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> Posted by Hannah McCandless, Program Support Associate, Village Enterprise

Through its one-year graduation program, Village Enterprise provides business and savings training, access to savings groups, seed capital, and mentoring to rural East Africans living in extreme poverty. The program combines these grassroots interventions with linkages to financial institutions, increasing the financial capability of the extreme poor. In the second part of this series, Village Enterprise reflects on some of the learning gained through these interventions, focusing on amplifying progress made at the grassroots level through linkages to formal institutions.

The adoption of attitudes, habits, and behaviors needed for healthy financial decision-making is an essential first step in preparing individuals to be consumers of financial services. But just because households regularly save money or understand the risks of microloans does not necessarily mean that they are ready to evaluate and take-up formal financial services on their own. To be effective, financial inclusion interventions for those living in extreme poverty, at the base of the pyramid, need to both foster financial capability and facilitate healthy linkages to financial institutions.

Recognizing this need, Village Enterprise is working to establish linkages between our Business Savings Groups (BSGs, our version of VSLAs) and formal financial institutions. However, as we have learned, linking our BSGs to the right financial institution is easier said than done. We have found that creating healthy linkages is a multi-step process, rather than a one-time event.

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> Posted by Hannah McCandless, Program Support Associate, Village Enterprise

Through its one-year graduation program, Village Enterprise provides business and savings training, access to savings groups, seed capital, and mentoring to rural East Africans living in extreme poverty. In part one of this series, Village Enterprise reflects on some of the learnings gained through these interventions, focusing on facilitating behavior and attitude change to increase financial capability.

In a recent CFI blog post, Robert Stone of Savings at the Frontier reflects that technology can serve as a valuable tool, but not a silver bullet, in the quest to improve well-being through expanding financial capability. As tech-thinker Kentaro Toyama notes, “Even in a world of abundant technology, there is no social change without change in people.” Toyama’s words resonate with Village Enterprise’s approach to financial inclusion for the extreme poor. Stone argues that effective change will occur when interventions that create change in people are connected to systems that amplify the effectiveness of these changes. This is a good description of what Village Enterprise is about.

Village Enterprise’s graduation program instills behavior change in people by providing a package of supports that enable them to move forward: access to savings networks, an asset transfer, skills training, and mentoring. Then, we capitalize on these changes by connecting participants to formal financial services. The combination of these services dramatically increases financial capability–the knowledge, skills, attitudes, and behaviors needed to facilitate healthy financial decision making–in the extreme poor.

Capitalizing on behaviorally informed practices

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> Posted by Pablo Antón Díaz, Research Manager, CFI

Leonardo Tibaquira Morales, Product Manager at Accion, leads a training for workshop participants who work with pensions

Traditional financial education programs have, at best, a minimal impact on the financial capability of recipients. At least that’s what the research tells us. Still, the vast majority of time and energy contributed towards improving financial capability around the world is channeled through traditional methods. I had the opportunity to take a closer look – and contribute to – one country that is energetically trying to improve financial capability: Colombia.

The Colombian government recognizes that the average level of financial literacy and financial capability in the country is low, especially among rural and low income communities (as a joint-study by CAF and others across several South American countries demonstrates) and that the programs implemented thus far have been insufficient to address the issue. But, the country is poised for change.

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> Posted by Sonja Kelly, Director of Research, CFI

UNLEASH Lab 2017 gets underway in Denmark

UNLEASH Lab 2017 gets underway in Denmark

This week and next, three Accion staff—myself, Pablo Antón Díaz, and Kathleen Yaworsky — are working with about a thousand other people to make progress on the Sustainable Development Goals (SDGs) during UNLEASH Lab 2017. As the website exclaims, “The first UNLEASH event is held when talents from all over the world come to Denmark for nine days to create real, scalable solutions to the Sustainable Development Goals.” Before I left, a friend of mine asked what the goals have to do with my work, since they don’t explicitly include financial inclusion. The answer is quite simply that financial inclusion is an enabler of the SDGs. We encourage and advance financial inclusion so that people’s lives can be better in many of the ways the SDGs address – from education to health care to housing.

UNLEASH Lab 2017 is an audacious experiment that brings together people from 130 countries who work in academia, health, education, economic development, infrastructure development, city planning, and more. The idea is that with adequate brainpower and resources, a group of people like this can move the needle on the SDGs. The events team, with support from Deloitte, Dalberg, and others, and drawing on input from more than 200 “knowledge and talent partners”, has loaded the agenda with inspirational speeches, team-based design workshops, and competitions. At the end of the event, some of the better ideas that emerge will receive funding. And apparently Ashton Kutcher will be there too for a little extra star power.

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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 Robert Stone, Project Director, Savings at the Frontier

In his excellent debunking of the myth that technology solves everything, Geek Heresy, Kentaro Toyama argues that “technology’s primary effect is to amplify human forces… Even in a world of abundant technology, there is no social change without change in people.” That means a change in their capabilities, in the broadest sense, as defined by Amartya Sen, the Nobel Prize winning economist and philosopher. In Sen’s work, especially in The Idea of Justice, he argues that justice requires people to have the freedom to do what they would choose to do if they could, if they had the capability to choose.

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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.

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> Posted by Center Staff

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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> Posted by Center Staff

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.

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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.