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> Posted by Sonja Kelly, Director of Research, CFI

In ethics, there is a commonly shared thought experiment called the trolley problem. You are standing next to trolley tracks, and a trolley is coming. In its current trajectory, it is going to run over five people who are tied to the tracks. You could divert the train using a lever in front of you, but then the trolley would hit one person tied to the tracks. Do you become active in this scenario and sacrifice the one person? Or do you abstain from involvement and watch the five people get run over?

I don’t mean to be morbid here, but this is a thought experiment that I have been mulling over when it comes to financial inclusion.

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> Posted by Kettianne Cadet, Lead Analyst, Investing in Inclusive Finance, CFI

“Evolve or die, it is that simple!” remarked Kelvin Twissa, Board Member of FINCA Tanzania. His comments came during a session on Disruption at the recent Africa Board Fellowship (ABF) seminar in Cape Town.  In an era where business is definitely not usual, many incumbent financial institutions and their operating models are being threatened by disruptors, and the ability to continuously innovate and evolve has become an increasingly important ingredient for survival.

Graphic harvesting image from May 2017 Africa Board Fellowship Seminar

Graphic harvesting image from May 2017 Africa Board Fellowship Seminar

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> Posted by Lizzy Bolze, Analyst, Investing in Inclusive Finance, CFI

How does a microfinance institution know what transformation will be like from an NGO to a formal financial institution? In an increasingly complex industry with competition from commercial banks and the entrance of fintechs, many microfinance NGOs are considering transformation to realize their growth potential and help attract investment. However, the road to transformation can often be bumpy, as noted in the Center for Financial Inclusion’s publication Aligning Interests: Addressing Management and Stakeholder Incentives During Microfinance Institution Transformations.  Regulatory compliance issues, information technology hurdles, and aligning with the needs of the NGO and investors can often complicate the process. For Enda Tamweel, the largest and oldest microfinance organization in Tunisia, the decision to transform has come with external pressures, operational challenges, and a focus on maintaining their mission. Read the rest of this entry »

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 Kyle Burgess, Executive Director and Editor in Chief, Consumers Research

From cash to digital currency

Image Credit: FamZoo Staff. No alterations made. CC BY-SA 2.0

Digital currencies, such as Bitcoin and its underlying blockchain protocol, introduce a technical platform for a new global payment infrastructure that has the potential to level the playing field for the 2.5 billion people across the globe who are unbanked or underbanked. The immutable and distributed nature of digital currencies and a number of the platforms built on top of blockchain protocols can provide improved security, efficiency, affordability, privacy, and transparency in financial transactions, as well as a whole host of other transfers of value or information. Furthermore, thanks to the proliferation of mobile devices, blockchain-based digital currencies can even remove the middleman, and serve as a bank in your pocket. However, fully removing a third party intermediary comes with significant risks, as there’s no one to call if you lose your private key (which functions as your password), break your hardware wallet (which acts as your digital vault), or want to dispute a payment because the goods you purchased are damaged (because digital currency transactions are irreversible). Like any other product, consumer protection must be at the forefront of the development and implementation of digital currency and blockchain-based financial services.

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> Posted by Tess Johnson, Project Associate, CFI

Farmer standing in green field and using touch screen mobile phone.

Photo credit: Xavier Arnau

Despite the excitement about moving mobile financial services (MFS) to a richer smartphone-based environment, we still have a long way to go before many customers at the base of the pyramid can reap the full benefits of these technologies. CFI Fellow Leon Perlman diligently identified many of the key obstacles for more inclusive MFS, including the lack of infrastructure to support the higher-speed mobile connectivity critical for MFS transactions; the plethora of substandard and/or cost-prohibitive smartphones in developing countries; and pervasive security vulnerabilities that threaten MFS transactions, to name a few.

There are some bright spots in Leon’s report, however, and we think it’s important to acknowledge them.

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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.

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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.