You are currently browsing the tag archive for the ‘BBVA’ tag.

> Posted by Sonja E. Kelly, Center for Financial Inclusion at Accion, and Sergio Navajas, Multilateral Investment Fund, Inter-American Development Bank

A Spanish-language version of this post immediately follows the English-language version.

Financial institutions of all sizes around the world are joining the digital revolution. In our work and research at the Center for Financial Inclusion at Accion and the Inter-American Development Bank we have seen some best cases of institutions shifting toward digital as well as some failures. At the end of this month we’ll be discussing strategies to pursue digital innovation as part of the Foromic in Buenos Aires. (Join us for our session on Tuesday, October 31st at 11:15 am!) In the meantime, for institutions that want to start down the path of digital innovation, here are a few of our top strategy suggestions.

1. Make sure you actually want to digitize. Some institutions are digitizing because they have undertaken extensive research on what value digitization will bring to their institution. These analyses involve things like cost reduction, increased access, increased efficiency, better record-keeping, or all of the above. But others are digitizing, more or less, because they see their peers doing it. Remember when your mom told you not to jump off a bridge just because everyone else was? The same applies here. There are some institutions that will do just fine without pursuing a full digital strategy right now. And that is ok. A good rule of thumb here is you’re likely better off not digitizing at all if you are only going to “phone it in.”

Read the rest of this entry »

> Posted by Todd A. Watkins, Paul DiLeo, Anna Kanze, and Ira Lieberman

Embed from Getty Images

Fintech is a shiny attractor for impact investors. Emerging financial technologies shimmer with disruptive potential for the delivery of a wide array of financial, educational, health, and social services for the poor. While microfinance still makes up a major share of impact investing portfolios, many investors appear to have moved on to fintech, the next wave of creative destruction. Rather than be toppled by it, microfinance institutions (MFIs) look to ride that wave too, to extend reach, reduce costs and prices, improve and deepen client services, and improve risk management.

Fintech, whether new digital services or proprietary software used to evaluate and underwrite credit, brings glittery potential for MFIs, no question. But in fairy tales unicorns glitter too. Are MFIs chasing something equally illusory? Microfinance has decades of success growing and strengthening a high-touch business model. As growth slows, should MFIs now abandon that approach and use high-tech to go low-touch for cost efficiency? If MFIs stay their course, will they be overtaken by new entrants with new models, like Chinese online peer-to-peer lender Yirendai, which went IPO on the New York Stock Exchange last year? Or instead, will MFIs find innovative high-tech ways to further leverage their deep relationships with clients and understanding of client needs?

Read the rest of this entry »

> Posted by Pablo Anton-Diaz, Research Manager, CFI, and Sergio Navajas, Senior Specialist, Inter-American Development Bank

Embed from Getty Images

Financial institutions in the Latin American and Caribbean (LAC) region are not investing in fintechs. Over the years the financial institutions in the region have demonstrated their willingness to adopt creative new solutions, such as microcredit and agent banking in the quest to advance financial inclusion. But with fintech solutions, compared to institutions in other regions, Latin American financers have been reluctant to invest. Why?

Read the rest of this entry »

> Posted by Vitas Argimon, Credit Suisse Global Citizen Volunteer

Embed from Getty Images

With financial technology disrupting the industry, banks are turning to startups to help them innovate, and startups are turning to banks to help them scale. Banks are increasingly connecting with financial technology startups to reach the unbanked and underbanked. In the report, The Business of Financial Inclusion: Insights from Banks in Emerging Markets, CFI and the Institute of International Finance (IIF) found that many banks are building a vast ecosystem of partnerships to expand their reach and service offerings and to improve internal processes. This growing interaction between legacy providers and new providers is taking a variety of forms. Many larger banks are engaging with startups in multiple ways, from partnering with the firms to providing support to incubate new firms. In my deep-dive into the ecosystem of this engagement, I discovered three primary types of interaction.

Read the rest of this entry »

> Posted by Hannah Sherman, Project Associate, CFI

Embed from Getty Images

In a world of rapid change, few organizations have all the capabilities needed to accomplish every aspect of their business. This is true for commercial banks, which often find success in adapting to new opportunities through partnering. CFI’s most recent publication, The Business of Financial Inclusion: Insights from Banks in Emerging Markets, a joint publication with the Institute of International Finance (IIF), illustrates how banks use partners to adopt new technologies and reach previously underserved markets.

The report, based on interviews with the financial inclusion leads at 24 banks, shines a spotlight on the role of banks as leaders in financial inclusion and discusses their specific strategies related to technology, data, financial capability, partnerships, and other issues.

The report found that banks create a variety of partnerships. The banks in our survey partner with telcos, payments companies, insurance companies, microfinance institutions, retailers, and consumer-goods companies. They work closely with governments for G2P payments and with international development agencies and donors that provide start-up capital for new financial inclusion initiatives. They also contract with digital technology providers such as data analytics companies, back-office systems providers, digital channel providers, financial capability providers, and other fintech firms.

Among many other areas, banks often use partnerships to improve on the following:
Read the rest of this entry »

> Posted by Susy Cheston, Senior Advisor, CFI

A lot of money is being spent on financial education—and we’d like to see it spent more effectively. We still don’t know all that is needed about what works, but based on our scan of the current landscape for financial capability-building innovations, we can already recommend six major shifts in how financial capability resources are deployed.

The first three recommendations relate to who is building financial capability.

1. Bring financial capability efforts closer to the actual use of financial services by enabling providers to take a greater role.

2. Shift the expectation that the government is responsible for financial capability to an expectation of shared responsibility among all stakeholders, including financial service providers and other institutions.

3. Engage organizations serving BoP constituencies, from government social service agencies to employers to non-profits.

This calls for “all hands on deck.” We argue, first and foremost, that providers can and should take a primary role in building financial capability, as they are best equipped to reach customers at teachable moments and to help them learn by doing. Many providers are already spending significant resources on financial education. They could have a much greater return on their investment if they focused those resources on embedding financial capability into product design and delivery, looking at all the touch points in the customer experience as opportunities to help customers use products more successfully.

Read the rest of this entry »

> Posted by David Tuesta, BBVA, and Sonja E. Kelly, CFI

A Spanish-language version of this post follows the English-language version.

YOU are a beneficiary of data. The materials in those shoes you are wearing were chosen over other materials because of data on cost, durability, and consumer opinion. When you go to the supermarket, you can easily find the chocolate bars because data told company marketers that if the chocolate bars are at the front of the store, consumers will be more likely to buy them. When you use public transportation, the fare you pay is based on data on the cost of the system and estimates of how many riders there will be.

Some people think data is boring. For those people, we say “tough luck.” Data is inevitable. Data provides the information on which economic decisions are based. More data provides more knowledge, information and transparency, helping all economic agents make better decisions, and through this, increasing society`s welfare.

It is no wonder, therefore, that data is critical for financial inclusion, as the financial services industry expands its focus toward harder to reach and lower income populations. The data we have on consumers helps to better understand how quickly financial inclusion is catching on and to tool financial services products appropriately to different market segments. Data at higher levels helps too: information about financial services providers is essential for regulators to monitor the market. Data matters, and it will shape the path of financial inclusion.

Last month at the invitation and of the Inter-American Development Bank we met at the IDB’s Washington, D.C. headquarters with a group of people from many institutions across the financial services industry from large international organizations to small research institutions to global banks to take stock of what data is out there, how much information could be available, how it can best be used, and how data efforts can be improved. There have been strong efforts to improve data from the demand side (customers), such as the Global Findex. Despite many data collection initiatives on the supply side (providers), there are still gaps that could be important for improving and evaluating convenience and
accessibility of potential financial services for those who are unbanked.
Read the rest of this entry »

> Posted by Eric Zuehlke, Web and Communications Director, CFI

Embed from Getty Images

Financial inclusion stories and research are published daily, lauding various efforts to bring lower-income people into the formal banking fold. All progress deserves celebration, but also closer examination. When a new initiative takes effect, or a new service deployed, how does that advance us in achieving financial inclusion? A backdrop of sound measurement is critical. A BBVA research team, Noelia Cámara and David Tuesta, recently set out to construct an index that measures the extent of financial inclusion at the country or region level. The index is discussed and applied to 82 countries in the team’s new paper, Measuring Financial Inclusion: A Multidimensional Index. We were especially intrigued to learn that this research incorporates both supply and demand-side data. I recently sat down with Cámara to talk about the project, from challenges in measuring financial inclusion to the implications of the newly-available index.

1. What are the challenges in measuring financial inclusion?

Many issues arise when it comes to measuring financial inclusion. First, there is no single definition for financial inclusion universally accepted in the literature. Most definitions include three dimensions: use, quality, and access. However, when it comes to defining these dimensions, no consensus is found. For instance, the use of financial services is part of the financial inclusion concept, but it is not clear what “use of financial services” really means. Thus, several questions come to the fore: Do we consider having a bank account in the formal financial system to be a necessary condition for financial inclusion? Is having a pre-paid card or microinsurance enough to classify an individual as included? Is using electronic payment intermediation (e.g. paying bills with a mobile phone) a sufficient condition?

Read the rest of this entry »

> Posted by Rishabh Khosla, Tahira Dosani, and Vikas Raj, Accion Venture Lab

Small businesses are the engine of employment, contributing up to 85 percent of new full-time jobs in low-income countries, and two out of three new jobs in countries like the U.S. The IFC finds a strong correlation between the health of the small business community, economic growth, and poverty alleviation.

Despite these Herculean responsibilities, micro, small, and medium enterprises (MSMEs) the world over struggle to access the financing they need to maintain cash flow, hire new employees, purchase new inventory or equipment, and grow their businesses. The IFC estimates that the unmet demand for MSME finance in emerging markets is $2.1-2.6 trillion (around 1/3 of outstanding loan balances to this segment). Unlike larger firms that can access capital markets, MSMEs must seek financing from banks or non-bank finance companies (NBFCs). Yet traditional lending approaches often fail to address this “missing middle” because the cost of diligence and underwriting is too high relative to the potential revenues from the smaller loans that MSMEs need. This situation is worse in emerging markets because of a lack of reliable financial data and high levels of informality. According to the Harvard Business Review, the financial crisis only exacerbated the situation: borrower balance sheets are still recovering, and banks, faced with new regulatory requirements, have reduced the share of lending to MSMEs in 9 out of 13 OECD countries.

Read the rest of this entry »

Enter your email

Join 2,169 other followers

Visit the CFI Website

Twitter Updates

Archives

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.

Note

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.