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> Posted by Center Staff
Good morning! It’s the start of another week, which means there’s a new issue of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. This week’s issue includes stories on the Islamic Development Bank supporting the Sustainable Development Goals (SDGs), the Bill & Melinda Gates Foundation’s research on bitcoin and blockchain technology, and the Reserve Bank of India (RBI) creating a new financial inclusion committee. Here are a few more details:
- Last week the Islamic Development Bank’s Chief Economist asserted the importance of Islamic finance in achieving the SDGs and the Bank pledged over $150 billion over the next 15 years towards achieving them.
- An interview with CoinDesk highlights the Gates Foundation’s recent research on how blockchain technology might be helpful as a means of settlement between payment systems and in international remittances.
- The RBI created a committee to devise a five-year measurable action plan for financial inclusion covering areas such as payments, deposits, credit, social security transfers, pensions, insurance, and consumer protection.
For more information on these and other stories, read the sixth 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 .
Financial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.
PERC, a “think and do tank” advancing financial inclusion through information services, has been effective in addressing credit invisibility by advocating the use of alternative data in credit reporting, including in Australia, Brazil, China, Kenya, and the U.S. We invited Michael Turner, PERC’s CEO, to submit an opinion piece, and are publishing the results in a three-part series. Part one and two can be found here and here; the following is part three.
Misperceptions abound about how to impact credit information sharing in emerging markets. Let me weigh in on this debate and set the record straight.
- Technology is not the problem. There are abundant and affordable platforms to enable robust information sharing in even the most extreme environments.
- Scoring models are not the problem. FICO, SAS, Dunn and Bradstreet, and a host of multi-national credit bureaus and lenders have plenty of smart mathematicians, computer scientists, statisticians, and others with lots of letters behind their surnames to ensure innovation in this space. The breakthrough that will move markets won’t be found here.
- End-user capacity and incentives are not the problem. Many pro-poor lenders are already using automated underwriting solutions and can quickly assimilate new data or new scoring models.
So if investing in the technology, risk modeling, and end-user trenches aren’t going to galvanize things, let alone revolutionize them, in which trenches will the revolution begin? The answer lies further upstream, in the consumer and commercial credit ecosystems.
The answer is data access.
This is a deceptively simple response and raises a number of related questions. Which data is both predictive of credit worthiness and covers broad segments of the unbanked and underserved populations? Who owns it? Can traditional credit bureaus access this data? Why haven’t they so far? Are other parties needed to provide lenders access to this data? How can data subjects (people) access and “port” their data from mobile payment systems the same way they can carry their credit report information?
> Posted by Center Staff
Good afternoon! Freshly published is this week’s Financial Inclusion 2020 News Feed, sharing the big news in banking the unbanked. Among its stories are a new partnership between MetLife Foundation and Opportunity International to expand financing and skills training in rural China, the launch of a World Food Programme initiative that integrates climate risk reduction with financial services, and the release of the first annual Consumer Banking PACE Index, which gauges bank performance to consumer expectations. Here are a few more details:
- MetLife Foundation and Opportunity International have embarked on a three-year partnership to support thousands of small businesses in rural China with financial services and business development training via banks, mobile vans, and rural service centers.
- The World Food Programme launched the R4 Rural Resilience Initiative, which helps smallholder famers in Zambia navigate environmental demands using index-based agricultural insurance, improved natural resource management, credit, savings, and productive safety nets.
- The new Consumer Banking PACE Index, drawing on input from over 9,000 consumers, examines bank performance in a handful of countries around the world to conclude that, among other findings, fair and transparent pricing falls below consumer expectations, and trust in banks remains an issue.
For more information on these and other stories, read the fifth 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 us at .
> Posted by Center Staff
We may be in the heart of the summer season here in the United States, but the world of financial inclusion is hardly slowing down. Released today, the fourth issue of the Financial Inclusion 2020 News Feed shares the big news in banking the unbanked. Among its stories are recent findings on the financial performance of impact investing, an appeal from the United Nations to commit to the cooperative business model, and the launch of a national financial inclusion strategy in the Philippines. Here are a few details:
- Comprehensive analysis conducted by Cambridge Associates and the GIIN found that private impact investment funds recorded financial returns in-line with a comparative group of non-impact investing funds.
- In celebration of the International Day of Cooperatives, on Saturday United Nations Secretary General Ban Ki-moon asserted the importance of cooperatives for financial inclusion and sustainable development.
- The Bangko Sentral ng Pilipinas (BSP) signed a memorandum of understanding on a national financial inclusion strategy last week, which provides a framework for the government and private sector to take action.
For more information on these and other stories, read the fourth 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 us at .
PERC, a “think and do tank” advancing financial inclusion through information services, has been effective in addressing credit invisibility by advocating the use of alternative data in credit reporting, including in Australia, Brazil, China, Kenya, and the U.S. We invited Michael Turner, PERC’s CEO, to submit an opinion piece, and are publishing the results in a three-part series. Part one can be found here; the following is part two.
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While the jury may be out on M-Shwari (see here), the verdict is in on M-Pesa. M-Pesa offers real value to an estimated 14 million disenfranchised and financially excluded Kenyans. Indeed, for many lower-income Kenyans, M-Pesa is not only a payments service, but also a form of insurance. Think of it like an online strategy game. You donate units to members of your group in the belief that they will reciprocate when you request. This same norm operates in Kenya with M-Pesa users, who send spare shillings to friends and family every opportunity they get with the operating belief that if there is ever a need (say their tire pops and they need to pay for a repair) they can send out a request for funds to members of their group and have confidence that their needs will be met. This is a great contribution for a product that former Safaricom CEO Michael Joseph called “a gadget” to make phone service stickier.
Another unintended contribution stemming from M-Pesa is the gradual building of a non-financial payment transactions database at Safaricom. Practice and research from around the world proves that this data is highly predictive of consumer and small business credit risk. The collection and use of this data could be an extremely useful tool to drive meaningful financial inclusion in Kenya. Safaricom Financial Services fully realizes this, and like so many other mobile network operators around the world, moved to limit access to this data to themselves and their bank partners.
> Posted by Center Staff
Hot off the press! We published the third issue of the Financial Inclusion 2020 News Feed, our new weekly online magazine on the big news in financial inclusion. What’s been happening in the world of banking the unbanked?
Among its stories, the new issue of the FI2020 News Feed spotlights the following:
- The State Bank of Pakistan ordered all commercial banks in the country to create a new account category, Asaan Account, which targets the base of the pyramid by simplifying account opening requirements
- Mybank, a new online bank in China, was launched by Ant Financial, utilizing transaction records on Alibaba to extend credit to individuals and small businesses
- In Tanzania, agent and mobile phone-based banking continues to grow steadily in both the volume and value of transactions
For more details on these and other stories, read the third issue here, and make sure to subscribe 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 us at .
> Posted by Center Staff
Larry Reed, director of the Microcredit Summit Campaign, recently sat down with Susy Cheston, senior advisor to FI2020, and Anton Simanowitz, co-author of the new book The Business of Doing Good, to discuss how organizations can do good work and turn a profit, particularly in the microfinance sector.
In exploring this question, Simanowitz draws on key insights from the new book, in which he and co-author Katherine Knotts studied the success of AMK, a social enterprise which has touched the lives of millions of people living in poverty in rural Cambodia. This study revealed six powerful strategies to improve business to do good:
- Don’t just offer products; respond to client needs
- Ask good questions and have good conversations
- Do what it says on the tin
- Motivate staff to do difficult work in an excellent way
- Own the dirt road
- Adapt to the changing landscape
Find out more about the thinking behind these insights, here.
In the latter half of the book, the authors explore the disconnect between theory and practice and the resulting implications for client value. AMK’s success is largely attributed to its recognition of the distinction between client wants and client needs, which are rooted in the meaningful conversations the organization has with its clients. The authors observe, through their exploration of AMK, that vision is ensured only when it follows intent, instead of being constrained by conventional wisdom.
> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI
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My proudest moments as a parent are when my 2-year-old son finds change lying around the house and runs excitedly to put it in his piggybank. We never consciously did anything to encourage this behavior. I like to think it is due to some small part of my DNA shining through.
The recent CFI and HelpAge report, Aging and Financial Inclusion: An Opportunity, highlights that most people expect to use accumulated savings and assets to fund their retirement, but in reality end up relying primarily on support from family, friends, and the government.
I’ve blogged in the past about how much trouble people have with saving. And it seems financial intuitions for their part use every imaginable mechanism to make it easy (pension contributions at 7/11, behavioral nudges for opting employees into retirement plans), fun (prize-linked savings, lotteries, and games), or obligatory (compulsory savings as a loan requirement) for their clients to save.
I have always believed that the ability to save is a key piece of financial security, and that building the financial capability to save at a young age has a profound impact on financial security throughout a person’s life, even into the retirement years. Recent research undertaken by CFED to “deepen our understanding of youth financial capability and explore the behaviors, types of knowledge and personality characteristics that help children and youth achieve financial well-being in adulthood” supports that belief. The research included an extensive literature review of consumer science, developmental psychology, and related fields to explore the factors that comprise youth financial capability, as well as how and when these abilities are developed.
> Posted by Center Staff
What’s happening this week in the world of financial inclusion? Check out the second issue of our new weekly online magazine, the Financial Inclusion 2020 News Feed.
In case you missed the inaugural issue, each Monday the FI2020 News Feed will bring you the big news in financial inclusion. We’ll pull from all over to spotlight great new stories, initiatives, videos, podcasts, and more.
Here are some of the pieces featured in this week’s issue:
- Business Today’s recent article on account inactivity in India’s Jan Dhan Yojana scheme
- The Microcredit Summit Campaign’s post on the Government of Ecuador committing to disability inclusion
- The Wall Street Journal‘s announcement of finalists in the Asia-Pacific Financial Inclusion Challenge
- Agencia de Noticias Andina’s article on an Indian financial inclusion delegation’s recent trip to Peru
To read the second issue, click here, and make sure to subscribe 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 us at .
> Posted by Susy Cheston, Senior Advisor, CFI
What financial inclusion stakeholders believe is most important in advancing client protection
Regulators take the lead in advancing client protection in financial services, we’ve heard. Providers “merely comply.”
If you are of the view that providers can, and should, take a leading role in client protection, then the results of a recent survey conducted by the Aspen Institute are discouraging. The survey, carried out on behalf of the Smart Campaign as part of its strategic planning, took a look at the three-legged stool of client protection—providers, regulators, and consumers—and asked which element was the most important. Of the financial inclusion stakeholders who were interviewed, only 24 percent said that provider-led initiatives were the most important element in client protection. By comparison, 39 percent thought regulation and governance were the most important, and 37 percent put their faith in consumer awareness and activism.
I disagree! We believe action from the financial services providers themselves is a vital missing link. But what is holding them back? In a consultative process carried out by the Financial Inclusion 2020 project over the past year, here are the top six reasons we heard for providers not taking the lead in consumer protection. Read the rest of this entry »
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