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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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> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI
Those who work in the financial inclusion space need a deep understanding of how low income people manage their money, and there is no better guide to develop this understanding than Ignacio Mas, who recently spoke at the Africa Board Fellows seminar in Cape Town. Here are some of his insights.
Unused money is vulnerable if you are poor. You have to protect it from a lot of things – theft, friends and family, and, also, your future self… (Let’s not underestimate the threat of the future you as someone who has the most access to, and authority over, those funds.) And there is no saying how resolved you will stay toward your savings goals. One way to protect any unused money against these threats is to make it less liquid. For example, you could convert your savings into a goat. In many countries, a goat can be sold if an emergency should arise, but you certainly wouldn’t sell or trade it to make an impulse purchase. Or as the vendor I just bought holiday jam from put it: “Making jam is like forced savings for me. I spend it in the summer on jars and sugar and fruit and get it back in December for Christmas shopping money!” These are examples of self-nudges that enable clients to better stick to their goals – one of the seven behaviorally-informed practices for financial capability. These approaches create behavioral roadblocks, so that individuals are able to save with less effort.
The Center for Financial Inclusion is working to create a Financially Capable India platform that will hasten the spread of behaviorally-informed approaches to financial capability throughout the Indian financial inclusion sector.
As a part of this effort, CFI is excited to collaborate with MetLife Foundation to announce Inclusion Plus: an innovation competition for impactful and scalable organizations that are working to advance financial inclusion in India. Participants will be able to connect with other like-minded social enterprises, engage with PNB MetLife mentors and compete for a prize pool totalling $150,000.
Participants will present solutions to increase access to quality, sustainable financial services in one or more of the following subcategories:
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Looking Beyond [Universal Financial] Access
CFI defines Financial Inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services…”
The World Bank’s latest edition of the Global Findex revealed that between 2011 and 2014 over 700 million people were newly financially included, at least according to the top line metric of account ownership. The Universal Financial Access program continues to drive home the message that financial access is within reach, even possibly by 2020. We at CFI are now shifting our focus to the other elements of financial inclusion, those which we have always stood by and advocated for, but those that will certainly take longer than 2020 to reach.
Our definition continues:
“… provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”
In this issue of our ongoing Financial Inclusion 2020 e-magazine series you will find insights from recent or ongoing CFI research projects. In a rundown of our Business of Financial Inclusion report, you will hear what commercial bank managers told us about the opportunities and challenges that they face in reaching unbanked and underbanked customers. You will also dive into how commercial banks are partnering with financial technology startups to serve new customers and broaden their product offerings. In the e-zine’s research spotlight, we take a critical look at how effective G2P payments have been in advancing financial inclusion. We also explore the role of microfinance in microenterprise growth. In addition, we discuss the importance of two emerging concepts, financial health and financial capability, and what these two frameworks mean for regulators, providers, and customers.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
Recently news broke that Google is developing an ambitious online platform that aligns with India’s flagship Pradhan Mantri Jan Dhan Yojana (PMJDY) financial inclusion scheme, and will support users in building their financial literacy and accessing appropriate financial services. If the platform does indeed come to fruition, and functions as intended, it could mean huge benefits for the country. It is reported that the PMJDY program has succeeded in enabling every household in the country in having a formal bank account, and as of the end of 2015, according to the Finance Ministry, 60 percent of the accounts opened under the program have been used and have a balance. However, concerns over account dormancy and lack of account usage in the country persist, as do concerns over financial capability. A platform that empowers Indians to best use PMJDY financial services, harnessing the horsepower of Google, could be a game-changer.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
It is hard to imagine who would scam an older adult over their hard-earned savings. But the reality is that as many as 17 percent of Americans aged 65 or older report that they have been the victim of financial exploitation. What’s more, only one in 44 of these cases are ever brought to the attention of protective services. In total, billions of dollars are lost each year due to the financial abuse of older Americans. Recently, the Consumer Financial Protection Bureau (CFPB) adopted a novel approach to combatting this trend, intervening with financial education … over a meal.
> Posted by Brian Kuwik, Chief Regional Officer, Africa, Accion
Today around the world, we celebrate our youth and their achievements and reflect on the goals of “eradicating poverty and achieving sustainable consumption and production” for the youth of this generation. To achieve these goals, a culture of saving money consistently over time will be important.
How can financial institutions, policy makers, and parents encourage the youth to save? A six-year project (2010-2015) across four countries, YouthSave, led by Save the Children and Washington University examined this question. Recently, I attended the project’s dissemination event in Accra, Ghana and learned about how, as part of the project, a bank partnered with middle and secondary schools to offer formal savings accounts to students 12-18 years of age.
Many Ghanaian students are saving money informally in their schools because they either lack national identification documents or cannot find an adult whom they trust to be the primary signatory to a bank account. Some entrepreneurial students act as “susus” collecting cash from their classmates on a daily basis and safe-guarding it. Since they often keep one day of savings as a fee for this service, this can be a costly way of saving.
> Posted by Sonja Kelly, Director, CFI
I’m thrilled to announce that we are now accepting proposals for 2016-2017 CFI Fellows! Maybe this is your year to consider having a little funding and space to take on a big financial inclusion question that could have a major impact on the industry.
We’re looking for researchers who are willing to undertake ambitious work that will advance financial inclusion. We’ve assembled a set of five questions that we think represent some of the most pressing concerns facing the industry, and we will be funding the most promising proposals that set out a plan for answering these questions. The topics we selected are ones that have been well-vetted. They were sourced from an internal Accion-wide exercise, discussions with the CFI Advisory Council, consultation with our friends across the financial inclusion space, and the solicitation of your comments on our “shortlist” of questions here on the blog (thank you so much for your input!).
The research questions this year cover a range of topics:
What does effective human touch look like in our digital age? Although financial services are rapidly going digital, some customers, especially those new to the formal financial system or with lower levels of education may still desire to interface with people—to build trust, to troubleshoot problems, and to receive advice on their financial lives. How are financial services providers integrating human touch into digital products? Is it working? Where is human touch critical throughout the delivery process? Who within the target population is going to want and need that human touch more than others? And how should financial service providers build it into their process?
> Posted by Hannah Sherman, Project Associate, CFI
Commercial banks that are pursuing financial inclusion strategies are increasingly focused on designing a positive customer experience when targeting underbanked customers in emerging markets. 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 this aspect of bank activities has emerged.
Based on in-depth interviews with 24 banks in emerging markets, the report examines the challenges and opportunities banks face in reaching unbanked and underbanked customers. It shines a spotlight on banks as leaders in advancing financial inclusion and discusses specific strategies related to technology, data, partnerships, financial capability, and other key issues.