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> Posted by Bruce J. MacDonald, Vice President, Communications & Operations, CFI
In New York yesterday to celebrate the launch of the FI2020 Progress Report (and Accion’s and Citi’s 50-year partnership, and the awarding of the first Accion Edward W. Claugus Award – Accion never does anything by halves…), we had the privilege of an audience with Dr. Daniel Schydlowsky.
Dr. Schydlowsky, recipient of said award, hardly needs introducing. As Superintendent of Banking, Insurance & Private Pension Fund Administrators for Peru, and as chair of the Alliance for Financial Inclusion, he symbolizes the gold standard of financial inclusion regulation. Scratch that – he is the gold standard. Peru has ranked at the top of the Economist Intelligence Unit’s Global Microscope report for seven consecutive years. And to paraphrase the old E.F. Hutton TV ad, when Daniel Schydlowsky speaks, people listen. “We can perfectly well keep banking systems safe, and still do something for inclusion,” he said, explaining his philosophy of regulation (and thereby, perhaps, Peru’s standing). “Indeed, the more we include, the safer we’re making the banking system.”
Like our new Progress Report, Schydlowsky outlined his view of what lies ahead and what he’s excited about. First up: The promise of new loan-origination techniques. Making microloans is an artisanal craft, and thus expensive. But he is optimistic about the promise of new developments: big data, customer-relationship tools, and psychometric training (again, as is our Progress Report). Come to Peru, he urged innovators, where you will find a willing partner and audience.
> Posted by Elisabeth Rhyne, Managing Director, CFI
Today the Center for Financial Inclusion (CFI) is proud to launch the Financial Inclusion 2020 Progress Report, an interactive website that portrays the recent progress and unmet challenges on the path to global financial inclusion.
When we began the FI2020 project in 2011, we hoped to create a sense of both urgency and possibility. We believed that enabling everyone in the world to gain access to quality financial services was a goal of major development significance. We also saw that with many active players and the promise that digitization would enable many more people to be reached at lower cost, it was no longer simply wishful thinking to call for full inclusion within a reasonable time frame. Global financial inclusion had entered the realm of the possible.
Today, in 2015, we are both astonished by the progress and daunted by the gaps that remain. Global Findex data shows 700 million new accounts in the three years from 2011 to 2014, reducing the number of unbanked worldwide from 2.5 to 2 billion. National governments have created ambitious financial inclusion strategies, the FinTech industry is exploding with $12 billion in global investments in 2014 alone, and the World Bank has a plan for reaching universal financial access to transaction accounts by 2020.
Our quantitative review, By the Numbers, revealed that if the current trajectory of expansion in accounts continues, many countries will achieve full account access by 2020. The rails are being laid at a rapid rate, and there is great momentum toward universal access. But access to an account is not the same thing as financial inclusion, and progress toward meaningful financial inclusion, in which people actively use a full range of services, is lagging. The passengers – customers – are often still waiting at the station for services that take them where they want to go.
> Posted by Susy Cheston, Senior Advisor, CFI
In three days the Center for Financial Inclusion will unveil the FI2020 Progress Report. In it, we define progress made toward financial inclusion and make predictions about the most critical issues facing the industry.
This web-based report has been a year in the making, the result of FI2020’s monitoring of industry trends, interviews with experts, and an analysis of financial inclusion data from both the supply and demand side. We organized the report around the five areas identified in the 2013 Roadmap to Financial Inclusion: Addressing Customer Needs, Client Protection, Credit Reporting & Data, Financial Capability, and Technology.
Perhaps the most fun—and most debatable—aspect of the report is the rating we will reveal for each area, marking where we are on the road to financial inclusion along these five dimensions. The financial inclusion community around the world will have the opportunity to weigh in with their vote – and we expect there will be some disagreement with our opinions. We hope you will not only mark your own rating, but also leave comments with your views. Most of all, we hope this thought exercise will help focus all of our attention on how to close the gaps to get to a 10 in each area.
To offer a sneak preview of the content, I thought I would reveal how we rated progress made on client protection:
> Posted by Haset Solomon, Communications and Operations Associate, the Smart Campaign
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I rarely think about the cost of convenience. I often use my phone’s navigational system, seeking turn-by-turn directions, but I usually don’t consider the trail of data I’m leaving behind – and even if I do, I decide the benefit outweighs the cost. We live in an age where leaving myriad digital footprints is almost inescapable. Increasingly, we hear of big data analytic companies that “liberate data” or “democratize data” for the purpose of improving products and services or making them more widely available. There are true benefits to advancing our society’s data capabilities and unearthing new patterns and insights. (The phone that tracks my travel can give me advice on promising restaurants nearby.) But the costs can be high. Here in the U.S., the anonymity of “meta” data sets is continually being challenged. Fortunately, in this country consumer advocacy groups and institutions such as the Electronic Privacy Information Center (EPIC), Bureau of Consumer Protection at FTC, and Consumer Financial Protection Bureau (CFPB) are working to address and remedy breaches of privacy and data rights.
In most of the world, similar institutions are nonexistent or under-developed. The fast uptake of technology has opened up large population segments to new possibilities, while leaving them vulnerable. Digital financial services users in developing countries are often choice-less and voiceless on how their data is used.
> Posted by Center Staff
The latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are: the prevalence of countries inadequately tracking the well-being of their older citizens; the launch of Monese, a mobile-based banking service targeting immigrants and expats in the U.K.; and CARE distilling lessons learned from its work developing sustainable agricultural value chains in a new book. Here are a few more details:
- HelpAge International recently released the 2015 Global AgeWatch index, which ranks countries on quality of life for older people based on access to pensions, healthcare, employment, and further education. The index had to exclude 98 countries that don’t sufficiently collect such data on this growing population segment.
- Monese, licensed as an electronic money institution, lessens “residency restrictions” and offers accounts to those new to the U.K., providing services like cash deposits, withdrawal, and low-cost international money transfers.
- In their new book on reducing poverty via value chain development, among others, CARE shares the following takeaways: work along the entire value chain – not just with farmers; design for scale from the start; and skillfully empowering women is smart economics and the right thing to do.
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 .
> Posted by Sonja E. Kelly, CFI
A couple months ago we announced a new program coming out of the Center for Financial Inclusion and Accion designed to produce actionable research for the microfinance and financial inclusion industry. We’ve been busy since, overwhelmed by the positive response we had to our announcement, and torn between many high-quality research proposals.
In recent days we selected four fellows to carry out research that we think will have an influence on the future of financial inclusion. Without further adieu, I would like to introduce you to…
Read the rest of this entry »
> Posted by Kai Hsu, Director of Administration & Finance, Positive Planet China
Over the past five years, peer-to-peer lending (P2P) has grown rapidly. Now more commonly referred to as “marketplace lending” because of the large range of institutions, intermediaries, and non-“peer” parties involved, the industry is poised to continue its year-on-year triple-digit growth. The breakneck speed of P2P’s growth seems natural given the many advantages it offers. As an industry, focus has gradually moved from a community of individuals lending directly to other individuals (often within affinity groups), and has evolved into a powerful engine of technical efficiency. Today, P2P is viewed in many different ways: a potential agent of financial inclusion; an innovation in big data analytics and credit risk evaluation; an efficient mechanism for loan matching without the often burdensome capital and regulatory requirements of banks; an innovative operational model leveraging the cost savings of online platforms; a new asset class for retail and institutional investors; and the list goes on.
Change has been slow to come, with many banks questioning the P2P model’s long-term relevance and P2P lenders failing to capture the public eye for many years, but big banks have recently begun to show their appetite for the more robust of the online lenders. Banks have made equity stakes in P2P businesses in the past, such as Barclays’ 49 percent investment in South Africa’s RainFin. However, 2015 seems to be the breakout year for P2P into mainstream finance. In June, Goldman Sachs announced plans to enter the consumer lending space through an online platform, akin to what Lending Club and Prosper offer in the U.S. Several days later, Morgan Stanley featured an optimistic report on P2P lending on its home page. In August, Standard Chartered led a $207 million C-round of funding for Chinese P2P company Dianrong.
> Posted by Grace P. Sengupta, Assistant Manager, BRAC Social Innovation Lab, and Maria A. May, Senior Program Manager, BRAC Social Innovation Lab and BRAC Microfinance Research and Development Unit
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Bangladesh is a fast-growing mobile money market. With bKash, the second-largest mobile money provider in the world, industry growth in the country has reached impressive heights. Between January 2013 and February of this year, the number of mobile money clients in Bangladesh increased five-fold to 25 million users, with the number of monthly transactions increasing from 10 million to 77 million.
Yet many have found that much of the mobile money usage in Bangladesh is still over the counter – that is, many people who use mobile money rely on an agent to complete their transactions for them. There is strong speculation that the current mobile money interfaces are just too complicated for the average rural, low literacy user.
Last year, BRAC, our Bangladesh-based organization, decided to try going (nearly) cashless in a very rural, very remote branch run by our Integrated Development Programme (IDP). Many of the institution’s financial transactions, such as giving staff mobile allowances, paying extension workers, and collecting loan installments (for clients who opted-in), were digitized.
> Posted by Carol Caruso, Senior Vice President, Channels & Technology, Accion
Providing micro financial services is often a costly endeavor. As practiced in most places today, it involves many manual processes which limit the potential for scaling up and expose vulnerability to poor service, errors, and fraud. Furthermore, as telco operators and fintech companies bring services to customers through new distribution mechanisms, microfinance banks (MFBs) need to explore innovative ways to competitively deliver their services. Hence, it is promising to see a rise in the use of tablets, smartphones, and other devices housing applications that digitize field operations. Digital field applications (DFAs) offer MFBs a way to take advantage of technology to solve some of these challenges. Globally MFBs have deployed DFAs in a wide variety of ways. For example, loan officers equipped with DFAs can process loan applications and answer client inquiries in the field, eliminating paper forms, digitizing data, and saving time and money for organizations and their clients. Bringing financial services out to clients can achieve a much-needed personal touch and can even increase the richness of the client interaction. For example, client education and consumer protection awareness can be more effective when digital messages are delivered by a field staff member. DFAs can also improve credit operations. When assessing loan applications and risks, field officers can operate more efficiently if digitally equipped.
In order for MFBs to successfully leverage these tools, both for their and their clients’ benefit, they must understand their business case, and incorporate best practices for implementation that have been derived from lessons learned by others. There is no shortage of pilots that have been halted due to challenges arising from lack of experience and understanding – despite hardware availability or subsidies.
With this in mind, Accion’s Channels & Technology group have published a case study aiming to provide some clarity on the impact of DFA use by examining the business case, implementation process, and effects for three MFBs: Ujjivan Financial Services in India, Musoni Kenya, and Opportunity Bank Serbia (OBS). Our case study presents a consolidated review of the findings from the three MFBs, with an accompanying Excel-based business case toolkit, available for MFBs to examine the potential impact a DFA might have on their business. Individual cases presenting the findings from each institution are also available – here, here, and here.
> Posted by Center Staff
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This week the United Nations Food and Agriculture Organization (FAO) and MasterCard forged a new partnership to develop inclusive financial systems to support small-scale farmers and lower-income families. The team’s first effort focuses on the Kakuma refugee camp in north-western Kenya, a settlement home to roughly 170,000 refugees who have fled wars and violence in neighboring countries.
The partnership seeks to harness the duo’s respective strengths: FAO in fighting hunger and malnutrition among the most vulnerable and hardest-to-reach, and MasterCard in expanding financial inclusion through digital services. Their initiatives will center on, among other elements, providing credit and cash to households in economically-marginalized communities for the purchase of basic needs and farming inputs.
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