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> Posted by Bobbi Gray, Research Director, Grameen Foundation

We need to ensure products and services help family units, not just individuals, thrive.

Writing in 1982, about Fred Astaire, Robert Thaves wrote “Sure he was great, but don’t forget that Ginger Rogers did everything he did, backwards…and in high heels.” Since then, this quote about two legendary dancers has been used to celebrate the skills and talents of women and to demonstrate their ability to juggle complexity and pull it off gracefully.

At Grameen Foundation, we celebrate women for the potential they carry for ending poverty and hunger. In fact, some statistics suggest that if women farmers had the same resources as their male counterparts, the number of hungry people in the world could be reduced by 150 million. Beyond access to quality farm inputs, credit, and land, we also know that when women have equal access to education, health services, and business services they can thrive economically. Helping mothers be healthy before and during pregnancy also results in healthier children and more productive societies. Women are a key driving force against poverty.

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> Posted by James Militzer, Editor, NextBillion Financial Innovation

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The following post, which was originally published on NextBillion, shares a conversation between Anna Kanze, COO of Grassroots Capital Management, and Daniel Rozas, Independent Consultant, on initial public offerings (IPOs) in microfinance. Both Anna and Daniel have contributed to a number of Financial Inclusion Equity Council (FIEC) publications.  Anna was the principal author of the recent FIEC report, “How to IPO Successfully and Responsibly: Lessons From Indian Financial Inclusion Institutions”. The podcast draws from the report’s findings and focuses on the effects of IPOs on Equitas Holdings, Ujjivan Financial Services, SKS Microfinance, and Compartamos.

Initial public offerings have long been a controversial topic in microfinance, and rightly so. The IPOs of Compartamos in Mexico and SKS Microfinance in India, in 2007 and 2010 respectively, made a lot of money for investors and turbocharged the sector’s growth. But they also sparked hyper commercialization and debt crises that rocked the industry, gravely harming its clients and tarnishing its public image.

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> Posted by Pablo Antón Díaz, Research Manager, CFI

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Scott Graham, Daniel Rozas, and Pablo Anton-Diaz at the “Preventing Overindebtedness in the Microfinance Sector in Mexico” panel, XV National Microfinance Summit, Mexico City, Mexico, November 2016

For the past decade, in part fueled by regulatory changes in the financial sector, there has been an explosion in the availability of credit to low-income individuals in Mexico. The Mexican microfinance sector has become increasingly concentrated and highly competitive. In 2015, the 10 largest microfinance institutions (MFIs) in the country represented 81 percent of the total market size, with more than 1,500 smaller MFIs sharing the remaining 19 percent.

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  • Latin America and the Caribbean (LAC) and East and South Asia have the most conducive environments for financial inclusion. India stands out for the most progress in the last three years and is now ranked third
  • Further policy changes are needed if financial inclusion is to play the role envisioned in the Sustainable Development Goals
  • The digitization of financial services is key to increasing access to finance

The 2016 Global Microscope on Financial Inclusion shows that essential policies for bringing financial services to low-income groups are now widespread in the developing world. Nine of the 12 financial inclusion indicators covered in the benchmarking index improved globally in 2016, building on gains which have been made during the last decade. Even so, many countries have not moved significantly beyond basic policies, and greater focus is needed if financial inclusion is to play the critical role envisioned in the Sustainable Development Goals (SDGs).

The Global Microscope is produced by The Economist Intelligence Unit (The EIU), with policy guidance and financial support from leading organisations in the field including the Center for Financial Inclusion at Accion. Now in its 10th year, the Microscope is the global standard for financial inclusion policy in developing economies.

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> 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.

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> 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.

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> Posted by Caitlin Sanford, Bankable Frontier Associates

A Spanish-language version of this post immediately follows the English version.

The Financial Diaries showed Mexicans are in a double bind when it comes to health. While households in the study were afflicted with diseases of tropical poverty such as tuberculosis, hepatitis, and insect-borne diseases, they also suffered from diseases commonly diagnosed in wealthier countries, like diabetes, depression, and obesity. People are unable to access the quality of healthcare they would like to deal with these diverse problems, both because of financial constraints and because it is difficult to know when expensive, higher quality care is necessary. Financial Diaries households mostly pay for medical care by borrowing from their social network. We found this to be true even though the Mexican government does provide a comprehensive and well-functioning — if variable by location — national public insurance program called Seguro Popular.

The framework of behavioral psychology provides insights as to how Diaries respondents think about the timing of paying for healthcare, and why they pay for health spending almost exclusively by borrowing from families and friends.

1.      It is difficult to assess risk under scarcity and limited information, so families wait to get care.

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> Posted by Gabriela Zapata, Independent Consultant

A Spanish-language version of this post immediately follows the English version.

With so much hype around and support for financial education initiatives in Mexico in recent years, CFI’s and JPMorgan Chase & Co.’s project on innovations in financial capability-building provides a great opportunity to see who is actually moving the needle (or not) in favor of developing financial capability in Mexico.

Here, the terms financial capability and financial education are often used interchangeably. While the ultimate aim of these closely related efforts is to enable people to make informed and better decisions around financial products and services, the positive behavior change that is sought from these efforts, with very few exceptions, is neither clearly defined from the outset nor measured.

Most initiatives in Mexico fall under what I would call “classic” financial education, focusing on information dissemination, either classroom-based or online, primarily on generic topics (e.g. savings, credit, insurance, interest rates, credit card, etc.), money management, and budgeting/planning. Unsurprisingly, it is much easier to account for their activities and outputs (e.g. type and number of courses and materials developed; number of courses given; number of attendees) than to measure their impact on decision-making. Only a few undertakings measure knowledge acquisition or learning levels right after the intervention, and they have no way of knowing how, in practice, the learning informs consumer decision-making going forward.

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> Posted by Susy Cheston, Senior Advisor, CFI

A lot of money is being spent on financial education—and we’d like to see it spent more effectively. We still don’t know all that is needed about what works, but based on our scan of the current landscape for financial capability-building innovations, we can already recommend six major shifts in how financial capability resources are deployed.

The first three recommendations relate to who is building financial capability.

1. Bring financial capability efforts closer to the actual use of financial services by enabling providers to take a greater role.

2. Shift the expectation that the government is responsible for financial capability to an expectation of shared responsibility among all stakeholders, including financial service providers and other institutions.

3. Engage organizations serving BoP constituencies, from government social service agencies to employers to non-profits.

This calls for “all hands on deck.” We argue, first and foremost, that providers can and should take a primary role in building financial capability, as they are best equipped to reach customers at teachable moments and to help them learn by doing. Many providers are already spending significant resources on financial education. They could have a much greater return on their investment if they focused those resources on embedding financial capability into product design and delivery, looking at all the touch points in the customer experience as opportunities to help customers use products more successfully.

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> Posted by Center Staff

After over a year of research, we at the Center are excited to launch A Change in Behavior: Innovations in Financial Capability, the result of a project funded by JPMorgan Chase & Co. which assesses the landscape of financial capability-building interventions across the globe, with a special focus on Mexico and India. Highlighting an industry trend in its early stages, the report explores innovations that focus on triggering positive customer behaviors, especially at critical decision-making moments, such as when signing up for and using financial products, or when putting money aside to meet savings goals.

We define financial capability as the combination of knowledge, skills, attitudes and behaviors a person needs to make sound financial decisions that support well-being. This definition reflects an emerging industry view that focuses attention on behavior. Financial capability focuses on behavior change as well as the customer’s end state: financial health and well-being. This school of thought contrasts with traditional financial education, which has generally been more focused on the transfer of knowledge, skills, and information.

The financial capability approach stems from the growing body of industry research which reveals an important gap between knowing and doing. When techniques informed by behavioral economics are integrated into client interventions, people are more likely to translate their knowledge into action. While traditional financial education methods still predominate, our research identified a host of exciting financial capability innovations. These interventions range from personal counseling, to mobile apps that help customers understand their finances at a glance, to soap operas that embed financial capability messages and lessons.

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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.