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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.
> Posted by Beth Rhyne
As leaders of the microfinance industry in India assemble in Delhi this week for the ACCESS Microfinance India Summit, India-watchers outside the country can follow events in the sector by taking a look at the latest report from M-CRIL: “M-CRIL Microfinance Review 2011: Anatomy of a Crisis.” The executive summary is available as a stand-alone document, and it provides instructions for purchasing the entire data-drenched report.
For me, the best parts of the report are the numbers that help dimension the sector and its crisis, as well as its no-holds-barred approach to stating conclusions. Here is a small sampling:
On the role of microfinance in India: “Microfinance is now established as a significant component of the financial system in the country and its contribution to financial inclusion continues to rival, if not exceed, that of the rural banking system.” “With 31.8 million borrower accounts the size of the microfinance sector more than matches significant parts of the Indian financial system in terms of the number of citizens affected. This number is more than three times the number of micro‐credit accounts serviced by the Regional Rural Banks and is greater even than the total number of such micro‐accounts held by the commercial banks.” Read the rest of this entry »