Impact Where? Socially Responsible Investing (SRI) in the U.S.

January 4, 2018 in Investing in Inclusive Finance | Tags: , , , , , , , | by | Leave a comment

> Posted by Amanda Epting, Independent Consultant

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Lately it seems that everyone wants in on sustainable, responsible impact investing (SRI). Encapsulating a broad swath of investment styles, from environmental, social, and governance (ESG) screening to shareholder resolutions and community investing, SRI has become the darling of the social impact community.

In the U.S. alone, over one-fifth of professionally-managed funds (held by institutional investors, money managers, and community investment institutions), or a total of $8.7 trillion, consider ESG factors. This figure is up from $6.57 trillion in 2014 according to the U.S. Forum for Sustainable and Responsible Investment (USSIF)’s 2016 SRI Investing Trends Report. A much smaller proportion is in impact investments. According to the Global Impact Investing Network’s 2017 Annual Impact Investor Survey, which polls 209 institutional investors making impact investments, capital invested in impact investments rose by 17 percent last year from $22 billion to $26 billion.

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CFI’s Year in Review

December 21, 2017 in Center for Financial Inclusion | Tags: , , , , , , , , , , , | by | 1 comment

> Posted by Center Staff

2017 was certainly an eventful year. And our year at CFI was no exception. Through our CFI Fellows Program and partnership with the Institute of International Finance, Mainstreaming Financial Inclusion, we produced thought-provoking research on fintech partnerships, the role of human touch in a digital age, breakthroughs in insurance and more. In the client protection area, 24 financial institutions were Smart Certified, bringing the total number of certified institutions to 94. The Africa Board Fellowship Program continued to make a difference at the governance level of financial institutions across Africa, and now roughly 200 CEOs and board members have participated in the program. And more…

Before we celebrate the New Year, we wanted to pause and look back at some of our favorite moments of 2017.

Financial Health as a Global Framework

We developed a new model for assessing financial health. The financial health framework was developed through a project led by the Center for Financial Services Innovation (CFSI) with CFI and Dalberg as partners. The framework offers a globally applicable model for financial health that includes six indicators of financial health and four contributing factors that are particularly relevant to the developing world.

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Nigeria Needs to Include Consumer Protection in Its Ambitious Financial Inclusion Plans

December 19, 2017 in Center for Financial Inclusion, Client Focus, Client Protection, Financial Inclusion, Microfinance, Smart Campaign, Social Performance | Tags: , , , , , , | by | 1 comment

> Posted by Carmen Paraison, Senior Program Associate, Africa, the Smart Campaign

Nigeria has an ambitious target of including 70 percent of its population in the formal financial services fold by 2020, from a baseline of 44 percent with access to an account in 2014. But financial inclusion involves a lot more than account access. The Center for Financial Inclusion defines financial inclusion as a state in which all people who can use them have access to a full suite of quality financial services at affordable prices delivered by a range of providers in a competitive market with convenience, dignity and consumer protections, to financially capable clients. Protection for consumers is an important part of that definition, and I recently had the opportunity to visit Lagos to learn more about consumer protection challenges in the country. In particular, I wanted to see how Smart Certification can help Nigeria reach its financial inclusion goals in a way that provides benefits to customers.

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How Successful Are Banking Agents in Bringing Digital Financial Services to New Customers in India?

December 18, 2017 in Branchless Banking, Center for Financial Inclusion, Client Focus, Financial Inclusion, Microfinance, Technology | Tags: , , , , , , , | by | Leave a comment

New report from CFI Fellows Program on effective agent banking

> Posted by Shreya Chatterjee and Misha Sharma, Senior Research Associate and Project Manager, IFMR LEAD

India’s financial services industry is poised for a digital revolution. From payment banks to India Stack to the recent expansion of mobile financial services, policy makers and financial service providers are energetically pursuing digitization of financial services. But the country still has a tremendous way to go. Roughly half the population has low digital literacy, and adoption of digital financial services (DFS) is skewed towards higher income population segments. For example, only 9 percent of those with lower education levels are online, as compared to 38 percent for those with higher education levels.

As CFI Fellows, we explored how frontline banking agents can advance the adoption of DFS by helping first-time DFS users become comfortable transacting in new ways. We evaluated the factors currently shaping the adoption of DFS by emerging consumers in India and assessed how well agents are playing their crucial role in helping customers successfully transition to digital platforms.

In the blog post we wrote at the outset of our project, we pointed out that there are benefits and drawbacks to deploying human touch in digital financial services, and that an optimal mix of human and technology-enabled customer touchpoints needs to be achieved. Over-reliance on banking agents could cause overdependence on the part of customers, possibly eliminating potential cost savings unlocked by technology. But banking agents may also present great benefits, including in assisting with product adoption, facilitating transactions, resolving problems, building trust, and supporting customers’ transitions to more advanced services.

However, not all agent banking services are created equal, and in India we observe a wide range of models in action. In our research we studied three types of agents, each with a different profile and relationship to their parent organization. We wanted to answer these questions:
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Net Neutrality Ruling Could Block Your Bank

December 15, 2017 in Branchless Banking, Center for Financial Inclusion, Client Focus, Financial Inclusion, Investing in Inclusive Finance, Technology | Tags: , , , , , , , , , , , , , , , , | by | Leave a comment

What the FCC’s net neutrality vote means for financial inclusion, fintech startups

> Posted by Elisabeth Rhyne and Vikas Raj, Managing Director of the Center for Financial Inclusion at Accion and Managing Director of Accion Venture Lab

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In a landmark ruling yesterday, the U.S. Federal Communications Commission (FCC), led by Chairman Ajit Pai, voted to end net neutrality — the requirement for internet service providers to treat all the content they carry equally regarding access, price, and speed/quality of delivery. This decision, overturning Obama-era internet regulations, is a big deal and may shape the way Americans experience the internet in the future.

It could have significant implications for financial inclusion, too.

Under the new ruling from the FCC, internet service providers (ISPs) may give preferential treatment to content from applications they favor — unlimited access, differential pricing, or faster/better download speeds — while slowing or even blocking other applications.

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‘Stealthy’ Saving: Building on Payroll Credit to Automate Savings

December 12, 2017 in Center for Financial Inclusion | by | Leave a comment

> Posted by Lauren Oldja and Gabriela Zapata

Acreimex credit officers receive sales training

The following post was originally published on NextBillion and has been re-published with permission.

Basic savings accounts are essential to helping people build assets, and they’re often the first step in building a relationship with customers.

This is something Acreimex—a savings and credit cooperative in Oaxaca, Mexico, serving over 120,000 members (as the cooperative refers to its customers) across eight states through its network of 45 branches—understands very well. Although they are a savings-based institution, some of their customers find it difficult to save. The cooperative has worked with BFA since 2016 to improve the profitability, relevance and accessibility of its product portfolio – and part of these efforts have focused on finding a way to introduce savings to its existing payroll loan customers.

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India’s Demonetization: One Year Later, What Was the Impact on Financial Inclusion?

December 11, 2017 in Branchless Banking, Center for Financial Inclusion, Client Focus, Financial Inclusion, Policy, Technology | Tags: , , , , , , , , | by | 2 comments

New data from InterMedia breaks down the impact of demonetization on financial inclusion across gender, locality, income levels, account types, and more. 

> Posted by Nadia van de Walle, Senior Research Manager, Financial Inclusion Insights, InterMedia

(click to enlarge)

Demonetization had a strongly positive effect on financial inclusion, leading to increases in account registration and active and advanced use of registered accounts, according to our data. Perhaps surprisingly, given some of the discussion in the financial inclusion community over the last year predicting demonetization increasing electronic payments, these account registration increases were mostly among bank accounts rather than mobile wallets.

InterMedia’s fourth annual Financial Inclusion Insights (FII) survey was underway on November 9, 2016 when approximately 85 percent of the banknotes in circulation in India were invalidated by the policy known as demonetization. The invalid notes had to be deposited in a bank or exchanged for new ones at banks and other financial institutions. The timing of demonetization in relation to InterMedia’s activities presented an opportunity for us to measure the impact on financial inclusion using a panel survey of 1,600 randomly selected individuals in the states of Gujarat, Madhya Pradesh, and Rajasthan. These respondents were first interviewed for the FII survey roughly one month prior to Nov. 9, and then re-interviewed seven months later.

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SADC Needs a Regionally-Accepted Digital Financial ID—and It Is Feasible to Contemplate

December 8, 2017 in Branchless Banking, Center for Financial Inclusion, Client Focus, Financial Inclusion, Policy, Technology | Tags: , , , , , , , , , , , , | by | Leave a comment

> Posted by Aurora Bila and Kim Dancey, Director of Payment Systems at the Bank of Mozambique and Head of Payments at First National Bank

Of the 338 million citizens of the Southern African Development Community (SADC) member states, 138 million lack adequate official means of identification. This limits their access to and usage of many government services, as well as the range of services offered by financial service providers. This affects their wellbeing in a host of ways, which is why the U.N. Sustainable Development Goals include the goal of a robust “Identity for All” by 2030.

Some SADC countries lack a standardized form of identification, and citizens require various pieces of documentation to access financial services in the formal sector. And in some instances there are no legislative frameworks for issuing any form of formal identification document.

Even among those SADC adults who do have national IDs, documents are often not accepted across borders for opening bank accounts or sending remittances home. Banks and remittances agencies in SADC countries face more stringent Know Your Customer (KYC) requirements for cross-border than for domestic remittances. Therefore, if the identity source document is not easily verifiable to the level of assurance required, to manage both internal risk and to comply with Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) requirements in force, the provider will not make the service accessible. Furthermore, global standard-setting bodies are increasing the pressure on local regulators regarding identity. For example, it is no longer sufficient to identify only the remittance-sending customer. Financial services providers are now compelled to also know the identity of the recipient and to hold these identities throughout the payment transaction. Consequently, only institutions willing and able to price and charge for the risk and cost will offer the services.

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The Frivolity of Frivolous Expenses

December 6, 2017 in Center for Financial Inclusion | Tags: , , , , | by | 1 comment

In the context of cash assistance to displaced persons, what constitutes a “frivolous expense” to donors doesn’t necessarily reflect reality. 

> Posted by Kim Wilson

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Refugees sit by their shelter at a makeshift tent camp on the Greek island of Samos.

Are you following the question of how people receive cash assistance in emergencies or protracted crises? If so, hop aboard the listserv of CALP (Cash Action Learning Partnership). Brisk discussions, great resources, and important insights circulate weekly, often daily.

Lately, we have been discussing “frivolous expenses”—money spent on alcohol, cigarettes. Participants in the listserv are making excellent points. They assert that tracing cash uses in hopes of soothing donor concerns that money is not being spent wisely is folly for two reasons: 1) we already have substantial evidence that an increase in available cash to households does not increase marginal consumption of alcohol or cigarettes and 2) it’s hard to trace actual use since cash assistance typically supplements other sources of household income.

I would like to pose a third reason why a focus on the uses of cash assistance is folly. To do that, I need to take us into the language of financial planners. Rarely do financial planners, at least in the U.S., use the term “frivolous expense.” Instead, they prefer to divide people’s budgets into committed expenses and discretionary expenses. In this system, the same item can potentially be classified differently at different points in time. For example, a financial planner speaking to my students the other day agreed that purchasing a grande latte at the local Starbucks was a discretionary expense in the fall semester, and should be enjoyed only after committed expenses were budgeted for and met (including any set-asides for savings). But the coffee’s classification could change. Let’s look to the spring. In March, inviting a potential employer to an informational interview might include treating them to a beverage. For each networking week, the grande latte (in fact two) would now be budgeted as a committed expense: it represents an investment in a student’s future.

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Let’s Rid the Globe of Ultra-Poverty

December 5, 2017 in Client Focus, Financial Inclusion, Investing in Inclusive Finance, Policy, Resources, Technology | Tags: , , , , , , , , , , | by | Leave a comment

Eradicating ultra-poverty for 394 million people globally will require urgent action across sectors. The recently-released Global State of Ultra-Poverty (GSUP) outlines concrete recommendations for each stakeholder group.

> Posted by Anne H. Hastings, Global Advocate, Uplift

When you hear the word “ultra-poverty”, what does it mean to you? Here’s how one woman described it, after she was able to make her way out of it:

“When you live in ultra-poverty, you are a person who has fallen into a hole with no light. No one recognizes you. You are humiliated. You endure all your pain by yourself. Society has forgotten you. If you don’t find someone to take your hand and help you out of that hole, that is where you will stay.”

Ultra-poverty is not the same thing as “extreme poverty” as defined by the World Bank, which includes anyone living under $1.90/day purchasing power parity. Rather, according to most of us who work on ultra-poverty, it looks like this: in ultra-poor families, everyone goes without food for days at a time, children aren’t in school and have no access to health care, and the family has no productive assets to make a living – no land, no livestock, no job, no small commerce.

Around the globe, 193 nations have committed to Sustainable Development Goal #1: ending poverty in all its forms by the year 2030. That means ending ultra-poverty too. Can we do it? There is a lot of evidence to suggest that we know how to do it. The evidence can be found in the Science magazine issue published 15 May 2015 or in the Policy in Focus issue of July 2017. The programs described in these documents, usually referred to as graduation programs for the ultra-poor, have been proven to work, especially when integrated into a country’s social protection strategy. Graduation programs are characterized by their: (1) time-bound nature, usually 24-36 months of direct assistance to a family; (2) carefully sequenced, holistic programming combining social assistance, livelihoods training and financial services; (3) the “big push” they provide the family, often in the form of a transfer of productive assets; and (4) the mentoring and staff accompaniment participants receive.

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