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What does it take to go from data silo to data flow?
> Posted by Ethan Loufield, Director of Strategy and Operations, CFI
This post is one of five entries related to the report “Accelerating Financial Inclusion with New Data,” a collaboration between CFI and the Institute of International Finance (IIF).”
One might think that with the explosion of new types of data and advanced analytics there would be an abundance of low-hanging fruit for financial service providers to feast on. While the excitement about the potential of non-traditional data may be justifiable, the reality is that the hard work of building the networks to derive value from such data is just getting underway. Just as the invention of the automobile required the development of roads, signage, lighting, laws and regulations, so too will data need its own groundwork before it can bring transformative change to the financial system and society at large.
Any change of this magnitude also requires large-scale collaboration to ensure that the infrastructure and standards put in place are broadly applicable across technologies, data types, industries and countries. As such, alongside the many in-house and bilateral initiatives afoot across various providers and markets, there needs to be a much more holistic and collaborative approach to developing data ecosystems that can align principles, practices and standards to facilitate the flow of data through value chains and across geographies.
In the era of digital credit, we need not just new laws, but also new mental models for responsible digital credit provision.
> By John Owens, CFI Fellow
As digital credit providers have grown exponentially over the past few years, and as digital products and models have proliferated, so too have concerns around consumer protection. In the recently published report, Responsible Digital Credit, I argue that ensuring that digital credit customers receive responsible treatment requires more than enhanced consumer protection laws and regulations. It also requires strong commitment from the digital credit industry. Finally, it needs consumers who are empowered to play a more proactive role in managing their digital credit responsibly. Read the rest of this entry »
> Posted by Jorge Hernandez & Gabriela Zapata, BFA
Most financial institutions recognize that data should lie at the heart of strategic decision-making. With technology playing an increasingly central role in every aspect of business operations, data can make a business more agile, more client-centric, and ultimately, more profitable.
However, the use of advanced data analysis tools is still relatively new and many institutions are finding their way. This prevents them from making well-informed, strategic decisions, often at a high cost to themselves and their clients. But how can an institution create an environment in which data-driven decision-making becomes the norm rather than the exception? To start with, institutions must craft data analysis tools that meet the needs and preferences of the users within the business to ensure that they are relevant and actually utilized. Read the rest of this entry »
New CFI/IIF report examines the role that alternative data plays in helping mainstream financial institutions reach underserved customers.
>> Posted by Tess Johnson, Research Associate, CFI
With the explosive growth of data and the breakneck pace of digitization, mainstream financial service providers (FSPs) are increasingly turning to new and alternative data sources and analytics tools to more efficiently reach emerging markets and help bring the world’s 1.7 billion underserved people into the formal financial system. This “new data,” largely separate from traditional credit bureau data, represents a tremendous opportunity for commercial banks to identity new customers, many of whom were previously “credit invisible,” and to better understand and serve the needs of their existing client base. However, the path to greater data utilization is not always clear, as FSPs must weigh the benefits of embracing a data-centric approach with significant operational challenges, including changing a risk-adverse banking culture, recruiting top technical talent, upgrading legacy IT infrastructure and navigating a complex regulatory environment. Building upon in-depth interviews with banks, fintechs and other actors, Accelerating Financial Inclusion with New Data—the newest joint report from the Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance (IIF), supported by MetLife Foundation—examines the data landscape and evaluates the progress FSPs have made in innovating around data and areas where they have faced obstacles. Read the rest of this entry »
What if your employer told you that your next paycheck would come in the form of Bitcoin. How would you react?
> Posted by By Chrissy Martin, U.S. Global Development Lab, USAID
Note: This post originally appeared on ICTworks and is re-posted here with permission.
Do farmers really want to be paid in mobile money? To answer this question, I’ll ask you to first entertain a brief thought experiment.
Imagine that your employer told you that next pay period, your company will start paying you in Bitcoin. How would you react? Sure you’ve heard about Bitcoin, but you have lots of questions as to what it will mean to receive your salary this way, such as:
- Am I getting swindled?!
- Where can I use bitcoin?
- Can I spend it like dollars, or will I have to convert into dollars first?
- Where can I convert?
- How much is the conversion fee?
- Will I be paid into my same bank account?
Adapting Smart Certification for Digital Financial Services
>Posted by Alex Taylor, Marketing and Community Outreach Manager, Smart Campaign
This is the fourth in a series of blog posts exploring the impact of Smart Certification on the financial inclusion industry.
Since launching Smart Certification in 2013, we’ve witnessed rapid changes in the financial inclusion space driven by digitization of financial services and fragmentation of traditional business models. Nearly $100 billion in investment has flown into the global fintech market since 2010, creating an explosion of digital innovations and provider models. Our analysis of the Global Findex data shows that recent gains in inclusion have been largely driven by the rise of mobile money and digital payments.
Digital financial technology is central to making financial products more accessible to underserved people around the world. This is an exciting moment for digital finance, and an equally important for time for client protection. The industry has the opportunity to marry the client-centric approach embraced by so many fintechs and the industry-accepted consumer protection standards to develop quality products, build trust, and encourage usage. The Smart Campaign will leverage its experience to help lead the charge on this.
As we celebrate 100 Smart Certifications, we look forward to the next 100. Looking to the future requires defining responsible practices and standards given the technological advances that allow nearly instant access to credit, payments, savings, and insurance. The standards and the certification program must become more agile, mirroring the fast pace of change. We envision an adaptable approach that takes into consideration the product and client delivery mechanism, as well as the provider’s function in the value chain. The flexibility of this framework could eventually allow any type of provider to seek certification, but the process will begin with a focus on digital lenders and expand to encompass additional business models on a demand-driven basis.
Read the rest of this entry »
Demand for credit in Africa exceeds supply, despite the rise in mobile money. Yet start-ups, growing daily in number, are at risk of accelerating over-indebtedness, by supplying credit to clients without conducting appropriate repayment capacity analysis. Digital lenders need to understand the risks of over-indebtedness from a client perspective, and algorithms need to evolve to take this into account. Regulation also must guide good practice for fintech digital lenders.
Read the rest of this entry »
> Posted by Jeffrey Riecke, Senior Specialist, CFI
Never before have issues of data privacy and security been more top of mind. In the United States this attention was on full display a few weeks ago when every media outlet was glued to Facebook’s CEO Mark Zuckerberg as he fielded questions from Congress on how his company handles, and has mishandled, user data.
Europe begins a new era for data protection today as the General Data Protection Regulation (GDPR) goes into effect, following its passage roughly two years ago. The law is being celebrated widely for its robust customer-centricity. The degree to which it succeeds, in Europe and globally, in enforcing a business environment that provides adequate safeguards for consumer data management remains to be seen. One thing is certain, however: it has the potential to change the way we all interact with businesses, from internet platforms to banks.
> 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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