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> 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.
> Posted by Julia Arnold, Financial Inclusion Consultant
If I ask you to picture an American who is financially vulnerable, what do you see? Do you see someone living from paycheck to paycheck? Someone who patronizes a payday lender or car title lender? Perhaps a family struggling to decide which bill to pay at the end of each month? Someone with a high school degree working a few part-time, low-wage jobs? And how many people do you think fit into this category in the U.S.? Twenty percent? Thirty percent?
What if I were to tell you that in fact nearly half of Americans report that they could not come up with $400 in an emergency? That’s about 150 million people – a number so large you’re bound to know at least one person in this group. Financial insecurity or vulnerability isn’t just a concept discussed among development professionals looking to support a microfinance institution in Kenya or India; in the U.S., it’s a reality for millions of our neighbors and friends. Those living in perilous economic existences are not just the people we imagined above. The financially vulnerable are hiding in plain sight.
> Posted by Hannah Sherman, Project Associate, CFI
A financial shock can happen suddenly and at any time, and a single unexpected expense can push many American households into financial hardship. Something as straightforward as a car repair can have a snowball effect on a family’s finances if they are not prepared for it. A 2015 report from the Pew Charitable Trusts found that in 2014, 60 percent of American households experienced a financial shock, and that the average household spent half a month of income on its most expensive shock.
While most households have at least a loose budget for recurring expenses like housing, food, and transportation, most are not prepared for additional unexpected expenses, a study from the Center for Financial Services Innovation (CFSI) found. Consumers’ attitudes and behaviors are typically consistent with their financial health – i.e. those who are financially healthy are more likely to have recovery strategies available when setbacks strike.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
Last week the President of Mexico launched the country’s long-delayed National Financial Inclusion Strategy. The comprehensive plan engages the spheres of private banking, social welfare, public education, telecommunications, and more to extend quality financial services to the 56 percent of adults in the country who remain without a formal bank account. Although the plan was nearly full-formed three years ago and has since sat on the proverbial shelf, the enactment of the strategy represents a reaffirmed commitment to financial inclusion across the Mexican Government, including the Office of the President, the Central Bank, the Ministry of Finance, and the Ministry of Public Education.
The national strategy is structured as a six-pillared plan. The Ministry of Public Education (Secretaria de Educacion Publica) will promote financial education starting with children and youth by incorporating related content into the curriculum of public education. Financial education will also be embedded in government programs like Prospera, Credito Joven, and Mujeres PYME. Prospera is Mexico’s conditional cash transfer program, which has 6.5 million beneficiaries. Credito Joven is a youth inclusion program introduced in February 2015 that aims to empower young people, in part by providing credit to those with no credit histories. Mujeres PYME offers finance and business development support to small businesses led by women.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
This morning I had the luxury of splitting an Uber with my girlfriend for our to-work transportation. Neither she nor I are affluent by United States standards, but I would say we’re relatively financially healthy. Most months, our expenses like rent, food, medical bills, and student loans are low enough compared to our incomes that we have money left over for things like Uber rides, dinners out, and the occasional vacation. We have formal financial products and understand them well. Financial health for us means the combination of our financial flows and our financial products positions us for financial stability in the immediate and long-term, even as we grow older and our financial demands dramatically change.
Building financial health, for me, requires attention to my day-to-day financial activities that help build my resilience and allow me to take advantage of opportunities. It’s having savings quietly accumulating for a rainy day or for that bicycle purchase. It’s having access to loans that help if I want to go back to school, buy a house, or start a business. It’s the ability to pay up when an emergency visit to the hospital is necessary, and it’s the confidence that if my house is broken into I can replace my possessions.
My own financial health is very much related to the unique day-to-day financial needs, opportunities, and emergencies that exist in my life. Someone who is unemployed, or older, or supporting a child, or enrolled in school would have a much different assessment of their own health. Similarly, someone in a low or middle income country—where the Center for Financial Inclusion focuses most of its attention—would have different financial needs and therefore different financial health. Despite these differences, however, the thing I’ve noticed is that many of the big financial issues around the world are the same. As part of the Center for Financial Service Innovation’s (CFSI) financial health blog contest, I wanted to offer some observations along these lines.
> Posted by Sonja Kelly, Director, CFI
What are the biggest unanswered questions in financial inclusion? This isn’t rhetorical—we want your opinion.
In preparation for selecting three CFI Fellows for 2016-2017, we are developing a short list of questions whose answers would drive financial inclusion forward.
Our Research Fellows Program is an initiative intended to tackle the biggest questions in financial inclusion—in order for the industry to take action in new areas and in new ways. The current cohort of fellows is finalizing research ranging from big data to small enterprises to technology infrastructure to G2P payments.
The questions we put forward for this next cohort will only be relevant if they are essential to the financial inclusion community. So we’re coming to you (yes, you!) for your input.
To get the conversation started, here are some of the questions on our working list. Let us know below in the comments which you think are compelling, and please take the liberty of adding your own.
Read the rest of this entry »
> Posted by Hannah Sherman, Project Associate, CFI
To create sustainable impact in the financial inclusion landscapes of emerging markets, providers must engage, train, and/or learn from vast networks of customers. Prospective customers must develop the skills to effectively use financial products. Doing this well is both difficult and expensive. Arifu, based in Kenya, attempts to minimize this challenge by bringing together providers and consumers in a cheap, efficient way. Arifu is a new kind of platform that provides customer capability-building through mobile technology. Arifu tests, refines, and hosts content developed by various educational organizations via SMS on mobile phones. Arifu’s business model is designed with scalability in mind, and it claims that it can be 90 percent cheaper than conventional customer outreach programs.
Arifu’s digital learning experts work with providers to design and develop behaviorally-informed training, advertising, and data collection programs. Department-level financial accounts, budget controls, custom alerts, and cost-benefit analytics help organizations minimize, measure, and justify their programs down to each interaction.
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