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> Posted by Elisabeth Rhyne, Managing Director, Center for Financial Inclusion at Accion

I recently browsed the website of CashNetUSA, a company that offers payday loans and related products in 38 states across the United States. The website was easy to read and presented the application process and the (very high) charges simply and clearly. But I wanted to know more. Is this company legitimate? Does it live up to its promises? Will I experience any problems along the way? More broadly, how can a consumer tell whether an online payday lender is trustworthy?

I had no peer or family member to ask about this, so I turned to online credit provider reviews and began a Google-based armchair investigation.

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Insights from new CFI Fellows research on integrating human touch in Kenya’s digital financial services landscape.

> Posted by Alexis Beggs Olsen, CFI Fellow

Mbugua, owner of a restaurant, a butchery, and a dry goods store in Nairobi, Kenya has actively used financial services to grow his businesses from the meager beginnings of a small stall selling boiled cow heads. He is currently juggling four digital loans and two microfinance loans. Whenever possible, Mbugua prefers to interact with his financers digitally to save time. Yet, like most of the Kenyans my research associate and I spoke with as part of our CFI Fellows research project, Mbugua considers in-person interaction to be critical at certain stages. “Face-to-face is tiresome. There’s a time factor,” he said. “But it’s 100 percent perfect. Your questions will be exhausted. And you can’t negotiate with the phone.”

Our research seeks to understand when and why customers prefer human over digital interfaces across their financial services customer journeys – and vice versa. We focused on value-added financial services, including loans, savings, and insurance, and we chose Kenya because of the country’s deep penetration and market maturity of mobile phone-based financial services. We conducted in-depth qualitative interviews with 104 respondents.

We discovered that a “centaur” solution—one that unites the strengths of both tech and human touch—offers the most promise for both customers and financial service providers (FSPs) targeting the base of the pyramid.

Digital interfaces outperform human interaction in a number of areas: digital services are often more convenient (once you learn how to use them), more predictable and consistent (with the exception of loan approvals and rejections, which are often opaque), and less stressful for customers during collections. However, most Kenyans – even those who already use low-touch digital products – prefer to interact with a person face-to-face at key stages in their customer journey. We found that while Kenyans are very comfortable conducting transactions digitally, other key aspects of the financial service customer journey are not adequately handled by digital means alone.

Like most of our respondents, Mbugua wants to interact directly with a person to accomplish three critical tasks:

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> Posted by Center Staff

Are you working to expand quality financial services access? The 2018 Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance is accepting applications for what will be another exceptional week of learning and exchange among world leaders in financial inclusion. The program will take place March 25-30, 2018 at the HBS campus in Boston, Massachusetts. We hope you’ll join us!

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> Posted by Ana Ruth Medina Arias, Lead Specialist for Latin America and the Caribbean, the Smart Campaign

“The risk is to regulate by anecdotes and not by evidence.” – Mariela Zaldivar, Deputy Superintendent, the Superintendency of Banking, Insurance and Private Pension Fund of Peru (SBS Peru)

In recent years, Peru has called for our attention not only for being at the top of the Global Microscope’s international country rankings for the most conducive environment for financial inclusion, but also for its historic collaborative effort to establish a fully-interoperable nationwide digital payments platform (Bim) to support the supply of financial services. But buckle up, there is more.

The country’s regulator, the Superintendency of Banking, Insurance and Private Pension Fund of Peru (SBS Peru), has taken client protection very seriously, and despite already having very robust systems (on grievance redress and dispute resolution, for example), it continues to lead with groundbreaking policy changes based on evidence and research to ensure that regulation is aligned with the needs and capabilities of the end client. The Smart Campaign is proud to have collaborated with the SBS on these policy changes.

Client Voices was a research project of the Smart Campaign that directly asked clients in four countries (Peru, Benin, Georgia and Pakistan) about their experiences with financial providers and what they thought constituted good and bad treatment. In Peru, the project was made possible through strong support from the SBS, which was involved from the very beginning, providing substantive inputs to all project phases. However, their engagement did not stop there. The SBS is also committed to implementing the client protection recommendations arising from the project.

Here is how the SBS turned the major findings of the research into an opportunity for policy improvement in the area of financial consumer protection.

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BRAC Uganda shares strategy and sustainability insights from its transition from an MFI to a bank.

By Emily Coppel and Isabel Whisson, BRAC

Woman holds carton of eggs

©BRAC/Alison Wright

BRAC Uganda Microfinance is pursuing a shift in its regulatory status that will allow it to broaden the landscape of financial services it provides to Uganda’s rural poor.

BRAC, the largest microfinance provider in Uganda, currently serves more than 200,000 predominantly rural, female clients, through more than 150 branches across nearly every district in the country. In the nine years since the microfinance company was established, BRAC has provided microloans to poor women (a basic loan ranges from US $55 – $1,400), and small enterprise loans for male and female business owners (from US $1,400 – $10,000). Its current portfolio is around US $45 million. This year, BRAC submitted its application to transform into a bank. In Uganda, it was a Tier 4 institution, a category for unregulated credit-only NGOs, and money lenders. After the transformation, BRAC will become a regulated Credit Institution, under Tier 2, allowing it to expand its suite of services for clients – most notably, to savings accounts.

The process of transitioning to a regulated institution in Uganda is a lengthy one, and requires the organization to strategically analyze its goals and pro-poor model. Much can be learned from this process that can inform others considering a similar transformation to expand services for clients. As with any significant change, the organization is already facing new challenges that must be carefully and creatively navigated so as not to alienate its customer base.
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For Financial Inclusion Week 2017, WSBI highlights the ways that new partnerships and new products are helping its members make progress toward financial inclusion.


Posted by Mina Zhang, Senior Advisor, WSBI

The World Savings and Retail Banking Institute (WSBI) and its members are committed to Universal Financial Access (UFA), doing their part to help realize the “account for everyone” goal. Our data from the end of 2016 shows that we’re making progress, with 136 million new clients and 236 million new transaction accounts, since the UFA benchmarks were set at the end of 2014.

For Financial Inclusion Week 2017, we are highlighting the ways that new partnerships and new products are helping us achieve this goal.
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AXA shares insights on and solutions to women’s unmet insurance needs in emerging economies.

By Garance Wattez-Richard, Head of Emerging Customers, AXA Group

Women-focused insurance solutions are a central part of AXA’s Emerging Customers work. In our SHEforSHIELD report, launched with the International Finance Corporation in 2015, we found that the market is growing quickly, as women become more risk-aware and willing to invest in protection. We conducted focus groups with women in Indonesia, Nigeria, and the United Arab Emirates (UAE) and learned that women have very specific, yet unmet needs when it comes to insurance. I am happy to share the stories of three of the women we met on our customer insights journey, diving into their fears and desires and the role that inclusive, women-focused insurance solutions could play.

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> Posted by Iftin Fatah, Investment Officer, Overseas Private Investment Corporation

Embed from Getty Images

The 2017 Annual Impact Investor Survey from the GIIN showed that respondents, which make up a diverse and active group of impact investors, committed more than $21 billion to impact investments in 2016 and planned to commit 17 percent more capital than that in 2017. Geographically, however, the Middle East and North Africa (MENA) only makes up 2 percent of assets under management.

Islamic finance is largely concentrated in three markets – Iran, Malaysia, and Saudi Arabia – but it spans nearly every part of the world, including MENA, Asia, and sub-Saharan Africa. For its part, Islamic finance has grown over the past two decades, with total assets reportedly totaling roughly $2 trillion. Despite this growth, Islamic finance still makes up a small share of the global financial market. These two areas of Islamic finance and impact investing are ripe for potential collaboration. Out of the 1.6 billion Muslims in the world, 650 million are living on less than 2 dollars a day.

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> Posted by Rupert Scofield, Chair of the Partnership for Responsible Financial Inclusion (PRFI)

A meeting of the Partnership for Responsible Financial Inclusion in September 2017 (pictured from left to right: Shameran Abed, Jesse Fripp, Steve Hollingworth, Maria Cavalcanti, Michael Schlein, Sharlene Brown, Rupert Scofield, and Robert Dunn. Not pictured: Christian Pennotti, Mary Ellen Iskenderian, and Michael Mithika)

In 2011, I joined the inaugural meeting of CEOs that led to the formation of the Microfinance CEO Working Group. Nearly seven years later, my colleagues and I have continued to enjoy the trust and collaboration made possible by sitting together and sharing our strategies, challenges, and opportunities. We have encouraged the sharing of information among key senior staff in seven departments such as risk management, social performance, and digital financial services, across our networks. This collective of senior managers, which we refer to as peer groups, find the conversations at their levels insightful and that they allow for greater efficiency at solving common problems. In some cases, members benefit from non-proprietary work and processes developed by another. In other cases, we are creating the solutions together. Today, we truly recognize that we are no longer a working group, but a strong partnership committed to advancing financial inclusion in a responsible manner. It is my pleasure to share our new name: Partnership for Responsible Financial Inclusion (PRFI).

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> Posted by Elisabeth Rhyne, Managing Director, Center for Financial Inclusion at Accion

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

Two books published this year, The Financial Diaries, by Jonathan Morduch and Rachel Schneider, and The Unbanking of America, by Lisa Servon, take on the state of financial inclusion in the United States. Given the professional standing of their authors, we can expect that these books will contribute substantially to the body of knowledge on financial inclusion. What is perhaps more surprising is just how broadly important their messages are. Both books examine what is arguably the top economic challenge in America today – the crumbling of the economic foundation for many working-class and middle-class families – and they do so through the lens of financial services, a somewhat unusual but very revealing perspective.

The Financial Diaries: How American Families Cope in a World of Uncertainty focuses on the variability of income and expenses, which makes it hard for an increasing number of Americans to maintain a steady standard of living. The weekly and monthly extent of this volatility eluded most national statistics until the Diaries project, with its unique methodology, which was developed initially to study financial behavior in low-income countries. During a Diaries project, researchers record every financial transaction made by participating families each week for a year. This detailing yields intimate portraits of families’ financial lives at a level of magnification not previously available.

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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.