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> Posted by Center Staff

The 2017 Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance is now accepting applications for what will be another exceptional week of learning and exchange among world leaders in financial inclusion. The program will take place April 17 – 21, 2017 at the HBS campus in Boston, Massachusetts.

The 2017 HBS-Accion Program builds on 11 successful years and over 700 alumni – CEOs, presidents, executive directors, and other high-level professionals – from roughly 100 countries.

Today’s landscape of financial services for the base of the pyramid is increasingly complex, with a diversity of products, providers, and support organizations extending services to previously excluded populations. Disruptive technologies and new ways of doing business are creating new possibilities for reaching more people with more types of services. It’s an exciting time for financial inclusion, though for leaders steering their organizations through this landscape, the pace and magnitude of change may look overwhelming.

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  • Latin America and the Caribbean (LAC) and East and South Asia have the most conducive environments for financial inclusion. India stands out for the most progress in the last three years and is now ranked third
  • Further policy changes are needed if financial inclusion is to play the role envisioned in the Sustainable Development Goals
  • The digitization of financial services is key to increasing access to finance

The 2016 Global Microscope on Financial Inclusion shows that essential policies for bringing financial services to low-income groups are now widespread in the developing world. Nine of the 12 financial inclusion indicators covered in the benchmarking index improved globally in 2016, building on gains which have been made during the last decade. Even so, many countries have not moved significantly beyond basic policies, and greater focus is needed if financial inclusion is to play the critical role envisioned in the Sustainable Development Goals (SDGs).

The Global Microscope is produced by The Economist Intelligence Unit (The EIU), with policy guidance and financial support from leading organisations in the field including the Center for Financial Inclusion at Accion. Now in its 10th year, the Microscope is the global standard for financial inclusion policy in developing economies.

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> Posted by Alexandra Rizzi, Deputy Director of the Smart Campaign

The following is part of the Smart Campaign’s #FintechProtects series. We’re raising awareness about responsible digital financial services, spotlighting work from the Smart Campaign and others, and engaging with industry actors on how fintech can move forward in a way that’s best for clients. For more information on #FintechProtects, and to get involved, click here.

In financial inclusion circles there is palpable excitement around the promise of digital financial services (DFS) – most recently quantified by the McKinsey Global Institute as the potential for 1.6 billion individuals becoming banked, $2.1 trillion in loans disbursed, and 95 million new jobs. Yet, in order for this potential to be achieved, customers must trust the service. For instance, India-based MicroSave conducted research showing that while 85 percent of DFS customers said they would recommend DFS to others, they thought of it as a Plan B due to lack of trust. Issues that can erode or prevent trust from building include gaps in data protection and security, service downtime, insufficient transparency, agent misconduct and unauthorized fees, among others. As Graham Wright of MicroSave writes, “It is clear that there are immediate potential wins for DFS providers who address consumer protection issues.”

In this post the Smart Campaign spotlights a fast-growing fintech company, JUMO, that is helping to define what responsible digital finance means.

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> Posted by Center Staff

Financial Inclusion Forum UK event yesterday at the European Bank of Reconstruction and Development (EBRD)

This post is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

We are one day into Financial Inclusion Week 2016 and are so excited to already see stakeholders from across the globe coming together to discuss the week’s theme of keeping clients first in a digital world. As our global financial ecosystem undergoes a digital revolution, we are presented with great opportunities and great challenges to extending financial services in a responsible manner. At CFI, we believe that access to financial services is not enough. We define financial inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services provided at affordable prices, in a convenient manner, with respect and dignity. Additionally, financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”

Keeping clients first in a digital world requires looking beyond access to the essentials of quality services and client treatment. Financial technology has the potential to improve access, as well as the potential to improve convenience, lower prices, and build financial capability. However, fintech also has the potential to take away some of the respect and dignity present in an in-person banking transaction, and it can present new risks. We hope that this week you will explore the best ways to ensure that this digital revolution is not compromising clients, but instead further protecting them against risks and empowering them through new channels.

What’s Happening

Financial Inclusion Forum UK: Last night in London, over 200 stakeholders gathered at the European Bank of Reconstruction and Development (EBRD) for a conversation focused on “The Progress and Future of Financial Inclusion.” The three-hour event, organized by the Financial Inclusion Forum UK, consisted of a keynote and two panel discussions. The first panel discussion, featuring representatives from CDC, VisionFund, and EBRD, and moderated by Yasmina McCarty of GSMA, assessed current progress in financial inclusion. The second panel looked to the future with panelists from Financial Services for All, DoPay, Leapfrog Labs, and the Centre for the Study of Financial Innovation.

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> Posted by Tilman Ehrbeck, Partner, Omidyar Network

This post is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

The digitization of the retail financial services front-end has the potential to unlock access to formal financial services for the 45 percent of working-age adults in emerging markets who are currently disconnected from the global economy. A recent McKinsey & Company study estimates that digital finance could reach the bulk of today’s excluded, mobilize new deposits and expand credit, adding six percentage points to emerging market GDP in 10 years-time, worth some $3.7 trillion. The driving force behind the digitization of retail financial services in emerging markets is the mobile phone. Already today, more people worldwide own a mobile phone than a bank account and by 2020, 80 percent of working-age adults will have a smartphone in their pocket. But to capture this opportunity, a lot still has to come together.

To begin with, the mobile infrastructure needs to be expanded. Data plans can still be very expensive in emerging markets, and low-cost smartphones have limited memory, which means people can use only a few apps. In fact, most emerging market users are connected via 2G feature phones, hindering a number of financial innovations from running on them.

But things are looking up.

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> Posted by Center Staff

The Center for Financial Inclusion is working to create a Financially Capable India platform that will hasten the spread of behaviorally-informed approaches to financial capability throughout the Indian financial inclusion sector.

As a part of this effort, CFI is excited to collaborate with MetLife Foundation to announce Inclusion Plus: an innovation competition for impactful and scalable organizations that are working to advance financial inclusion in India. Participants will be able to connect with other like-minded social enterprises, engage with PNB MetLife mentors and compete for a prize pool totalling $150,000.

Participants will present solutions to increase access to quality, sustainable financial services in one or more of the following subcategories:
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> Posted by Center Staff

Number of AML-related fines by U.S. regulators 2000–2014. (click to enlarge)

This post is part of a series examining the global phenomenon of de-risking and its impact on financial inclusion. To investigate this issue, CFI staff partnered with Credit Suisse Global Citizen Rissa Ofilada, a compliance lawyer based in the Philippines, to undertake a literature review and conduct interviews with key players in the conversation on de-risking.

The root causes of de-risking have been surprisingly hard to pin down. In our previous post in this series, we looked at the role that the Financial Action Task Force (FATF) and global standards have played. Today we’ll examine the role of the U.S. government.

It is no wonder that decisions by the U.S. government—at both federal and state-levels—have a significant ripple effect. Most international settlement systems—the way that banks move money across borders—are pegged to the U.S. dollar. Furthermore, the U.S. plays a strong role in setting international global norms. Added to this is the massive size of the U.S. financial system and the power that the U.S. government has to govern the system. Finally, banks located in emerging markets, even if they are largely domestically oriented, need to be able to do business with U.S. businesses and banks, and therefore must remain in good standing with American authorities.

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> Posted by Center Staff

Financial Inclusion Week is fast approaching! From October 17-21, 2016 partners all around the globe will hold conversations focused on advancing financial inclusion, and more specifically, this year’s theme: keeping clients first in a digital world.  So far over 30 organizations have signed on to participate in the week, including BRAC, Innovations for Poverty Action, and the U.S. Chamber of Commerce Foundation. Here is a rundown of the ways that you can get involved.

Hold a Conversation: We encourage organizations to gather internal or external stakeholders to discuss the theme in any conversation format that works for them. The link to register as a Financial Inclusion Week partner can be found here and you can check out a full list of this year’s events on the Financial Inclusion Week Website.

Talk to a Client: Given this year’s theme of keeping clients first, we are also doing a call for client visits. We encourage you to organize client visits for you and your staff, donors, or other partners – either in addition to or instead of hosting an event. This will provide an opportunity for you to hear directly from your clients on how they are engaging with digital financial services, and what they need from providers and support organizations.

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> Posted by Nadia van de Walle, Lead, Africa Partnerships and Programs, the Smart Campaign

Almost two years ago, the Smart Campaign surveyed financial service providers in Uganda as part of our study, What Happens to Microfinance Clients Who Default (WHTCWD). In summarizing what they described, we did not mince words, reporting the environment as “Hobbesian” at the time. Providers in Uganda described default as a major issue of concern for them. Borrowers in arrears would skip town or change their name, behaviors enabled by the lack of government IDs and credit bureaus.

MFIs often adjusted for these thin credit envelopes and their high distrust of clients by meting out harsh, inflexible punishments on an immediate basis to those who missed a repayment. For instance, providers, suspecting customers of being at flight risk often seized collateral immediately after missed payments in ways that contrasted sharply with the Client Protection Standards and best practices guidance. Some providers explained that they had to act quickly because borrowers have multiple loans and if they didn’t seize the collateral quickly, another lender would swoop in, leaving them with nothing. Unfortunately, all of this was occurring in an environment of weak due process and slow legal enforcement, and we heard about instances where lenders were paying off local law enforcement, turning to local councils to pressure defaulters, and even getting clients thrown in jail.

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> Posted by Jeffrey Riecke, Communications Specialist, CFI

Going door-to-door to conduct surveys is expensive. Going door-to-door to conduct surveys assessing household consumption and poverty levels in far-flung areas around the world is even more expensive. And reliable data, of course, is crucial to financial inclusion and other international development efforts.

In recent years, the use of nighttime satellite imagery capturing civilizations’ lights or lack thereof has risen as a means to learn more about an area’s poverty levels without cumbersome surveys. But with these images alone, the picture is incomplete. A new project from a research team at Stanford University devised a computer model that brings poverty assessment into sharper focus. The model accurately predicts poverty levels, an ability built through machine learning using nighttime satellite imagery, high-resolution daytime satellite imagery, and household survey data. In fact, the model is able to predict up to 75 percent of the variation in local-level economic outcomes, and beats the nightlight models nearly all the time.

How does the model work and what are its limitations?

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Founding Sponsor

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.


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.