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BEFIT photographers

BEFIT photographers. Photo Credit: Elisabeth Rhyne

> Posted by Elisabeth Rhyne, Managing Director, CFI

Imagine a country unlike any you have ever seen – a mountainous land without Starbucks, where pop stars sing praises of the king, and men wear skirts with knee socks. You might be tempted to relegate the country to the category of charming or exotic. But that would be a disservice to Bhutan, which presents itself as kind, intelligent and ready to participate in the modern world.

I attended the Bhutan Economic Forum for Innovative Transformation’s summit on “Equitable Growth through Financial Inclusion” held last month in Thimphu, Bhutan’s capital city, and that provided me with an opportunity to hear in depth about its unique development philosophy – Gross National Happiness (GNH). Before we turn to the connections between GNH and financial health, here is some important context. Read the rest of this entry »

> Posted by Virginia Moore, Communications Director, CFI

Last week, the Center for Financial Inclusion at Accion (CFI) participated in LendIt USA, an annual conference that brings together leaders and startups in fintech, lending, and venture capital to discuss trends, innovations, and the future of the industry.

So, what were we doing there? We attended to help introduce what we do to this audience of over 5,000 people, partnering with LendIt organizers to launch its very first financial inclusion track. CFI managing director Elisabeth Rhyne spoke on a panel about responsible credit along with representatives from the Consumer Financial Protection Bureau, the Marketplace Lending Association, LendStreet, and AEO. Championing the Smart Campaign and consumer protections, Beth brought a global perspective on what responsible credit looks like in practice. She also debated the elephant in the room—or as she put it, “the dead cat on the table:” interest rates. Our director of research Sonja Kelly also moderated a lively session on how smartphones in emerging markets are expanding access to credit with executives from Branch, Cignifi, Juvo, and PayJoy. We’ll have more on these sessions soon.

It was exciting and satisfying to see so much interest in financial inclusion from conference attendees who may not readily know the definition of financial inclusion, appreciate its value, or recognize how they’re contributing to it.

What Is the Value of Financial Inclusion to Fintech and Investor Communities?

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Money changer at the bazaar displays his currency wares

The following post was originally published on Devex.

In his proposed budget, U.S. President Donald Trump is calling for cuts to foreign assistance. In this message I would like to suggest that even with a smaller foreign aid budget, an excellent opportunity exists to work toward financial inclusion as a development goal. Financial inclusion provides wins all around: for business, for national security and for individuals — and it would not be expensive for the administration to pursue it.

Financial inclusion means ensuring that everyone — farmers, shopkeepers, teachers, students, etc. — has quality financial services to manage their lives and become economically productive. Over 2 billion adults worldwide lack a bank account. Financial services, including accounts, savings and credit, have become a gateway for social and economical inclusion, which in turn contributes to prosperity and peace. For the first time in history, financial inclusion is actually feasible: mobile money, e-commerce and digital financial services make it possible for providers to serve enormous new segments of the population.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Since 1992, when Accion created BancoSol in Bolivia, the first private commercial bank dedicated to microfinance, Accion’s aim has been to create a financially inclusive world, primarily through building financial institutions that serve the base of the pyramid. Accion has contributed to the birth, growth, or strengthening of 66 microfinance institutions in 34 countries, which together serve millions of clients with a broad array of financial services.

Through the years, Accion has gradually evolved its own unique microfinance institution partnership model. I recently spoke with Michael Schlein, Accion’s president and CEO, Esteban Altschul, chief operating officer, and John Fischer, chief investment officer. I asked them how and why Accion’s model for working with microfinance partners has taken its current form, and what has been learned along the way.

Michael Schlein said that the starting premise for Accion’s model was, “the recognition that charity – though very important – is insufficient to the task of building a financially inclusive world. You have to tap the capital markets.” As a non-profit organization originating in the international development arena, this premise set Accion onto a path that was “disruptive” in the 1990s, though it is widely adapted today in the impact investing movement.

The model assembles private investors around the common purpose to build a healthy and profitable financial institution that can grow and provide services over time. To succeed for investors, it must produce adequate financial returns and an exit path so the returns can be realized. To succeed for Accion’s mission it must result in quality financial services for people who would otherwise be excluded. Accion also looks for a demonstration effect. When business success inspires others to enter the market and thus creates an industry, that’s how Accion’s broader vision advances.

What has now crystalized is a model of partnership in which a web of incentives meets the needs of each organization involved, aligns all the players behind the mission, and elicits strong performance from each partner – including Accion itself.

Here’s how it operates.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

In his book, The Emperor of All Maladies, Siddhartha Mukherjee tells the history of the fight against cancer. It’s a grand saga involving scientists, doctors, patients, and politics, all wielding their best tools to find better treatments and ultimately a cure. And of course, the tale is not over: the scourge continues, though much progress has been made, and an increasing number of bright spots are appearing.

As I read, I see parallels between the evolution of that medical “war” and the struggle against poverty waged by the international development community, or at least the part of that struggle I’m part of, the struggle to give people financial tools to better their lives. The more I read, the more I see, until in each corner of the cancer story I find parallels with our own sector and its searches for solutions.

In the early 20th Century, surgeons began to treat breast cancer with radical mastectomies in which not only breast but also lymph nodes and many of the neighboring chest muscles were taken. The more radical, the greater the chances of success, went the theory. By mid-century, chemotherapies appeared. They represented another radical approach in which patients were brought to the brink of death as chemicals attacked cancerous and normal cells alike. In both cases, Mukherjee argues, brute force substituted for the absence of a deep understanding of the causes and behavior of cancer. The medical profession simply applied the tools at hand, raising the intensity as high as patients could tolerate. The tools sometimes cured the patient, but more often postponed the inevitable recurrence, a partial success. According to Mukherjee, the surgeons and chemotherapists who wielded these instruments were so convinced of their efficacy that they closed their minds to alternatives (including each other’s solutions), scoffed at attempts to measure success through rigorous trials, and downplayed the suffering imposed on actual patients.

Maybe you’re already seeing parallels…

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> Posted by Tanaya Kilara, Financial Sector Analyst, CGAP

Customer-centricity is about providing solutions based on a deep understanding of customer needs, preferences, and behaviors. This is a concept that is easy to agree with but difficult to implement. Financial service providers serving base of the pyramid (BOP) customers struggle with generating customer insights, but more importantly, with translating those insights into better products and services for BOP customers. In a recently released CGAP Brief, Beth Rhyne and I explore the relevance of customer-centricity for financial inclusion.

Our starting point is that BOP customers differ significantly from their wealthier counterparts. They have informal, irregular incomes, different spending and consumption patterns, different relationships with financial institutions, and need different consumer protection measures. Developing this understanding of customers and their differentiated needs is the first step in serving the BOP market with relevant financial services. Many financial service providers presume that this market can be served by the same products as those of higher income customers, or at best, that they can treat this entire market as a single segment. Providers need to recognize different needs and segments and therefore provide different financial solutions that cater to this market.

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Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion, discusses the background to the FI 2020 Global Forum. She details how and why 300 representatives from across the world – representing public, private and non-profit sectors – are coming together at the Lancaster London Hotel from October 28-30th to map out how full financial inclusion can be achieved by 2020.


Recent History
We started a couple of years ago with the question “could financial inclusion be achieved around the world by 2020?”. We did that to get people to think ahead, to look into the future instead of focusing on their problems today.

In preparation, we did two things. First we undertook some demographic research called ‘Mapping the Invisible Market’.

The bigger project was a series of working groups on each of the critical topics for Financial Inclusion. These working groups’ focus areas were defined by a survey we undertook to understand the opportunities and obstacles to financial inclusion.

The working groups had representatives from 40 organizations and have produced five roadmaps to financial inclusion – work that has subsequently been vetted by another 200 people. Our five Roadmaps to Inclusion are:

1. Technology Enabled Business Models
2. Consumer protection
3. Addressing Customer Needs
4. Financial Capability
5. Credit reporting

The FI2020 Forum: Creating a community of action
The people at the Forum are hand-picked to represent the different stakeholders in the industry. Indeed, one of the things that makes this meeting unique is that we have a broader array of people than ever before. We have people from major corporate and regional banks, microfinance institutions, telecoms companies, policy makers, regulators, investors and supporting organizations.

By bringing these diverse groups of people together, the Forum is creating a community – a community that has a commitment to action.

The Roadmaps have ten key action principles which are underpinned by a host of more detailed points. The work of this Forum is to put more action steps around those action principles – being specific about who needs to do what.

My hopes for the Forum
I hope that people come away from this forum with a much deeper vision of what financial inclusion is and what it entails.

I hope to see people getting excited about what actions need to be taken – identifying new opportunities and making commitments to take them. I also hope that people begin to see financial inclusion from the perspective of a client – of financial services making a real difference in their lives in both the short and long-term. A lot of times, financial inclusion is seen as ‘banking the unbanked’ – I hope people come away with a much deeper vision of what Financial Inclusion is and what is required to make it happen.

To see what others are saying and posting about the Global Forum, visit the Financial Inclusion 2020 website and follow #FI2020 on Twitter.

> Posted by Elisabeth Rhyne, Managing Director, CFI

The following post was originally published on the Huffington Post World Blog.

The High-Level Panel of Eminent Persons on the Post-2015 Development Agenda, led by David Cameron, Ellen Johnson Sirleaf, and Susilo Bambang Yudhoyono, has released its recommendations for the next round of world development goals. This document launches what is sure to be a lively debate that will take place in the coming months, as the United Nations considers this report and prepares for the Secretary General to announce the official U.N. recommendations later this fall.

The Eminent Persons panel put forward twelve illustrative goals, ranging from 1) End Poverty to 12) Create a Global Enabling Environment, and touching in between on health, education, water, energy, and other priorities.

For those in my line of work, the immediate question is: How does the report position financial inclusion?

In recent months, when the subject of financial inclusion and the Post -2015 Global Development Goals (GDGs) comes up, someone is sure to say, “Financial services aren’t development goals; they’re enablers.” And this is the crux of a dilemma. The importance of financial inclusion is increasingly recognized. But if financial services are seen through an “enabler” lens, they would not appear in the top tier of GDGs, which revolve around outcomes of intrinsic value to people and nations. What is the role of an enabler like financial inclusion in a development framework that focuses on outcomes?

It looks like the Eminent Persons recognized this dilemma, and as a result, they had a hard time finding the right place for financial inclusion. They did address it, finally, by tucking it under proposed goal 8) Create Jobs, Sustainable Livelihoods, and Equitable Growth. Specifically, sub-goal 8c says, “Strengthen productive capacity by providing universal access to financial services and infrastructure such as transportation and ICT.” They put it into a section that is mainly about job creation, and then linked it to physical and communications infrastructure. Another sub-goal (2c) calls for equal rights for women to open bank accounts (along with the right to own property and sign contracts), implying that financial services are a necessary part of an economic identity.

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> Posted by Center Staff

On Tuesday, in conjunction with the release of our second FI2020 Mapping the Invisible Market report, Growing Income, Growing Inclusion: How Rising Incomes at the Base of the Pyramid Will Shape Financial Inclusion, we hosted a live, interactive webcast with MasterCard. The webcast explored the relationship between rising incomes and financial inclusion, including the opportunity for inclusion presented by the emergence of the “vulnerable class.” The session also spotlighted the Mapping the Invisible Market interactive data tools (available here and here), as well as MasterCard’s work in supporting financial inclusion globally.

Hosted by MasterCard’s Nicole Ward, the webcast’s presenters were CFI’s Sonja Kelly and Elisabeth Rhyne, and MasterCard’s Tara Nathan. Here’s a few of the points that were made during the discussion.

  • Rising incomes, changing demographics, advances in technology, and government engagement are factors that are coming together to further financial inclusion
  • Global GDP has been growing for the past 30 years, with a projected increase from $61 trillion in 2010 to $85 trillion in 2020
  • From 2010 to 2020, the annual income of the bottom 40 percent in low and middle income economies is projected to double, from $3.1 trillion to $5.8 trillion
  • In many populous countries, the BOP will move into the vulnerable class in this decade
  • At the country level, there is a strong correlation between income and financial inclusion, both in account ownership and account use
  • There are many possible on-ramps to financial inclusion, including bill pay, G2P payments, no-frills accounts, and mobile money transfer
  • The transition from informal to formal financial services depends on many factors, including income level, income flow, employment formality, and social relationships
  • Incorporating the vast influx of new clients requires scaling up client protection and financial education
  • MasterCard is working with the government of Nigeria on a national ID program to provide a single proof of identity that also has the ability to deposit, receive, withdraw, and pay

Read the rest of this entry »

> Posted by Elizabeth Davidson, Financial Inclusion 2020 Consultant

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

Does Walmart pose a threat to banks? Some bankers are apparently worried the retailer indeed does. As Bloomberg recently uncovered, a group of bankers that advises the Federal Reserve asked U.S. regulators to keep Walmart out of the financial services business, or at least strictly limit and regulate their financial services-related products, including its established prepaid card business. Offered in partnership with American Express, the prepaid cards, known as Bluebird, are even marketed as a “checking and debit alternative.” The bankers’ group, called the Federal Advisory Council, thinks they are not just an alternative to traditional financial services, but a bona fide financial service in a “shadow banking” system that enjoys less regulation than traditional commercial banks.

So, is Walmart a real threat to the traditional sector? Maybe, but it and other big retailers could have the potential to reach those excluded from or underserved by traditional commercial financial services.

Consider the example of Banco Azteca in Mexico.

Banco Azteca, which CFI’s Elisabeth Rhyne called a “mega-success story” in terms of its reach and to whom the Inter-American Development Bank recently awarded its “equalBanking” prize for support of diversity and gender equality through financial services to the base of the pyramid, has a much different beginning than most banks: it grew out of one of Mexico’s largest consumer goods retailers, Grupo Elektra. After almost 50 years of experience offering consumer financing to its working class customers, the retail chain opened Banco Azteca branches—notably, after receiving a banking license—in all of its existing stores, establishing Mexico’s second largest network of bank branches almost overnight.

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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.


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.