very interesting.

What if, however, we use the World Cup system to see where the highest number of financially excluded people are? We crunched the numbers to show you, of the countries that made it to Brazil for the competition, who would “win” the title of “highest number of financially excluded people.” Basing winners on the countries with the largest number of people without a formal bank account, we noticed a few surprises.
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> 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.

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Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion, discusses the background to the FI 2020 Global Forum. She details how and why 300 representatives from across the world – representing public, private and non-profit sectors – are coming together at the Lancaster London Hotel from October 28-30th to map out how full financial inclusion can be achieved by 2020.


Recent History
We started a couple of years ago with the question “could financial inclusion be achieved around the world by 2020?”. We did that to get people to think ahead, to look into the future instead of focusing on their problems today.

In preparation, we did two things. First we undertook some demographic research called ‘Mapping the Invisible Market’.

The bigger project was a series of working groups on each of the critical topics for Financial Inclusion. These working groups’ focus areas were defined by a survey we undertook to understand the opportunities and obstacles to financial inclusion.

The working groups had representatives from 40 organizations and have produced five roadmaps to financial inclusion – work that has subsequently been vetted by another 200 people. Our five Roadmaps to Inclusion are:

1. Technology Enabled Business Models
2. Consumer protection
3. Addressing Customer Needs
4. Financial Capability
5. Credit reporting

The FI2020 Forum: Creating a community of action
The people at the Forum are hand-picked to represent the different stakeholders in the industry. Indeed, one of the things that makes this meeting unique is that we have a broader array of people than ever before. We have people from major corporate and regional banks, microfinance institutions, telecoms companies, policy makers, regulators, investors and supporting organizations.

By bringing these diverse groups of people together, the Forum is creating a community – a community that has a commitment to action.

The Roadmaps have ten key action principles which are underpinned by a host of more detailed points. The work of this Forum is to put more action steps around those action principles – being specific about who needs to do what.

My hopes for the Forum
I hope that people come away from this forum with a much deeper vision of what financial inclusion is and what it entails.

I hope to see people getting excited about what actions need to be taken – identifying new opportunities and making commitments to take them. I also hope that people begin to see financial inclusion from the perspective of a client – of financial services making a real difference in their lives in both the short and long-term. A lot of times, financial inclusion is seen as ‘banking the unbanked’ – I hope people come away with a much deeper vision of what Financial Inclusion is and what is required to make it happen.

To see what others are saying and posting about the Global Forum, visit the Financial Inclusion 2020 website and follow #FI2020 on Twitter.

> Posted by Elisabeth Rhyne, Managing Director, CFI

The following post was originally published on the CGAP Blog.

A great transformation is shifting the weight of global power, population, and economic growth from what was once called the first world to what can no longer be called the third, and more precisely toward the middle-income countries that are still, somewhat anachronistically, labeled emerging markets.

Through that shift, enormous numbers of people are moving out of poverty into the “vulnerable” class. Living on perhaps $4 to $10 per day, they are not quite middle class, but they possess, for the first time, a small amount of discretionary income above bare survival. In many countries, this group is, or will soon be, the largest segment of the population. For the first time, these hundreds of millions of households are starting to figure as prospective customers in the market analysis of companies around the world.

There is also a transformation going on in financial services, built on these rising incomes and fueled by information technology breakthroughs. Now is a time of creativity and experimentation with new products, providers, and delivery systems for financial services – and, importantly, outreach to previously excluded clients.

The responses of businesses and even nations to the opportunities presented by these demographic and technology shifts will create winners and losers. The winners will be companies that address this market while it is still relatively open, thereby securing their position in the world of the future. The winners will be nations that open their financial systems to the creative business models needed to serve these new customers, and thereby promote a productive and connected citizenry.

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> Posted by Jeffrey Riecke, Communications Assistant, CFI

For many of us in the U.S., it’s largely happenstance that we cross paths with the topics of microfinance and financial inclusion in a meaningful way. Personally, I remember first hearing about microfinance from friends during college, but it was always in passing, never to the extent or specificity needed for it to make a lasting impression on me. I wish this wasn’t the case! I wish my college self, and all students for that matter, had more exposure to these areas.

To help students and the U.S. academic community engage with microfinance and financial inclusion, Citi Microfinance and Kiva have teamed up to launch Kiva U. The mission of Kiva U, built around three core initiatives, is to create a community for our future inclusion leaders and to support the expansion of full financial inclusion. There’s a big opportunity in the combination of modern communications technology and academia’s inherently social environment, though few interactive financial inclusion platforms for students and educators exist. Kiva U aims to gain popularity as such a platform.

The three core initiatives of Kiva U are expand campus-based microfinance clubs, develop classroom-based microfinance and financial inclusion curriculum for all learning levels, and foster leadership among students interested in social enterprise, international development, and financial inclusion.

There are currently Kiva clubs at 67 colleges and 60 high schools in the United States. Providing online and offline engagement tools, Kiva U plans to leverage this foundation and connect with additional students and educators throughout the country’s academic community.

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> Posted by Center Staff

Are you a financial inclusion innovator? Do you have a hand in developing financial products and delivery methods that catalyze financial inclusion? Consider applying to be a participant in the Financial Inclusion 2020 Global Forum, convening this October in London.

If you’re a regular reader of this blog, you’ve most likely heard of the FI2020 Global Forum. If you’re a regular reader of this blog, you’ve definitely heard us discuss innovations in the financial services space that very well could, or are already improving service quality and are supporting the expansion of financial inclusion. Some such recent posts are Democratizing Data to Increase Transparency, Access, and Knowledge for the New Generation of Latin Americans and Financial Engineering for Low-Income Households. As a refresher on the Forum, it is a landmark, invitation-only event that will engage a broad range of players in financial inclusion in a collaborative environment where they can map the action agenda for achieving financial inclusion by the year 2020.

The Forum will bring together approximately 300 leaders across regions and industries, including regulators, policymakers, NGOs, donors, and financial services providers. The recent advances in financial inclusion could not have been possible without the innovations of new technologies and disruptive business models. Participation from senior-level representatives of established companies and organizations that have developed, marketed, and implemented products with noticeable market impact are key to the conversations taking place at the FI2020 Global Forum.

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> Posted by Ignacio Mas and Kim Wilson, Independent Consultant and Fellow, Center for Emerging Market Enterprises and the Feinstein International Center, Tufts University

The statistics are appalling: something like two-thirds of people in developing countries do not have access to a bank account, and more than half of those who do don’t find it sufficiently convenient or relevant to use it much.

By referring to this state of affairs as financial exclusion, we elevate the problem to one of gross inequity and neglect of basic needs. But let’s be honest: it is hardly the kind of aggravation that motivates affected people to demand inclusion. No boycotts are brimming, no sit-ins loom in the distance. There are few street-level activists, not counting those who have created a money-lending business out of it. People seem content with just staying away from banks. And the feeling is mutual: many banks, spurred on by donor money, now talk the inclusion talk, but pull the aid away and their new-found focus on the poor may well start to blur. Such little passion for inclusion in the formal system means no movement will explode onto the scene and no market will flourish any time soon.

First of all: do the excluded really feel excluded? Many people certainly feel excluded from banks. They’re aware that banks don’t concern themselves much with the needs of the ordinary person, and they’ve often been made to feel unwelcome in banking halls. Poor people everywhere rationalize that with a simple dictum: banks are not for people like us.

But even if they feel excluded from banks, do they feel excluded from finance? Hardly, and to see that, just ask them about any life circumstance in which they needed money. You’re much more likely to get a story of resourcefulness than of helplessness. By force of need, they’ve developed the skill of scanning their assets, prospective income sources, and social relationships in order to pick which they are going to liquefy in some way in a situation of need. They’ll ask for help from a friend, borrow from the store, pawn a jewel, ask for an advance from an employer, delay buying some business inventory, suspend contributions to some personal or collective savings plan…

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> Posted by Center Staff

Corruption at any step in a financial system jeopardizes financial inclusion. Globally, roughly 1 in 4 people paid a bribe to a government employee or institution in the last year. That’s the big finding from the Global Corruption Barometer 2013, the latest in Transparency International’s annual public opinion survey on corruption. This year’s survey polled more than 114,000 people in 117 countries on their experience with bribes, their perceptions of corruption across institution types, and their beliefs on the potential for ordinary people to fight corruption.

Percentage of respondents per country/territory who paid a bribe to a government employee or institution in the last year.

For many, especially those living on less than two dollars a day, a bribe added to the cost of a service can determine if a service is a possibility – this includes basic financial services. Of the countries included in the Barometer, it was found that 7 out of the 9 countries with the highest bribery rates were in sub-Saharan Africa. Sierra Leone recorded the highest rate with 81 percent of polled individuals reporting that they had paid a bribe during the past year, followed by Liberia, Yemen, and Kenya, with 75, 74, and 70 percent, respectively. According to Global Findex data, access to and usage of formal financial services in sub-Saharan Africa is among the lowest in the world.

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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.


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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