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> Posted by Center Staff

Financial Inclusion Week 2017 is just over two weeks away. From October 30 – November 3, over 50 organizations will host online and in-person events across the globe, exploring the theme New Products, New Partnerships, New Potential.

We are excited to announce the AXA Group is a track partner for the Week. The AXA Group, a world leader in financial protection, supports its individual and corporate customers at every stage of their lives, providing them with the products and services that meet their insurance, personal protection, savings and wealth management needs.

A full calendar of Financial Inclusion Week events will be launched on October 17th, but here is a quick preview: Read the rest of this entry »

> Posted by Rachel Morpeth and Danielle Piskadlo, Analyst and Director of the Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion 

The following post was originally published on the Microfinance Gateway.

As a hub of technology-based innovation, sub-Saharan Africa (SSA) leads the world in mobile money accounts. 12 percent of adults in the region have a mobile money account, compared to 2 percent globally. In a recent global survey measuring progress towards financial access and usage, five of the ten highest scoring economies hailed from SSA. However, financial exclusion remains acute.

The fact that most of Africa’s population lacks access to formal banking services but has one of the highest mobile penetration rates in the world provides the perfect breeding grounds for the use of financial technologies to grow a customer base. However, as disruptive technologies and business models continue to revolutionize the financial inclusion landscape in Africa, they present new challenges to leaders and boards.

These challenges can only be overcome through creative, forward-thinking solutions and active dialogues across governance bodies – boards and regulators. Board members, CEOs, regulators and fintechs will come together to advance these issues in Ethiopia on October 12-13 at the Center for Financial Inclusion at Accion’s (CFI) Governing in a Digital World roundtable, a side event to African Microfinance Week. In the meantime, let’s take a quick look at a few of the challenges to be discussed, and their respective solutions.

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> Posted by Lizzy Bolze, Project Specialist, Investing in Inclusive Finance, CFI

Board members and CEOs of MFIs in the MENA region met at the MENA Governance and Strategic Leadership Seminar hosted by CFI, Calmeadow and the Sanabel Network, in Jordan this March

Over the past few years, the financial inclusion landscape in the Middle East and North Africa (MENA) region has rapidly evolved with new market entrants, changing regulations and increased financial risks. The industry aims to expand access to formal financial services and achieve much needed economic stability, and yet the financial inclusion ecosystem in MENA has experienced slower growth over the last 10 years compared to their peers in other parts of the developing world. According to reports by the World Bank and CGAP, microfinance institutions (MFIs) in MENA are currently reaching approximately 3 million borrowers, with a loan portfolio of over $2 billion — far below the market potential estimated at 56 million borrowers. The stakes are getting higher and MFIs need to reconsider their strategic directions in order to reach the unmet clients at the base of the economic pyramid.

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> Posted by Pablo Antón Díaz, Research Manager, CFI

Leonardo Tibaquira Morales, Product Manager at Accion, leads a training for workshop participants who work with pensions

Traditional financial education programs have, at best, a minimal impact on the financial capability of recipients. At least that’s what the research tells us. Still, the vast majority of time and energy contributed towards improving financial capability around the world is channeled through traditional methods. I had the opportunity to take a closer look – and contribute to – one country that is energetically trying to improve financial capability: Colombia.

The Colombian government recognizes that the average level of financial literacy and financial capability in the country is low, especially among rural and low income communities (as a joint-study by CAF and others across several South American countries demonstrates) and that the programs implemented thus far have been insufficient to address the issue. But, the country is poised for change.

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> Posted by Alexandra Rizzi, Senior Director, the Smart Campaign

The merits and pitfalls of mobile credit continue to be debated hotly in financial inclusion circles. Mobile products are making credit more accessible through branchless banking and alternative underwriting and business models. But experimenting with new ways of lending when your borrowers include those at the base of the pyramid brings steep risks and some models can be downright reckless. Which side of the fence are you on?

The Smart Campaign is seeking to assist the sector to develop a consensus about responsible online credit practice, and the good news is that these questions have recently become top-of-mind for a range of stakeholders. Quona’s Johan Bosini and Positive Planet’s Bezant Chongo gamely volunteered for an Oxford-style debate on whether mobile credit is good for its clients at the 4th Annual Mondato Summit in Johannesburg back in May.

The convenience and ease-of-access of mobile credit products are immensely beneficial to the unbanked, according to Bosini, speaking for the pro side. When juxtaposed to traditional lending products that take, for instance, in Benin, an average of almost 5 weeks to access (involving multiple trips), mobile credit seems supersonic, he emphasized. Using alternative data and analytics, mobile credit unlocks access for individuals without credit history. The reality for the poor, as elucidated by the Financial Diaries and other research, is that incomes fluctuate widely. Now with mobile credit, a person in a pinch can help smooth the inevitable bumps in income with a few clicks on the phone.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Path to Bhutan’s top government offices

Path to Bhutan’s top government offices

In 2014, the Royal Monetary Authority of Bhutan (RMA), the country’s central bank, made a commitment under the Alliance for Financial Inclusion’s Maya Declaration to develop a national financial inclusion strategy. It backed the overall pledge with specific commitments detailing the main pieces of the strategy. Since then, it has diligently put these pieces into place. Over the past three years, the RMA created regulations for microfinance organizations (deposit-taking and non-deposit taking) and agent banking. It set up a mobile payments system, a credit bureau and a collateral registry. This is an impressive set of accomplishments for a country starting from a relatively blank slate in these areas.

But is it enough? I wonder whether these initiatives will spark the provision of financial services that contribute to the inclusive economic growth Bhutan is seeking.

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> Posted by Kettianne Cadet, Lead Analyst, Investing in Inclusive Finance, CFI

“Evolve or die, it is that simple!” remarked Kelvin Twissa, Board Member of FINCA Tanzania. His comments came during a session on Disruption at the recent Africa Board Fellowship (ABF) seminar in Cape Town.  In an era where business is definitely not usual, many incumbent financial institutions and their operating models are being threatened by disruptors, and the ability to continuously innovate and evolve has become an increasingly important ingredient for survival.

Graphic harvesting image from May 2017 Africa Board Fellowship Seminar

Graphic harvesting image from May 2017 Africa Board Fellowship Seminar

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BEFIT photographers

BEFIT photographers. Photo Credit: Elisabeth Rhyne

> Posted by Elisabeth Rhyne, Managing Director, CFI

Imagine a country unlike any you have ever seen – a mountainous land without Starbucks, where pop stars sing praises of the king, and men wear skirts with knee socks. You might be tempted to relegate the country to the category of charming or exotic. But that would be a disservice to Bhutan, which presents itself as kind, intelligent and ready to participate in the modern world.

I attended the Bhutan Economic Forum for Innovative Transformation’s summit on “Equitable Growth through Financial Inclusion” held last month in Thimphu, Bhutan’s capital city, and that provided me with an opportunity to hear in depth about its unique development philosophy – Gross National Happiness (GNH). Before we turn to the connections between GNH and financial health, here is some important context. Read the rest of this entry »

> Posted by Todd A. Watkins, Paul DiLeo, Anna Kanze, and Ira Lieberman

Embed from Getty Images

Fintech is a shiny attractor for impact investors. Emerging financial technologies shimmer with disruptive potential for the delivery of a wide array of financial, educational, health, and social services for the poor. While microfinance still makes up a major share of impact investing portfolios, many investors appear to have moved on to fintech, the next wave of creative destruction. Rather than be toppled by it, microfinance institutions (MFIs) look to ride that wave too, to extend reach, reduce costs and prices, improve and deepen client services, and improve risk management.

Fintech, whether new digital services or proprietary software used to evaluate and underwrite credit, brings glittery potential for MFIs, no question. But in fairy tales unicorns glitter too. Are MFIs chasing something equally illusory? Microfinance has decades of success growing and strengthening a high-touch business model. As growth slows, should MFIs now abandon that approach and use high-tech to go low-touch for cost efficiency? If MFIs stay their course, will they be overtaken by new entrants with new models, like Chinese online peer-to-peer lender Yirendai, which went IPO on the New York Stock Exchange last year? Or instead, will MFIs find innovative high-tech ways to further leverage their deep relationships with clients and understanding of client needs?

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

Ant Financial, the Chinese inclusive finance powerhouse founded by Alibaba Group, and Euronet Worldwide, a U.S. giant in the money transfer game, are in a bidding war over MoneyGram. Financially, this makes sense as the global remittance market is estimated at about US$600B and MoneyGram commands a market share of roughly 13 percent of the world’s largest remittance route, from the U.S. to Mexico.

When two large companies compete to acquire another large company you might hear about it on CNN Money and promptly move on to other thoughts. But this particular news struck me because it touches on three of the (many) insights about the future of financial inclusion that I took away from attending this year’s Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance just last month.

Big players will increasingly drive the financial inclusion sector moving forward while, in the past, only small companies served the financial needs of the low end market. Microfinance has shown the poor to be a commercially viable customer segment, and as competition heats up, many big financial players are looking for ways to better tap into the commercial potential of new clients at the base of the pyramid. These big players have the deep pockets to innovate, experiment, and take the risks required to figure out how best to serve the billions of people still financially excluded. In addition to Alibaba’s Ant Financial, China’s WeChat, the social messaging app which connects over 800 million people, now allows for money transfers.

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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.