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> Posted by Alexandra Rizzi, Senior Director, the Smart Campaign

The merits and pitfalls of mobile credit continue to be debated hotly in financial inclusion circles. Mobile products are making credit more accessible through branchless banking and alternative underwriting and business models. But experimenting with new ways of lending when your borrowers include those at the base of the pyramid brings steep risks and some models can be downright reckless. Which side of the fence are you on?

The Smart Campaign is seeking to assist the sector to develop a consensus about responsible online credit practice, and the good news is that these questions have recently become top-of-mind for a range of stakeholders. Quona’s Johan Bosini and Positive Planet’s Bezant Chongo gamely volunteered for an Oxford-style debate on whether mobile credit is good for its clients at the 4th Annual Mondato Summit in Johannesburg back in May.

The convenience and ease-of-access of mobile credit products are immensely beneficial to the unbanked, according to Bosini, speaking for the pro side. When juxtaposed to traditional lending products that take, for instance, in Benin, an average of almost 5 weeks to access (involving multiple trips), mobile credit seems supersonic, he emphasized. Using alternative data and analytics, mobile credit unlocks access for individuals without credit history. The reality for the poor, as elucidated by the Financial Diaries and other research, is that incomes fluctuate widely. Now with mobile credit, a person in a pinch can help smooth the inevitable bumps in income with a few clicks on the phone.

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> Posted by Alexis Beggs Olsen, CFI Fellow and Independent Consultant

Building the right channels to serve the financially excluded is one of the most important (and daunting) challenges facing senior executives, boards and investors in the financial inclusion space. They are not alone. As digital technology disrupts a wide swath of industries, leading global consulting firms have engaged in research to understand how best to help companies configure and prioritize digital and human-based customer engagement channels. While affirming the importance of digital innovations and ongoing investment therein, Accenture also sees a need for curbed enthusiasm. “Customers aren’t as predictable as we like to think,” cautions a recent Accenture Strategy paper. “Profitability resides in the digital / physical blur.” Verint also commissioned research in twelve countries that found customers want “a human element” to remain part of customer service and that “those who receive more ‘human’ or traditional customer service display more positive behaviors toward brands.”

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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 Alexandra Rizzi, Deputy Director of the Smart Campaign

The following is part of the Smart Campaign’s #FintechProtects series. We’re raising awareness about responsible digital financial services, spotlighting work from the Smart Campaign and others, and engaging with industry actors on how fintech can move forward in a way that’s best for clients. For more information on #FintechProtects, and to get involved, click here.

In financial inclusion circles there is palpable excitement around the promise of digital financial services (DFS) – most recently quantified by the McKinsey Global Institute as the potential for 1.6 billion individuals becoming banked, $2.1 trillion in loans disbursed, and 95 million new jobs. Yet, in order for this potential to be achieved, customers must trust the service. For instance, India-based MicroSave conducted research showing that while 85 percent of DFS customers said they would recommend DFS to others, they thought of it as a Plan B due to lack of trust. Issues that can erode or prevent trust from building include gaps in data protection and security, service downtime, insufficient transparency, agent misconduct and unauthorized fees, among others. As Graham Wright of MicroSave writes, “It is clear that there are immediate potential wins for DFS providers who address consumer protection issues.”

In this post the Smart Campaign spotlights a fast-growing fintech company, JUMO, that is helping to define what responsible digital finance means.

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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.