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> Posted by Larry Reed, Director, the Microcredit Summit Campaign, and Jesse Marsden, Research and Operations Manager, the Microcredit Summit Campaign
In collaboration with the CFI’s process to develop the Financial Inclusion 2020 Progress Report, the Microcredit Summit Campaign recently conducted interviews with microfinance leaders* around the world committed to reaching the most excluded. In this post, we share some of the insights from these conversations about how to ensure that the most invisible clients are financially included, directly drawn from the experiences of those who are doing it.
To set the stage, Luis Fernando Sanabria, General Manager of Fundación Paraguaya, made this central point: “Our clients need to be the protagonists of their own development stories. Our products should be the tools they use to meet their needs and empower their aspirations.” With that reminder of the purpose of financial inclusion, we begin the discussion by asking who are the most excluded.
In each country, people living in extreme poverty (below US$1.25 a day) make up the largest segment of those excluded from the financial system. We spoke with leaders from organizations that make intentional efforts to reach this large excluded market: Fundación Paraguaya; Pro Mujer; Fonkoze; Plan Paraguay; Equitas; Grama Vidiyal; and TMSS. These organizations not only address poverty, but also a host of other dimensions that lead to exclusion, including literacy, race, gender, physical disabilities, and age. Less frequently-discussed reasons for exclusion include sexual orientation, language barriers (especially among indigenous populations), and mental or emotional health issues. In India and Bangladesh, for example, those interviewed noted that the lack of personal identification often drove exclusion, especially among women, persons with disabilities, and the socially excluded, such as transgender individuals.
> 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 Sonja E. Kelly and Misha Dave, CFI
Dhanalakshmi (far right), client at Equitas
If there is one thing we have learned from working on disability and age inclusion in financial services, it is that including these populations in financial services is in some ways easier than practitioners expect it to be but, in other ways, harder than it looks.
In our research on aging and financial inclusion, one of the key insights was that financial service providers of all sizes often apply age caps on credit products. However, many institutions we talked with did not know exactly where these standards came from. Some attributed them to concerns about life expectancy of older clients, some to institutional history (“that’s just the way we do it”), some to the increase of credit portfolio insurance it would incur, and some to a perception of older people as economically dormant.
Many of these concerns can be mitigated by better research and dispelling myths about the creditworthiness of older people. Easy, right? In fact, there are some institutions that apply creative ideas to providing credit to older people. Group guarantees and automatic withdrawal payments on loans from publicly administered pensions through government partnerships are both examples of this.
However, such institutions providing credit to older people seem to be the exception rather than the rule. Worse, convincing institutions to care about this population is not easy. One institution we spoke with in India was baffled by the idea of providing credit to people over the age of 55. “But [the older people] could die and wouldn’t pay the loan,” the product developers insisted. Doing the research and articulating the issue was the easy part — now the hard work begins of advocating on behalf of older people.
Similar attitudinal barriers exist in financial institutions for serving persons with disabilities. Let’s take stock: over one billion people around the world — 1 in 7 of us — have a disability and four-fifths live in developing countries like India. Despite this and the fact that many microfinance institutions (MFIs) claim to be dedicated to “serving the world’s financially excluded people,” less than 1 percent of their clients are persons with disabilities.
> 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 Center Staff
Today, CFI announced the upcoming launch of Financial Inclusion 2020 (FI2020) Week, taking place November 2-6, 2015. During FI2020 Week partners across the globe will organize and participate in conversations exploring the most important steps to achieving financial inclusion.
FI2020 Week will bring together diverse stakeholders to conduct interactive and participatory events, each of which will produce calls to action. The range of participants will include banks, insurance companies, payment companies, telecommunication companies, policymakers, regulators, NGOs, microfinance institutions, investors, financial inclusion support organizations, financial capability experts, and fintech companies, across multiple geographies. FI2020 Week participants will focus on the question, “What are the most important actions needed in our country (or our industry segment) to advance financial inclusion?”
FI2020 Week partners to-date include the following industry leaders: AVAL Consulting, BRAC, CGAP, Fidelity Bank Ghana, Freedom from Hunger, Good Return, Grameen Foundation, GSMA, Innovations for Poverty Action, Institute of International Finance (IIF), JP Morgan Chase, LeapFrog Investments, Making Cents, MetLife Foundation, Micropension Foundation, Microsave’s The Helix Institute, Pakistan Microfinance Network, Sightsavers, the Smart Campaign, and Accion.
> Posted by Haset Solomon, Associate, the Smart Campaign, and Sonja E. Kelly, Fellow, CFI
Click for complete and full-size infographic
Earlier this year we shared a puzzle: microfinance institutions reported that they had age caps on credit products, but we couldn’t figure out what data or rationale was backing them. Leveraging the Smart Campaign’s endorser network of over 2,000 microfinance institutions, we set out to get to the bottom of this puzzle. What we found in our survey surprised us.
Consistent with our research in the Financial Inclusion 2020 (FI2020) publication Aging and Financial Inclusion: An Opportunity, 61 percent of respondents indicated that they have age caps at their microfinance institutions. Indeed, it is common-place for institutions to place age caps on their credit products. The practice is not limited to one country or region – respondents to the survey came from 45 different countries across every region. As we analyzed the survey, we figured there is either a global phenomenon of discrimination against older people or everyone has a very good reason for their actions that we have been missing.
When asked what the age cut-off is at each respondent’s institution, the responses ranged between 55-80 years, and the average age was 65. Our research earlier this year, however, found that this age cut-off is not always consistently applied within each institution. New customers may have an earlier age cut-off, whereas customers with an existing relationship with an institution may be given an additional few years to apply for a new loan.
So, why do institutions impose these age caps on credit products? We received two competing answers:
Read the rest of this entry »
What Happened and Where Are We Today?
> Posted by Evelyn Stark, Assistant Vice President, Financial Inclusion Lead, MetLife Foundation, and Graham A. N. Wright, Group Managing Director, MicroSave
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.
In the previous post “The Ebb and Flow of Customer-Centricity – Beyond the Basics” we discussed the details of building a customer-centric, or market-led financial service provider – and the intricate jigsaw puzzle of skills, processes, incentives, planning, and execution required to pull it off.
Results
So, did all of our action research partners become client-centric market leaders? Are clients in their countries receiving amazing customer service and great products? The truth is that some institutions are better at delivering client-centric products than others. As a result of the project our 10 action research partners* developed or refined nine savings products and 11 loan products. At the end of 2007, when the project closed and MicroSave transformed into a consulting company, 373,705 customers had loans from our action research partners; the outstanding balances on these loans were $300 million; 2.5 million people had savings accounts and an overall outstanding balance of $530 million.
Over the same period MicroSave trained more than 51 Certified Service Providers and over 1,000 staff in marketing, R&D, operations, and risk management departments. Many of these people remain in the industry (if not in the same jobs). These people and institutions have a deep understanding of being “market-led” and we need to build on the talent and experience the industry already has.
> 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 Indonesia’s first floating bank branch, a new report from the Impact Programme on the impact investing markets in sub-Saharan Africa and South Asia, and a paper from PricewaterhouseCoopers on the evolving cryptocurrency market. Here are a few more details:
- Bank Rakyat Indonesia’s new floating branch, offering all the services of its traditional branches, will boat its way around six of the Thousand Islands off the coast of Jakarta, which encompass around 8,000 of the bank’s customers.
- The Impact Programme’s new report explores investment patterns and future plans, revealing that, among other findings, industry participants are optimistic, though they see the need to both disaggregate the market and increase the range of investment instruments.
- PricewaterhouseCoopers, in a recently released paper, asserts that: “The discussion is no longer one of whether cryptocurrency will survive, but rather how it will evolve.” The paper examines how key market participants (merchants and consumers, tech developers, investors, financial institutions, and regulators) fit into the big picture.
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 .
Beyond the Basics…
> Posted by Evelyn Stark, Assistant Vice President, Financial Inclusion Lead, MetLife Foundation, and Graham A. N. Wright, Group Managing Director, MicroSave
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.
In the first part of this blog series, we saw how understanding customer demand is not enough to deliver mass financial inclusion … or even a successful product. Supply side factors are key … if rather more difficult than a quick market research exercise. Even after careful pilot-testing and a structured roll-out, all that preparation and keen balancing of client desires and institutional capacity to deliver sustainably didn’t necessarily work! Where were the clients? Why weren’t they storming the doors and asking for these wonderfully designed products? Weren’t our loan officers as excited as the project team? Did the CEO’s endorsement and great speech at the annual meeting make loan officers ready to sell the new products? Weren’t clients telling each other, and their cousins and friends?
No, they weren’t.
The supply side (staff) had not conveyed to the demand side (clients) that they had new products based on their feedback; they hadn’t convinced and trained staff, who were concerned that their jobs were about to get harder. Clients weren’t buying, and staff weren’t selling these new products. Once again, the action research partners* attacked the issues and MicroSave worked alongside, frantically learning and documenting.
Read the rest of this entry »
> 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 Microinsurance Network’s first annual “The State of Microinsurance” magazine, the findings of Child and Youth Finance International’s (CYFI) survey on youth finance regulation in Latin America and the Caribbean, and a blog post from the MasterCard Foundation on the role of microfinance associations in expanding financial inclusion. Here are a few more details:
- The Microinsurance Network magazine sheds light on global microinsurance progress, failures and innovations, approaches to regulation, assessing and meeting demand, and the role of microinsurance in disaster risk management strategies.
- The Latin America youth finance regulation survey, which CYFI aims to replicate in other regions, revealed that there is a great diversity in approaches to regulating practices affecting this client segment, and that young people are rarely seen as independent economic actors.
- In a recent blog post, the MasterCard Foundation draws on its experience working with microfinance associations in sub-Saharan Africa to discuss their myriad abilities to advance financial inclusion, including through knowledge sharing, collecting and analyzing sectoral data, and supporting collective lobbying.
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 .
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