> 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.).
4. We need to talk. These various stakeholders need to coordinate or at least share experiences. One approach is a multi-stakeholder Financial Inclusion Task Force within the national government or between government and the private sector.
5. It’s not just regulators. Regulators play a vital role, but industry leadership is essential for moving forward innovations in technology, for integrating financial capability and consumer protection into services, for adopting credit reporting for the base of the pyramid, and, above all, for meeting customer needs.
6. We need to find our balance. That includes knowing when to let the market take its course and when to regulate. It also includes balancing access and protection. For example, how do we use client data analytics as an on-ramp for thin file customers while protecting customers’ privacy? And how do we promote access to credit without increasing over-indebtedness?
7. Don’t let innovations lead to inadvertent exclusion. There is a danger of interventions and innovations leading to a new class of excluded customers. For example, a person with a disability may become even more excluded if mobile money services are not accessible.
8. We need to figure out the business models. This is an issue for every major “opportunity” to advance inclusion. It’s also an issue for reaching new customers who are harder to reach. Many feel the business case is already there for companies that take the long view, but we need to articulate this, and innovation is still needed.
9. It’s easy to say but hard to do. Many of the Roadmap principles are common sense and most have widespread agreement—but they are not happening. Some of the solution is to align incentives by governments, investors, donors, etc., with the Roadmap principles.
10. It all comes down to customers. The single most significant driver of financial inclusion is meeting customer needs. That includes expanding our market to include new customers.
For a more extensive overview of the conversations at the Global Forum, stay tuned for an i-magazine summary to be released next week. If you would like to receive this magazine, please provide your email address here. You can also view video recordings of most of the FI2020 Global Forum plenary sessions on our website.
Image credit: The Center for Financial Inclusion
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The Financial Inclusion 2020 Global Forum: A Letter to Microfinance Institutions
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December 13, 2013 at 12:01 am
yerramr
Delivering the promise and improving the reach are the most important goals in an environment of confusion over the fundamentals of financial inclusion and isolated thinking and approaches. This document seeks to put in a plan that all the stakeholders should strive to understand.
December 13, 2013 at 8:05 am
Alex Counts
This is an excellent blog and shows the clear need for pro-active follow up to FI2020 in the years ahead. The roadmaps supplemented by this summary of learnings/themes can make this easier. I hope this agenda is picked up and advanced by “Clients at the Center” convenings organized by MasterCard Foundation, et.al. Ideally we do not have to reinvent these insights with every new convening. Excellent work, Susy and team !
December 16, 2013 at 10:22 am
John Gitau
Hi Susie! It takes long to read from you. It’s fulfilling to read the results of good work you do behind the scene.
In the argument between the Stomach and the Brain, the stomach always wins on a single heuristic ” get me full first and I will support your nutritional analysis and recommendation”.
The stomach is simple. Fill it with whatever food, junk or healthy and it will facilitate the thinking. Thinking on an empty stomach is hard. Let me explain:
If we make access to finance for the poor very complex with so many pre-access parameters, metrics, matrices and algorithms completing the complexity with scientific calibration of financial products, we shall sure be rewarded with delivery paralysis. One would understand the seriousness and scientific approach to the manufacture of baby food formula given babies’ stomachs delicateness. But finance to the poor is not baby formula to be tested and re-tested for consumption suitability and compatibility. The poor are sane and sober adults who have handled money so far, their only shortcoming being having less of it. When they handle their money in their social setting, they seem to do well but some of the financial products we manufacture and feed them with make them constipate in indebtedness and have running stomachs in the form of stress associated with their household items being auctioned to settle the loans sold to them as nutritious delicacies. In our own ignorance or greed, we design financial products without asking them what they need and later classify them as defaulters who we chase across the plains.
Can we make access to finance for the poor as simple as feeding the stomach? I suppose they know what to do with the money and they are not like kids who must be denied razor blades lest they cut themselves. They have come such far handling money. Finance is not any more difficult to handle than food whose vast sampling we appreciate before settling with our favorites. Some food sampling leaves us with stomach aches, constipation, diarrhoea and all other inconveniences that come with it. We learn what to eat and what to avoid. Food, sensitive as it is as a resource, remains the most practically sampled. Nature is structured in a way that whatever resource we have access to, we learn by handling it. Money should be like dough, made available to the poor for them to make whatever they need from it. How much of the dough do we give them? Well, it is them to determine. They know. Ask them. A poor villager will not ask for a million dollars as that is without his realm of possibility. If you ask a poor person how much she needs, you will be surprised by her self set limit of what she can comfortably handle.
My point is that all these parameters are good but they should help in complicating financial access and use to the poor. FI2020 was a success in establishing what needs to be done. Can we now get down and do it in line with the expression “action speaks louder than words”? If we don’t embark on action now, we shall find ourselves next year in Peru discussing what we have been discussing since FI2020 in London. I pen off now to start taking action.