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> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI

#Allinforimpact was the hashtag at “Investing for Impact”, a socially responsible investing (SRI) conference in Boston. Maybe not “all” quite yet but certainly “more” investors are going in for impact, as indicated by the growth in attendance at the conference over the years. Investing for Impact was sponsored by socially responsible investors, such as Calvert Investment and Trillium Asset Management, who not only screen potential investee companies in terms of meeting certain environmental, social, and governance (ESG) criteria – but also serve as watchdogs for the sector and advocates for impactful companies.

A Few Top SRI Trends (from the conference)

Allowing Sinners to Repent: Some companies with bad names in the 1970’s such as General Electric and Ford have changed enough internally to now qualify within some investors’ ESG criteria. As one speaker put it, “What kind of church would we be if we didn’t allow sinners to repent?”

Shades of Grey: Tobacco, firearms, and carbon were across the board clear divestments. But the jury was still out on some companies and business models. For instance, Nestlé, which in the 1970’s came under fire for promoting baby formula in developing countries, has since done a lot to accelerate research on diabetes. Peapod, and other grocery delivery services, are making a pitch to be included as impact investments because the energy saved by not storing food, and the associated reduction in food waste, are positive externalities to consider.

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> Posted by Michael Schlein, President and CEO, Accion

Over the last few years, we’ve made great progress in expanding financial access for those left out of the economic mainstream. From 2011-2014, more than 700 million people gained access to new financial accounts. If you’ve just been reading the headlines, you might assume that telcos and fintech start-ups are the primary forces driving that progress.

But the newest study from the Center for Financial Inclusion at Accion and the Institute of International Finance, “The Business of Financial Inclusion: Insights from Banks in Emerging Markets”, found that of the 721 million adults who gained access to new financial accounts between 2011-2014, 90 percent of them did so at more traditional financial institutions.

Telcos and fintech start-ups have been getting the headlines; the banks have been getting the job done. That’s important, exciting news.

This report shows that, for the first time, banks, all around the world, are seeing financial inclusion as a core business function. The Business of Financial Inclusion report shows that banks are creating lean, viable business models to reach customers they have never reached before. Digital payments are the main gateway for commercial banks to reach underbanked customers. They take many forms – transactional accounts, salaries and bill payments, G2P, and P2P. This means cheaper, more secure, and more convenient payments. Instead of spending hours traveling to make a single utility payment, mobile money allows you to push a button.

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> Posted by Hannah Sherman, Project Associate, CFI

Commercial banks that are pursuing financial inclusion strategies are increasingly focused on designing a positive customer experience when targeting underbanked customers in emerging markets. CFI’s most recent publication, The Business of Financial Inclusion: Insights from Banks in Emerging Markets, a joint publication with the Institute of International Finance (IIF), illustrates how this aspect of bank activities has emerged.

Based on in-depth interviews with 24 banks in emerging markets, the report examines the challenges and opportunities banks face in reaching unbanked and underbanked customers. It shines a spotlight on banks as leaders in advancing financial inclusion and discusses specific strategies related to technology, data, partnerships, financial capability, and other key issues.

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> Posted by Deborah Drake, Vice President, Investing in Inclusive Finance, CFI

Declare victory and go home. How often do you get to say that? But that’s exactly what we did a few weeks ago when we celebrated the closing down of the Accion Bridge Fund. Why a celebration? As the first guarantee fund to support the growth of microfinance institutions, it achieved its objective which was to open doors to private bank funding. This was 1984; microfinance was in its early days and was the purview of small NGOs which had little to no experience with banks. What they did have was deep experience with microlending and bold ambitions to scale this lending. Funding above and beyond grants would be needed.

The Bridge Fund – originally called the Latin America Bridge Fund – was a pioneering breakthrough for Accion and for the industry. By providing a partial guarantee in the form of a letter of credit to local financial institutions, Accion’s network partners were able to grow their portfolios and establish relationships with the formal financial sector of their respective countries. As they gained experience and credibility, MFIs were able to leverage the guarantees to achieve funding multiple times the nominal amount of the guarantee.

Such well known leaders in financial inclusion as Bancosol and Mibanco received early support from the Bridge Fund. Accion’s partners in Paraguay and Chile were able to grow and thrive because Bridge Fund guarantees facilitated funding that they could not obtain from multilateral sources due to their political regimes. Over time the Bridge Fund grew to approximately US $6 million and provided guarantees to 40 MFIs in 15 countries around the world.

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> Posted by Christy Stickney, Independent Consultant

“Como tengo ya 57 años, ya no quiero más fuerte.” (Since I’m already 57, I don’t want [to work] any harder.) – A market vendor in Lima, commenting on her vision for her business’ growth.

“Tengo tantos planes, pero ya me siento cansado.”  (I have so many plans, but I already feel tired.)  —  A 42-year-old owner of a bakery in Guayaquil.

“Después de pagar todo y sacar las hijas de la escuela puedo descansar.” (After paying off everything and getting my daughters through school I can rest.)  — A 37-year-old paint store owner in Lima.

Entrepreneurs work hard—and when it comes to envisioning their older age they want to be able to have the luxury of slowing down. The above were common themes expressed by entrepreneurs in the three countries where I conducted my research as part of a CFI fellowship. “I’m tired.”  “I never rest.”  “We don’t take time off.” These are sacrifices associated with running one’s own business, especially among those who have grown their firms from a truly micro size, rising up from poverty and informality into what could be labeled as a “small enterprise” or SME (typically classified as those employing between 5 and 250 workers).

Throughout the developing world, active saving for retirement and participation in formal financial services for older age, like pensions, are minimal. Entrepreneurs of micro-businesses and SMEs face even fewer options than the formally employed, as they tend to operate outside the scope of either private or state-sponsored pension plans. The intention of my research was to learn about the nature of the micro-to-SME entrepreneurs and their businesses, as well as their experiences in growing their enterprises, overcoming hurdles, and utilizing available resources to their benefit. The goal of the research is to inform how to tailor financial services, which are key to enterprise growth, to this client niche. However, in studying these entrepreneurs and their businesses, I also encountered a pervasive alternative being pursued for the financing of one’s later years…

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> Posted by Hannah Sherman, Project Associate, CFI

Last Thursday the Institute of International Finance (IIF) and the Center for Financial Inclusion at Accion (CFI) launched The Business of Financial Inclusion: Insights from Banks in Emerging Markets. Based on in-depth interviews with 24 banks in emerging markets, the report explores the challenges and opportunities banks face in reaching unbanked and underbanked customers. It shines a spotlight on banks as leaders in advancing financial inclusion and discusses specific strategies related to technology, data, partnerships, financial capability, and other key issues, and concludes with recommendations for action.

In the following video, the report’s primary author Susy Cheston interviews Dr. William Derban, Director of Inclusive Banking & Corporate Social Responsibility at Fidelity Bank Ghana and one of the 24 bankers interviewed for the report. In their informal and in-depth conversation, Ms. Cheston and Dr. Derban discuss, among other topics, why Fidelity Bank Ghana has decided to engage in financial inclusion (hint: it’s not just about CSR), their commitment to always putting the customer first, their plan to reach viability, and the benefits they have gained through technology and partnerships.

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> Posted by Julia Arnold, Financial Inclusion Consultant

If I ask you to picture an American who is financially vulnerable, what do you see? Do you see someone living from paycheck to paycheck? Someone who patronizes a payday lender or car title lender? Perhaps a family struggling to decide which bill to pay at the end of each month? Someone with a high school degree working a few part-time, low-wage jobs? And how many people do you think fit into this category in the U.S.? Twenty percent? Thirty percent?

What if I were to tell you that in fact nearly half of Americans report that they could not come up with $400 in an emergency? That’s about 150 million people – a number so large you’re bound to know at least one person in this group. Financial insecurity or vulnerability isn’t just a concept discussed among development professionals looking to support a microfinance institution in Kenya or India; in the U.S., it’s a reality for millions of our neighbors and friends. Those living in perilous economic existences are not just the people we imagined above. The financially vulnerable are hiding in plain sight.

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> Posted by Sonja Kelly, Director, CFI

A recent Facebook promotion by a U.K. coffee shop offered,  “Like us on Facebook and get a free coffee!” This line would totally get me. Wait… all I have to do is click one little button, and I can save $2? Sign me up!

A free cup of coffee, however, was not the only thing that customers received when they liked the coffee shop’s Facebook page. They also got a very “personalized” experience, complete with the barista at the coffee shop rattling off their job, religion, birthdate, address, mother’s maiden name, and more.

Check out the video that documented the customers’ experiences here:

(My favorite part is when the barista says to the customer, “Oh, we know everything about you, Martin.”)

As part of the CFI Fellows Program one of our fellows, AJ Mowl, has been looking at some of the pros and cons of leveraging consumer data for financial inclusion. As she has relayed to me some of the basic facts about big data, I have become more and more aware of just how big big data is—and what the consequences are when I trade access to my data for services.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

When it comes to financial inclusion, as is true in many sectors these days, sexy start-ups and disruptive innovators often occupy the spotlight. But away from the glare, traditional banks are getting on with the work and making an enormous difference. In The Business of Financial Inclusion: Insights from Banks in Emerging Markets, produced in a partnership between the Institute of International Finance (IIF) and CFI, we explore how banks are innovating to include new customers.

Given the headlines, it may be a surprise to hear that even today the overwhelming majority of new accounts are opened at formal financial institutions, not mobile money outlets. Thanks to the Global Findex, we know that over 720 million adults accessed formal financial services for the first time between 2011 and 2014, 90 percent of these new accounts were opened at formal financial institutions. Of the 720 million total new accounts, only 54 million used mobile money as their primary account.

How are banks expanding customer outreach?

Through in-depth interviews, leaders from 24 national, regional, and global banks told us about the opportunities and challenges they face while reaching the unbanked and underbanked. Each bank has its own particular story. In the aggregate, their stories give insight into how banks are evolving to meet people where they are and serve population segments that have been traditionally excluded.

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> Posted by Amelia Kuklewicz, Bobbi Gray, Gabriela Salvador, Freedom from Hunger

It’s a scene many can identify with: rushing to an emergency room at 1 a.m. with a young child whose fever has spiked and cannot be controlled with over-the-counter medicine. We generally feel helpless and our mind leaps into worst-case scenarios.

While we’re considering the financial implications, they are secondary to ensuring our loved one receives immediate medical attention.

For many of us with health insurance, we already know what the visit is likely to cost us but we’re still mentally considering what financial resources we’re going to draw on to cover the emergency room co-pay.

Now imagine you are a mother that lives in Ecuador. Since neither you nor your spouse has formal employment with a consistent salary, you are ineligible for state health insurance. Private health insurance is out of the question with monthly premiums in the hundreds of dollars. To top it off, the first question you receive from the attending nurse in reception isn’t about your child’s condition but rather, “Cash or credit?” Many people are known to die during triage, simply from the requirement of having to show payment up front.

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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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