The Group of Twenty Finance Ministers and Central Bankers (G20) is targeting financial inclusion through the G20 Development Working Group (DWG), which is in the process of finalizing an agenda for its 2014 goals. The DWG focuses on developing an agenda for tackling development challenges, with the intent to remove constraints to sustainable growth and poverty alleviation. Recently, through our participation in InterAction’s G20/G8 Advocacy Alliance, CFI teamed up with other non-profits in the financial inclusion community to develop a set of recommendations for G20 leaders. While the Alliance and DWG span a diverse range of issues, our focus was, of course, on financial inclusion.

Our recommendations to the G20 were developed in coordination with CARE International UK, the Grameen Foundation, the Cherie Blair Foundation for Women, HelpAge USA, and the Microcredit Summit Campaign, among others. They urge governments to implement national strategies for financial capability and client protection, ensuring that these strategies and targets address a full suite of financial services and include underserved groups. You can read the full set of recommendations and contributing organizations here.

Last week we had the opportunity to discuss our recommendations with senior leadership from the Australian G20 presidency. As you may know, the G20 Presidency rotates each year, and this is Australia’s year. Each presidency takes a lead in setting the agenda and priorities, which are then discussed and (ideally) implemented by all G20 members.

The G20 Australian presidency issued a global development agenda, which was supported by the DWG. It highlighted two major outcomes for 2014 related to financial inclusion and remittances. We were happy to see an expressed desire to move beyond a focus on cost reduction for remittances, where there has been a great deal of progress, to maximizing the potential of remittances to increase financial inclusion.

During the meeting, our financial inclusion team brought three key points to the conversation:

1. No Financial Inclusion without Financial Capability. An example illustrating this point is CARE’s work with village savings groups for women. In order to ensure that women will benefit from the new formal financial services made possible when savings groups are linked to banks, we must ensure that the women will have the combination of knowledge, skills, attitudes, and ultimately behaviors that translate into sound financial decisions and the appropriate use of the new formal services. The methodology of savings groups is conducive to teaching members about financial services. While the G20 has been supportive of financial capability building efforts, we are calling for countries to incorporate lessons from behavioral economics and also ensure that government-to-person payments promote financial capability.

2. One Product Does Not Mean Full Financial Inclusion. Along with its support of financial capability, we’d like to applaud the G20 Development Working Group’s focus on remittances and migrants (one of the vulnerable groups we’ve identified in our Financial Inclusion 2020 (FI2020) project). But let’s not look at remittances as a stand-alone product. Remittances can be an on-ramp to additional financial services. In our FI2020 consultative process, Developing Markets Associates shared one innovative model with us, which provides financial counseling to remittance recipients, encouraging them to open a savings account.

3. National Strategies Should Focus on the Most Vulnerable Populations Backed by Data. While the current development agenda references vulnerable groups, such as youth, women, and migrants, we asked that the DWG also include the following groups: persons with disabilities, older adults, the extremely poor, rural households, refugees, subsistence farmers, and the LGBT community. We highlight a particular population that is growing in importance: older adults. In fact, older adults are the fastest growing population in the world and by 2050 will reach 2 billion people. In this light, when countries develop national strategies for financial inclusion, they need to make sure that vulnerable groups are fully considered. To ensure that we are doing this, countries should track data for each vulnerable group.

During the meeting, we learned that the G20 Development Working Group is working with the Global Alliance for Financial Inclusion (GPFI) to push the development agenda beyond government stakeholders to include private sector players (e.g. telecommunications companies, technology providers, insurance providers, private banks, NGOs). This is a new step for the GPFI, which has traditionally focused on government stakeholders. We agree with the new orientation. The promotion of public-private partnerships will be vital to increase financial capability building and create on-ramps to financial inclusion.

We encourage you to review our recommendations and comment if you would like to suggest other priorities for the G20 Development Working Group.

Image credit: G20

Have you read?

G20 Financial Inclusion Indicators: The New Data Sandbox

Financial Inclusion and the Post-2015 Development Goals

What Is “Financial Capability?”

Expanding financial inclusion to the 2.5 billion unbanked individuals around the world is essential, but why does it matter, and is it possible in the next six years?

In recent years, the inclusion movement has achieved critical support and rapid progress. Last year universal financial access by 2020 was endorsed by World Bank President Jim Kim. Technology-enabled business models are catalyzing outreach, building on infrastructure like the mobile phones now accessible to six of the world’s seven billion people.

In the following video, global financial inclusion leaders explore the questions of whether financial inclusion is possible by 2020, and why we should work towards that goal.

The video features the following individuals:

• Ajay Banga, CEO, MasterCard Worldwide
• Cherie Blair, Founder, The Cherie Blair Foundation for Women
• Sendhil Mullainathan, Professor of Economics, Harvard University
• Mark Hookey, Founder, Demyst.Data
• Nick Hughes, Director of Strategy, M-KOPA
• Edward Effah, Managing Director, Fidelity Bank
• Bob Annibale, Global Head, Citi Microfinance & Community Development, Citi
• Jean-Claude Masangu Mulongo, Former Governor, Banque Centrale du Congo
• Elly Ohene-Adu, Head of Banking Department, Bank of Ghana
• Duvvuri Subbarao, Former Governor of Reserve Bank of India
• Martyn Parker, Chairman, Global Partnerships, Swiss Re
• Susie Lonie, Mobile Money Consulting Director, Consult Hyperion/SJLCS

To watch the video on our CFI YouTube page, click here.

Have You Read?

What Will You Do to Make Financial Inclusion a Reality by 2020?

A Global Challenge: Can We Achieve Financial Inclusion by 2020?

Financial Inclusion by 2020: Our Generation’s Equivalent of Putting a Man on the Moon

It’s hard to imagine a more explosive, transformative, and empowering trend than the growth of the mobile phone sector in Africa. In 1998 there were fewer than 4 million phones on the continent; today there are around 800 million—a whopping 80 percent penetration. Compare this to the meager 24 percent of African adults with bank accounts. Experts expect there will be around 1.1 billion mobile phone subscribers by 2017.

Women likely will be at the forefront of this future growth in mobile access in Africa (and elsewhere), globally accounting for two-thirds of new subscribers. According to the Cherie Blair Foundation, the gender gap in Africa alone is a $2 billion business opportunity.

At the same time, the potential for mobile money is indeed dazzling. The Kenya example continues to dazzle us, with 21 million active users, more than 60,000 agents (many of whom are women), and mobile money deposits of KSh 226 billion, surpassing the deposit base of the country’s largest commercial bank, Kenya Commercial Bank.

With all this promise, the potential is unrealized outside of a few countries. Why? The answer is complex, but fundamentally it’s because mobile money operators systematically underinvest in two things: understanding the market and building the agent network.

As it turns out, both of these things are critical for connecting women with mobile financial services. Once we crack the problem of women’s access to financial services, their households and communities will follow shortly thereafter.

Market. What are the real pain points for women? Why is mobile money better than what they are doing now? Better than cash? These questions have not received the attention they deserve. Recently, a study by Bankable Frontier Associates for the GSMA’s mWomen program shed some light on women’s financial inclusion issues that are relevant for mobile money. Here’s what we know about women according to the study:

• Women are multitasking money managers. They are often in charge of very large numbers of small, regular transactions like shopping, receiving remittances, paying bills, and school expenses.
• Women are really stretched for time. Because they have so many different jobs within and outside of the household, making all these payments is a real hassle.
• Women are more likely to have erratic income sources. They tend to work more frequently in the informal sector where income comes in fits and starts—although they are also receivers of remittances and payments from government agencies, which can be more regular.
• Women are conservative. They do not want to take risks with the family’s money, and trust is their number one concern in choosing a provider. They prefer cash and informal systems such as savings groups.
• Women can be loyal evangelists. If they trust the source, winning women over to mobile money can create ripple effects throughout the community.

Overall, women value four things when it comes to financial services: convenience, reliability, security, and privacy. Mobile money has the potential to deliver on all four fronts.

Agents. As a corollary to the above, a high-quality, convenient agent network is crucial for building trust and loyalty. Too often, operators build out the agent network quickly, ahead of growth in customers and transactions. The agents don’t see transactions, they don’t bother to buy the electronic money, and forget their training. Yet these agents are the “face” of any mobile money operation. An early bad experience can turn women off for good.

At the same time, a growing agent network poses an enormous business opportunity for women. The Cherie Blair Foundation, the U.S. Agency for International Development, and Tigo (Millicom) have recently launched a program that will support more than 4,000 women agents in Tanzania, Ghana, and Rwanda. It will be important to follow that experiment closely to see what lessons can be learned.

Implications for building a business case around women

Five key messages stand out for operators keen on tapping the opportunity presented by women:

Make it easy to buy phones. Despite impressive penetration figures, 34 percent of women in Tanzania and 13 percent in Kenya reported they wanted to use mobile money but didn’t have a phone. On the other hand, one of the most commonly cited reasons for not having a phone (after cost) is that women don’t see the value. There’s an opportunity here—as women see the value in mobile money, they will buy phones.

Tailor marketing to women. Many mobile money marketing campaigns feature men and fail to address the specific pain points felt by women. But even the term “women” is too broad a market segment—a sophisticated consumer insights study would identify a few key segments and then focus messages on them.

Build awareness below the line. Trust and confidence is based on the personal touch. Safaricom estimates that it spent at least 10-15 minutes face-to-face with each customer for the first year or so. For women, this high-touch approach is particularly important, hence the need to invest in agent network quality.

Emphasize “show how” rather than “know how.” When women see that they can instantly pay family, business partners, and suppliers, they will build trust quickly. Getting women to try the service is critical. Analysis of the customer journey shows that women are just as likely as men to try mobile money once they become aware and understand it.

Streamline and clarify documentation. Some women shy away from mobile money—and banking in general—because they assume they lack the right documentation. Often this is not the case. Help women see that they are eligible.

Women are likely the entry point to mobile financial services adoption at scale. Those who ignore this important market segment may lose out entirely.

Brigit Helms of DAI is the Director of the USAID-funded SPEED project in Mozambique. Brigit brings more than 25 years of private and financial sector development experience, finding innovative business solutions to development problems in over 30 countries in Africa, Asia, and Latin America. Prior to joining DAI and the SPEED team, Brigit was Senior Expert for Financial Inclusion at McKinsey and Company where she worked with banks and telecommunications companies to build new business models to reach low income clients. Before that, she was CEO of Unitus, Inc., a global non-profit dedicated to financial services in East Africa and India. She spent four years in Asia with the International Finance Corporation where she led the organization’s Advisory Services work in Indonesia, on issues ranging from agriculture development, sustainable forestry, infrastructure, business environment, and financial services. Brigit was a founding leadership team member of CGAP, a global center of excellence for financial services. 

Image credit: Cherie Blair Foundation

Have you read?

International Women’s Day 2013: Where Are We With Women’s Access to Financial Services?

Mobile Money Could Mean Big Benefits for Lower-Income Women

Half the Sky: Turning Oppression into Opportunity for Women Worldwide