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> Posted by Elisabeth Rhyne, Managing Director, CFI

When it comes to financial inclusion, as is true in many sectors these days, sexy start-ups and disruptive innovators often occupy the spotlight. But away from the glare, traditional banks are getting on with the work and making an enormous difference. In The Business of Financial Inclusion: Insights from Banks in Emerging Markets, produced in a partnership between the Institute of International Finance (IIF) and CFI, we explore how banks are innovating to include new customers.

Given the headlines, it may be a surprise to hear that even today the overwhelming majority of new accounts are opened at formal financial institutions, not mobile money outlets. Thanks to the Global Findex, we know that over 720 million adults accessed formal financial services for the first time between 2011 and 2014, 90 percent of these new accounts were opened at formal financial institutions. Of the 720 million total new accounts, only 54 million used mobile money as their primary account.

How are banks expanding customer outreach?

Through in-depth interviews, leaders from 24 national, regional, and global banks told us about the opportunities and challenges they face while reaching the unbanked and underbanked. Each bank has its own particular story. In the aggregate, their stories give insight into how banks are evolving to meet people where they are and serve population segments that have been traditionally excluded.

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> Posted by Center Staff

“We would not be here without the visionary work of the pioneers who came before us, especially the women leaders who fought to build the very first banks for women in countries with seemingly insurmountable barriers,” writes Mary Ellen Iskenderian, President and CEO of Women’s World Banking in the forward of a new online book, Celebrating Women Leaders: Profiles of Financial Inclusion Pioneers. The book shares the stories of 31 women leaders from around the world who made the financial inclusion landscape what it is today.

Those recognized in the book include practitioners, academics, researchers, regulators, thought leaders, financiers, and more. Among them, the industry’s earliest pioneers, like Ela Bhatt, founder of Self-Employed Women’s Association (SEWA), as well as those who joined more recently, like Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance, and Jennifer Riria, CEO of Kenya Women Holding. Full disclosure: of the 31 included in the book are also CFI leaders and partners, including Anne Hastings, Elisabeth Rhyne, Essma Ben Hamida, and Jayshree Vyas.

The book was the idea of Samit Ghosh, CEO and Founder of Ujjivan. Ujjivan and Women’s World Banking worked together on the project, with young women working in the sector researching, conducting interviews, and writing the leader profiles.

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> Posted by Ignacio Mas, Senior Fellow, Council for Emerging Market Economies at the Fletcher School

Here are my best wishes for the CFI community, to be sung to the tune of the last bit of the twelve days of Christmas:

On the twelfth day of financial inclusion my true donor sent to me:

Twelve human centered designers

Eleven groundtruths validated

Ten agent trainings

Nine peer networks learning

Eight logs a-framing

Seven innovation challenges

Six rapid prototypes

Five fast failings

Four big data thingies

Three evidence bases

Two RCTs evaluating

And an e-money issuer license.

> Posted by Center Staff

What’s happening this week in the world of financial inclusion? Check out the second issue of our new weekly online magazine, the Financial Inclusion 2020 News Feed.

In case you missed the inaugural issue, each Monday the FI2020 News Feed will bring you the big news in financial inclusion. We’ll pull from all over to spotlight great new stories, initiatives, videos, podcasts, and more.

Here are some of the pieces featured in this week’s issue:

  • Business Today’s recent article on account inactivity in India’s Jan Dhan Yojana scheme
  • The Microcredit Summit Campaign’s post on the Government of Ecuador committing to disability inclusion
  • The Wall Street Journal‘s announcement of finalists in the Asia-Pacific Financial Inclusion Challenge
  • Agencia de Noticias Andina’s article on an Indian financial inclusion delegation’s recent trip to Peru

To read the second issue, click here, and make sure to subscribe by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to us at ezuehlke@accion.org.

> Posted by Alex Counts, President and CEO, Grameen Foundation

Account Use (Developing Economies) - Click to Enlarge

Account Use (Developing Economies) – Click to Enlarge

Especially since the Global Findex report made headlines around the world with its finding that the number of financially excluded dropped from 2.5 billion to 2 billion during the period 2011-2014, I have been increasingly uneasy with equating account access as financial inclusion, and especially as equivalent to the essential concept of full financial inclusion as defined by CFI. The Center’s new publication “By the Numbers” does an excellent job helping people to digest all the publicly available data about financial inclusion, and make sense of them. It also reinforces my unease.

Despite the progress in account openings, the report makes it clear that the number of people actually using accounts is unfortunately not growing. Even more worrying, it argues that most accounts “are not really functioning as the hoped-for ‘on-ramp’ to financial inclusion.” The risk, as I see it, is that by adopting a stunted definition of financial inclusion that emphasizes account openings, we may be measuring and incentivizing the wrong things. The report wisely urges “caution regarding the value of mass drives for account opening, such as mandated no frills accounts…”

While the available data may overstate progress in some areas, the data may understate it in others due to the tendency to focus only on transactions at formal financial institutions. As the report notes, the percentage of people in low and middle income countries who save increased from 31 percent to 54 percent — quite a jump! — over three years, but this “is not reflected in a commensurate increase in saving in financial institutions.” Global surveys tend to miss savings groups and microfinance institutions, which in many markets play important roles. The alarming gaps in data related to access among vulnerable populations are also noted.

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> Posted by Sonja Kelly, Fellow, CFI

When I started my doctoral research on financial inclusion policy and regulation, I was secretly thinking, “Surely this cannot be too complicated—it’s just the regulator directing financial institutions to make services available for excluded people.” Now, five years into my PhD, I’ve finally admitted what I should have known from the beginning: regulation of financial services providers is almost impossibly complex, and making sense of financial inclusion policy and regulation requires a great deal of creativity, especially given all of the different factors that supervisors have to consider beyond prudential supervision.

Prudential banking supervisor’s responsibilities beyond prudential supervision (percent of respondents)

A new publication on the range of regulatory issues that affect financial inclusion confirms this. Supervised by the Basel Consultative Group and researched by CGAP (in full disclosure, I was a part of the team), the publication describes the regulatory approaches to financial inclusion in 59 jurisdictions from all world regions.

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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 Susy Cheston, Senior Advisor, CFI

The Credit Reporting section of the FI2020 e-zine (click to read)

The Financial Inclusion 2020 Round-Up 2014 e-zine, found on the CFI website, takes a look at progress toward financial inclusion in the year following the FI2020 Global Forum. It was at the Global Forum that five Roadmaps to Financial Inclusion were presented after two years of being developed and debated by dozens of financial inclusion experts. Now, imagine the editorial challenge of collapsing a year’s worth of activity around each Roadmap into just two pages each.

While it’s a fun read, I admit to a little cognitive dissonance as I page through the Round-Up. The brief analyses of where we stand around each of the Roadmaps to Financial Inclusion can be summed up in the quote “we’re not as far along as we think we are.” While that quote was about the Technology Roadmap, it could just as easily be said of the other Roadmaps: Financial Capability, Addressing Customer Needs, Client Protection, and Credit Reporting.

Yet despite the clear-eyed look at the ongoing challenges, the e-zine also tells a story of intense and productive activity by a wide range of actors. Legacy financial service providers—the heavy hitters with big resources and even greater reach—are investing heavily in financial inclusion. It’s not just for corporate social responsibility any more; it’s part of a new business strategy inspired by the discovery of an untapped and (they hope) profitable new market. Sprinkled in and around those vignettes are stories of scrappy start-ups doing the social entrepreneurship thing. Some of those services may not make it past 2015, but some of them have a “why didn’t I think of that” inevitability about them. The diversity of actors and the energy are impressive.

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> Posted by Center Staff

The 2015 Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance is now accepting applications for what will be another exceptional week of learning and exchange among world leaders in financial inclusion. The program will take place April 6-11, 2015 at the HBS campus in Boston, Massachusetts.

The 2015 HBS-Accion Program builds on nine successful years and over 550 participants – CEOs, presidents, executive directors, and other high-level professionals – from roughly 100 countries.

Today’s landscape of financial services for the base of the pyramid is increasingly complex, with a diversity of products, providers, and support organizations extending services to previously excluded populations. Disruptive technologies and new ways of doing business are creating new possibilities for reaching more people with more types of services. It’s an exciting time for financial inclusion, though for leaders steering their organizations through this landscape, the pace and magnitude of change may look overwhelming. Financial service providers participating in the program will benefit from the guidance of some of the world’s best business minds to better understand the possibilities and the pitfalls of today’s financial services marketplace. Policymakers, regulators, and investors will find it valuable to get a closer look at how the industry is evolving in countries around the world.

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> Posted by Center Staff

Welcome to the second Financial Inclusion 2020 e-magazine!

It’s been a year since the Financial Inclusion 2020 Global Forum. The Center for Financial Inclusion at Accion is taking this moment to review how the drive for financial inclusion is faring. With this e-zine we bring you highlights of the past 12 months from around the financial inclusion world – new ventures, milestones, and ongoing debates. Inside, you’ll find a snapshot of progress in each of our five “Roadmap to Inclusion” areas, from technology-enabled business models to consumer protection. Over the past months we spoke with dozens of industry participants to gauge their views of the progress of each major recommendation presented at the Global Forum, and we’ve distilled their responses here. We learned of many exciting initiatives, though we have room to cite only a few.

To read the e-zine online, click the cover above or here. Although the e-zine is best viewed online, a PDF download is also available, here.

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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.