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> Posted by Elisabeth Rhyne and Sonja E. Kelly, Managing Director and Director of Research, CFI

Where are we in achieving a financially inclusive world?

Financial inclusion momentum has slowed in the past three years, the 2017 Global Findex revealed. The financial inclusion community may wish to reflect on these results, recalibrate expectations, and then re-engage.

In a new report, the Center for Financial Inclusion at Accion journeys through the 2017 Global Findex data recently released by the World Bank, which assess progress toward financial inclusion on the basis of a 150-country study conducted by Gallup. We examined the 2017 Findex data from our own perspective, and although we found some good news, there are also some concerning trends.

In recent years, the headline for financial inclusion has been the percentage of adults in the world with accounts (either financial institution or mobile-based). That number has grown since 2014 to 69 percent – good news. But we believe it is more relevant, if less encouraging, to focus on the number of adults with active accounts, that is, accounts they have used at least once in the past year. That number is 55 percent, representing a net gain of 393 million active accounts between 2014 and 2017, a much more modest gain than the nearly 700 million total new accounts added in the previous three years (2011-2014).

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> Posted by Isabelle Barrès, Global Director, the Smart Campaign

This is the first in a series of blog posts exploring the impact of Smart Certification on the financial inclusion industry.

The Smart Campaign is thrilled to announce that 100 financial service providers have been Smart Certified, extending fair treatment and respect to more than 42 million low-income financial clients around the world. One hundred Smart Certifications marks a major milestone for the advancement of pro-client practices in the financial inclusion industry. These 100 financial service providers have worked to achieve and demonstrate their commitment to protecting clients from harm and delivering responsible financial services.

The journey to 100 certifications began with the launch of the Smart Campaign in 2008, at a time when microfinance sector leaders recognized the need to ensure that consumers remained front and center to their operations as the sector underwent a period of rapid growth. The Smart Campaign went on to become an umbrella for financial inclusion sector cooperation, through the endorsement of thousands of stakeholders of the Client Protection Principles (CPPs) and accompanying standards. The CPPs offer a common framework for understanding client risks and improving practices, and form the bedrock of the Campaign’s Smart Certification program. The certification program was launched in 2013 as a tool to support and reward financial service providers that offer appropriate products and services and deliver them in a fair and respectful way.

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> Posted by Daniel Rozas and Sam Mendelson

The following post was originally published on NextBillion.

For most, socially responsible investing means just that – investing in a manner that not only generates financial returns but also produces positive social value. But what does it mean for an investor to be “responsible” when selling their holdings? How does one stay responsible at the very moment when one ceases to be an investor?

This is a basic challenge facing investors seeking to “exit,” i.e. sell their equity stakes to a new buyer. The issue isn’t entirely new. It first emerged in the mid-2010s, when several microfinance investment vehicles (MIVs) were starting to reach the end of their 10-year terms and were seeking to divest their assets. This issue was first addressed in the financial inclusion sector by a 2014 paper commissioned by CGAP and CFI, which first defined many of the key questions that socially responsible investors need to address when selling their equity stakes.

With another four years of multiple exits under the sector’s belt, NpM, Netherlands Platform for Inclusive Finance, along with the Financial Inclusion Equity Council (FIEC) and the European Microfinance Platform (e-MFP) asked us to take a closer look at one particularly tricky part of the exit process – selecting a buyer that is suitable for the microfinance institution (MFI), its staff and ultimately its clients. The result is Caveat Venditor: Towards a Conceptual Framework for Buyer Selection in Responsible Microfinance Exits – a new paper that goes beyond raising questions, and seeks to provide a template to help investors navigate the complex terrain of “responsible exits.”

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> Posted by Jeffrey Riecke, Senior Specialist, CFI

Last week, Mick Mulvaney, interim director of the U.S. Consumer Financial Protection Bureau (CFPB) said in reference to the CFPB’s consumer complaints database, “I don’t see anything in [the Dodd-Frank Act] that says I have to run a Yelp for financial services sponsored by the federal government. I don’t see anything in here that says that I have to make all of those [complaints] public.”

Mulvaney’s comments refer to the complaints database CFPB has been running for several years, which allows anyone to view, sort, and filter complaints submitted by customers regarding their treatment by their financial service provider. Since the database was created, roughly 1.5 million complaints have been logged. This database has functioned as a tremendous resource for prospective customers who want to check out financial institutions, for analysts of consumer risks in the U.S. financial system, and for financial institutions who want to see how they stack up against others. Its publication may also induce financial service providers to be more vigilant in avoiding bad practices and handling customer complaints well.

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A look at why #FinHealthMatters in the region

> Posted by Allyse McGrath and Jeffrey Riecke, CFI

This year on Financial Health Matters Day, we at the Center for Financial Inclusion at Accion are taking a look at the new Global Findex data and what it says about the financial health of respondents around the world. Because of our recent work on financial health in Eastern Europe and Central Asia, we decided to take a closer look at the Findex numbers from the region.

The 2017 Global Findex shows a substantial increase in account ownership between 2014 and 2017, from 62 percent to 69 percent of adults. However, one indicator that has decreased across this same period is the Findex’s proxy for financial health – the resilience question. This metric measures a person’s ability to come up with emergency funds in the amount of 1/20 GNI per capita in the next month (for reference, this is a little less than $3,000 in the U.S. context, and a little less than 700 dinar in Serbia). Isolating Eastern Europe and Central Asia, the percentage of people who said they could come up with this amount actually decreased slightly from 64 percent in 2014 to 61 percent in 2017.

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> Posted by Center Staff

After great anticipation, three years’ worth to be exact, the 2017 Global Findex Database was officially released this morning. The Global Findex is the authoritative data source on global progress toward financial inclusion. Released every three years, the Global Findex surveys more than 150,000 adults in 144 economies to better understand how people access and use financial services to make payments, and also to save and borrow.

Since the 2014 Findex, the percent of the global population that has a bank account with a financial institution or mobile money service rose from 62 percent to 69 percent. Five-hundred and fifteen million individuals opened an account for the first time over the past three years, reducing the unbanked population to 1.7 billion adults worldwide. However, the new data also reveal critical shortcomings in progress. For instance, the financial inclusion gender gap didn’t improve. Globally, women remain 7 percent less likely to own a bank account than men.

Here are a few of the 2017 Global Findex’s high-level statistics:
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Which topics would you most want to see researched?

> Posted by Sonja E. Kelly, Director of Research, CFI

Hi there. I would love your help as we select topics for our 2018 CFI Fellows research.

CFI is getting ready to launch the request for proposals for our 2018 Fellows cohort (a lot of you have been asking when it’s coming out, and the answer is SOON!). The CFI Fellows Program is designed to respond to questions we think are critical to the future of financial inclusion. Fellows come from many perspectives, including both relatively junior and senior well-known researchers, and including researchers who have been in the financial inclusion community for a long time and some who are perceptive outsiders. We share a set of topics for study, and ask interested researchers to submit research proposals that address the topic of their interest.

Our semi-final list of questions is long, and we ask for your help refining or prioritizing them – or adding new ones. We’ve enabled comments at the bottom of this post for your feedback. Alternatively, feel free to email me at skelly@accion.org.

Here are the questions we are currently considering:
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Data from InterMedia reveal stagnant progress across key financial inclusion indicators in Nigeria

> Posted by Nadia van de Walle, Charles Wanga, and Ridhi Sahai, Financial Inclusion Insights, InterMedia

The number of adults who are considered financially included in Nigeria has not improved since 2014, according to InterMedia’s Financial Inclusion Insights (FII) 2016 Annual Report and Survey Data. The survey defines financial inclusion as adults with a registered account at a full-service financial institution. Financial inclusion in Nigeria dropped slightly from 37 percent in 2015 to 35 percent in 2016 (Figure 1), lagging behind the three other African countries surveyed as part of the FII program. In 2016, FII data showed 69 percent of Kenyans, 54 percent of Tanzanians, and 40 percent of Ugandans were financially included.

InterMedia recently completed and published the 2016 Annual Report and Survey Data on the status of financial inclusion in Nigeria. The report, based on a nationally-representative survey of over 6,000 Nigerian adults, provides insight into Nigerians’ financial lives while tracking trends in attitudes, access, use and demand for financial services.

(click to enlarge)

With an economy that is large enough to account for almost a third of Africa’s total GDP, why might Nigeria be lagging its peers?

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Consumer protection is a driver of revenue, and not a regulated compliance cost

> Posted by Dylan Lennox, Partner, MFX

Educating digital financial services (DFS) providers to understand that consumer protection is a core business strategy is as important – if not more important – than consumer protection regulation supervision if we hope to ensure that vulnerable consumers are well protected. For this reason, as I articulated in my last post, I would like to see DFS providers and their managers take the lead when it comes to driving consumer protection, and that consumer advocates and regulators’ efforts are aligned to make sure this happens.

There are many possible reasons why DFS managers are not taking the lead, however, beyond a general lack of awareness of consumer protection and its importance:

  • They might be driven to achieve short-term targets with limited resources, prioritizing their time, budgets and activities to meet high ROI expectations. Or they might be under pressure to launch innovations and take advantage of the “next big thing” like digital credit or data monetization.
  • They could lack the necessary knowledge and experience in their teams to properly address consumer protection. Such know-how involves truly understanding customers’ needs, developing intuitive user interfaces, designing appropriate sales incentive structures, assessing customers’ loan affordability, and implementing effective internal control frameworks to address security, loss of privacy, or fraud risks.
  • Or perhaps the technology they have implemented does not have the required functionality to properly implement basic consumer protection requirements – like those of data security, for example. In such a case, it is left up to the individual DFS managers to make specific technical developments to address consumer risks. Such an institution-by-institution approach increases the overall cost of consumer protection to the industry and decreases the likelihood that it will be implemented as these measures compete with other priorities.

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Insurers are increasingly deploying “insurtech” innovations to connect with and serve lower-income customers

> Posted by Center Staff

This post is adapted from the recently-released publication “Inclusive Insurance: Closing the Protection Gap for Emerging Customers,” a joint-report from the Center for Financial Inclusion at Accion and the Institute of International Finance, in partnership with MetLife Foundation.

New technologies are dramatically changing the landscape for insurance around the world and enabling insurers to reach new mass market segments. New data sources and analytical tools are changing risk models by enabling new ways to create, capture, and analyze valuable information that can help insurers better calculate and manage the risk associated with customers. Machine learning applied to satellite imagery is changing agricultural and disaster insurance, allowing for more sophisticated claims management, even facilitating pre-loss payments that can help minimize the cost of a disaster before it is full-blown. The expansion of identity solutions and onboarding options is lowering operations costs and enhancing convenience. These innovations are helping the global insurance industry transform from a passive risk-transmission industry into an active risk mitigation and advisory partner for individuals, businesses, and governments.

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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.