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> Posted by Sonja Kelly, Director of Research, CFI

One of the most surprising unveilings at the recent  Mobile World Congress was the Nokia 3310, a reboot of a 17 year-old feature phone that stands out as intentionally basic amidst a dizzying world of smartphone bells and whistles. This phone boasts no cinema-quality camera, no super-fast internet, and no Candy Crush. In exchange, it offers a month-long battery life, a simplified user interface, and a price point of $49.

To me, this phone is a signal to emerging markets that the mobile industry has not forgotten that much of the world—about 37 percent of people in developing markets and 24 percent of people in developed markets, according to GSMA—will still not be using a smartphone by 2020. These populations are not making the shift for reasons like cost, battery life, and connectivity limitations. For them, the Nokia 3310 is a promising announcement.

In his research on the technology infrastructure surrounding digital financial services, CFI Fellow Leon Perlman points out that while feature phones are not disappearing any time soon, the choices for feature phones and options for people who need them repaired are shrinking. Perlman’s research, which will come out later this spring, underscores the need for the mobile industry to continue to provide valuable infrastructure to people who have not switched to smartphones. He cites the continued prevalence of USSD-based mobile money interfaces, which feature phones can utilize and which do not require internet connection, as a major incentive for continued investment in technology infrastructure for feature phones. If people cannot safely and effectively access their mobile wallets without switching to shiny new smartphones, mobile money will cease to be as inclusive as it claims to be.

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> Posted by Sonja Kelly, Director of Research, CFI

(click to enlarge)

This week at the Mobile World Congress in Barcelona, Verizon announced that it’s unveiling new 5G wireless connectivity for its mobile customers. More “G”s are not a surprising announcement, as mobile networks strut their speed at this annual event like body builders at a weightlifting competition. For those unfamiliar with what exactly 5G means, the network will provide speeds of a gigabit per second and faster, but only in a select group of cities in high income economies.

As we celebrate global innovation, we can also take a moment to highlight those who continue to have limited to no connectivity—with implications for global development. While 5G revs up, an astounding number of people are left out of mobile connectivity and therefore mobile money—even in countries known for their digital financial services uptake.

Our CFI Fellow Leon Perlman examines this phenomenon in his upcoming report. As a sneak preview, in his report Leon shows connectivity maps in a select group of emerging markets, such as the one above. Take this example of Tanzania, a market with growing mobile money usage. In this market, mobile network coverage misses large swaths of rural areas toward the center of the country. Certainly, those areas have lower population densities than other areas, but they are home to many people. The mobile financial services ecosystem depends on connectivity infrastructure that provides reliable and sufficiently high-speed data transmission. Lacking that, people in rural areas are left out in large numbers. In the map above, the blue splotches indicate mobile network coverage, and the dots are where mobile money agents are located.

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> Posted by Christy Stickney, Independent Consultant and CFI Fellow

Say the words ‘women’ and ‘entrepreneurship’ together and donors and philanthropists will rush to give you money. It’s one of the hot topics in development today.

But where are the women in small and medium enterprises (SMEs)? In my study with the Center for Financial Inclusion, Emerging SMEs: Secrets to Growth from Micro to Small Enterprise, I asked this question, both directly and indirectly, as I met with entrepreneurs who had started microenterprises that grew to be SMEs, with the help of finance from microfinance banks in Peru, Ecuador and the Dominican Republic. I called these growth-oriented businesses emerging SMEs. These are my observations about women’s involvement with emerging SMEs.

Only a very small proportion of emerging SMEs are led by women. In my research only one of fourteen of the high growth enterprises identified in the study was led by a woman. Although the access-to-credit hurdle had been largely addressed within the study group, as evidenced by their extensive business borrowing, women were highly underrepresented as leaders of emerging SMEs.

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> Posted by Sonja Kelly, Director of Research, CFI

We’ve been running the CFI Fellows Program for almost two years, with generous funding this year from the Rockefeller Foundation. The program has been a terrific experiment for many reasons. Now, while our current cohort of fellows is hard at work conducting their research, is a great time to stop and share some lessons we’ve learned along the way. The findings emerging from the program have also quickly become part of the continued learning and development of our expertise as an organization. Our staff engage closely with the fellows as they work, drawing from and contributing to their expert-level knowledge. And, on a personal level, I have come to understand financial inclusion in new ways.

As we’ve sourced topics, selected fellows, and engaged with knowledge communities, we have learned a great deal about people, organizations, technology and global trends. (You can see some of the specific findings coming out of the program here.) We also have gleaned observations about the nature of inquiry in financial inclusion, who cares about deeply understanding financial inclusion, and why financial inclusion matters.

Here are the top 10 things that I’ve learned thus far in the process of working on the CFI Fellows Program.
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In the following post, CFI Fellows Shreya Chatterjee and Misha Sharma of IFMR Lead offer an overview of their research project for CFI.

thumb_1b4e5caeaab54bb5bbbbf9384089e357-1Background and Research Questions

India is at the cusp of a digital financial revolution. From payment banks to ‘India Stack’ to demonetization, policy makers and financial service providers are energetically pursuing digitization of financial services.

Yet, for certain segments in lower income household groups, going digital presents a series of challenges, given that:

  • Only 17 percent of women and 27 percent of men use smartphones in India.
  • Only 9 percent of those with lower education levels are online, compared with 38 percent of those with higher education levels, per a Pew Research Center survey.
  • Forty-five percent of urban Indians and 51 percent of rural Indians have lower levels of digital literacy, according to the Financial Inclusion Insights Survey 2015, which defines digital literacy in terms of knowledge, skills, and behaviors used with a broad range of digital devices such as smartphones and laptops.

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In the following post, John Owens offers an overview of his research project with the CFI Fellows Program.

Background & Research Questions

More and more online credit providers have started to offer loans to not only consumers but also to SMEs around the world.

Outside of digital banking platforms, new alternative online and digital platforms that target consumers and small SMEs include:

  • Peer-to-peer (P2P) SME lenders
  • Online balance sheet lenders
  • Loan aggregator portals
  • Tech and e-commerce giants
  • Mobile data-based lending models

While the rise of alternative data-based lending has opened new and innovative credit opportunities for individuals and SMEs, these new technologies and providers also come with several consumer protection challenges. These can be categorized into seven main areas:
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> Posted by Center Staff

Microfinance client harvesting rice at her farm in Mawlamying, Mon State, Myanmar. Image credit: Accion.

About this time of year, before we launch into the promise and the chaos of January, it is helpful to reflect on the past 12 months.

Like many of you, CFI in 2016 can be characterized by change. We released the first reports from CFI Research Fellows. We established a new priority area for the Center in financial capability and financial health. The Smart Campaign pivoted towards digital financial services. We partnered with the Institute of International Finance (IIF) to examine how banks in emerging markets are driving financial inclusion. The Financial Inclusion Equity Council (FIEC) distilled how MFIs and other mission-driven organizations can preserve double bottom lines in initial public offerings (IPOs). We said so long to some long-time CFIers. We said welcome to some new ones.

Amid all the new initiatives, 2016 was also a year of deepening efforts in many legacy initiatives at CFI. The year saw significant progress in the Africa Board Fellowship Program, the Banana Skins report series, the Global Microscope report series, the Governance Working Group, Financial Inclusion Week, the Harvard Business School – Accion Program on Leadership in Inclusive Finance, the Microfinance CEO Working Group, and Smart Certification.

We thank you for your support this year on these and on all our efforts to advance financial inclusion around the world. To recap the year, here’s a quick rundown of CFI in 2016 in pictures. And Happy New Year!

The Smart Campaign Breaks New Ground

This year marked a shift in strategy for the Smart Campaign, with a greater emphasis on client protection issues emerging from new technologies and effecting change at the national level. The Campaign examined the client protection risks in the provision of financial services via agent banking and digital credit. It also worked with the government of Myanmar to enshrine the client protection principles in the country’s new microfinance policy and with MFIN to develop a Grievance Redressal Mechanism Framework for the microfinance network in India. Read the rest of this entry »

> Posted by Center Staff

john-owensAfter reviewing many high-quality proposals, we are excited to announce the second cohort of CFI Fellows. Like the inaugural cohort, the new fellows will explore and answer some of the most pressing questions in the financial inclusion industry. The six 2017 fellows will design and produce actionable research, focusing on the topics of responsible online credit, human touch in a digital age, and the business case for financial capability. Read more about the upcoming research below and join us for a webinar tomorrow, December 14 to hear from the fellows themselves.

John Owens, Independent Consultant

What does responsible online credit look like?

Online lending for consumers, and especially small and medium-sized enterprises (SMEs), is highly relevant and important to facilitating financial inclusion. However, trust, confidence, and responsible lending practices need to be in place to ensure that this industry is successful and that the customers are protected and empowered. CFI Fellow John Owens will examine the risks customers of online lending face and what best practices are, or should be considered, for setting consumer protection and risk mitigation standards for the emerging online financial services industry.

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> Posted by Christy Stickney, Independent Consultant and CFI Fellow

After decades of directing financial services to micro-enterprise owners, many microfinance institutions are finding that some of these enterprises have grown and that they’re now serving an expanding number of small business owners. With increasing global attention being directed to small and medium-sized enterprises (SMEs), it is fitting to look more deeply at what can be learned from entrepreneurs whose businesses started as microenterprises, grew, and can now be classified as SMEs – with a substantial number of employees. More specifically: Who are these entrepreneurs? What kinds of businesses do they operate? What have been their growth patterns and hurdles? And how have they utilized financial services to further their growth aspirations?

These are the questions that guided my research fellowship for the Center for Financial Inclusion. As part of my study I gathered institutional data and conducted in-depth interviews with clients of three leading microfinance institutions in Latin America: MiBanco, Banco ADOPEM, and Banco Solidario. The clients I focused on had all experienced significant loan size growth over several years.

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> Posted by Guy Stuart, Ph.D., Executive Director, Microfinance Opportunities

Can government-to-person (G2P) payments to low-income beneficiaries translate into their formal financial inclusion? This might happen if those beneficiaries can gain experience in dealing with a formal financial service provider (FSP) when they pick up their payments. This is especially the case where the government pays the beneficiaries of the program through a digital channel, such as a debit card or mobile money, and the payment pick-up process gives beneficiaries the chance to interact directly with this new technology. Furthermore, given that G2P programs are often targeted at women, there is the potential for these programs to increase the inclusion of the half of the population traditionally more excluded from formal financial services.

As part of the CFI Fellows Program, Microfinance Opportunities, in partnership with the Pakistan Microfinance Network and Centro de Formación Empresarial de la Fundación de Mario Santo Domingo, looked at the relationship between G2P payments and financial inclusion. For this project we analyzed global survey data and conducted field research in Colombia and Pakistan—two countries with large, well-established G2P programs.

The focus group discussions with the beneficiaries of the Familias program in Colombia showed the potential of G2P programs to have a direct effect on enabling women to become comfortable with using digital channels to receive money. The women unanimously reported that they used their Familias debit cards to withdraw their G2P payment from an ATM without any help from anyone else. They did report that, at first, they needed help, but soon learned how to use the cards themselves without any problem.
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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.