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> Posted by Patrick Traynor, Associate Professor, the University of Florida

CFI Fellow Patrick Traynor, an Associate Professor in the Department of Computer and Information Science and Engineering (CISE) at the University of Florida, is launching his research effort on the security of data in mobile lending applications.

Mobile phones and networks are transforming the world of financial inclusion. However, we know that we cannot simply “copy and paste” traditional financing mechanisms into this mobile context and expect widespread inclusion. For example, the traditionally-excluded often lack the standard data lenders use to underwrite credit decisions (such as government audited tax forms, formal pay stubs, property deeds, and so forth). A plethora of companies are attempting to measure creditworthiness using alternative data – including the data trail created through mobile money applications. Alternative data for underwriting holds the potential to dramatically expand access to credit if successful, but it also poses new challenges.

For instance, how secure is data used in digital credit?

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> Posted by Elisabeth Rhyne, Managing Director, CFI

What a marvel it is that a couple living in a remote region of the world, despite limited education and financial means, could use their cell phones to receive money from their children in the capital city! Like many techno-wonders of our world, the mobile financial services people all over the world use operate atop a complex set of distinct technologies zipped together. A host of systems work beneath every successful transaction, each driven by and subject to forces specific to that system, not all of which prioritize mobile money. It’s not a wonder, then, when things sometimes fall apart.

CFI Fellow Leon Perlman has the technical chops to unpack these systems, and this is exactly what he has done in his research for us. He went to 12 countries and tested multiple mobile financial services, the main handset brands available, and their component hardware and software. CFI just released his report, Technology Inequality: Opportunities and Challenges for Mobile Financial Services, and I recommend it to the technology savvy and novice alike.

I suggest using Perlman’s work as a mobile money technology primer. For example, do you understand the difference between Unstructured Supplementary Service Data (USSD), SIM Application Toolkit (STK) and Java-based applets used in mobile financial services? I didn’t. Now I know that each technology has its own merits and shortcomings, and that in the dynamic telecoms market the relevance of each is continually shifting. Leon’s paper explains these interface technologies, along with handset features and mobile signaling technologies—and more important, how they work together, or sometimes don’t. Along the way, readers are introduced to the many companies and government bodies involved: telecoms regulators, banking authorities, competition regulators, MNOs, handset manufacturers, operating system providers, user interface designers and financial institutions. These organizations have a wide range of objectives, interests and constraints, making it challenging to bring all the requirements together into a functional operation and viable business model.

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> Posted by Bobbi Gray, Research Director, Grameen Foundation

We need to ensure products and services help family units, not just individuals, thrive.

Writing in 1982, about Fred Astaire, Robert Thaves wrote “Sure he was great, but don’t forget that Ginger Rogers did everything he did, backwards…and in high heels.” Since then, this quote about two legendary dancers has been used to celebrate the skills and talents of women and to demonstrate their ability to juggle complexity and pull it off gracefully.

At Grameen Foundation, we celebrate women for the potential they carry for ending poverty and hunger. In fact, some statistics suggest that if women farmers had the same resources as their male counterparts, the number of hungry people in the world could be reduced by 150 million. Beyond access to quality farm inputs, credit, and land, we also know that when women have equal access to education, health services, and business services they can thrive economically. Helping mothers be healthy before and during pregnancy also results in healthier children and more productive societies. Women are a key driving force against poverty.

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> Posted by Gina Harman, CEO, Accion’s U.S. Network

Accion is constantly inspired by small business owners we work with in the U.S., who have transformed their lives by starting, sustaining or growing a business. At the same time, we are increasingly aware of the importance of demonstrating through research the value of our investments in small business success (and the investments of government agencies, philanthropic organizations and corporations that make our work possible). In assessing this impact, we are confronted with the challenge of understanding the value of our services in helping entrepreneurs achieve a diversity of business and personal goals. Our research finds that while many small business owners in the U.S. are looking for growth, financial security and family financial health is sometimes just as important. These findings resonate with conclusions from recent research on Latin American small businesses by CFI Fellow Christy Stickney.

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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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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.