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> Posted by Masrura Oishi, Tanjilut Tasnuba, and Isabel Whisson, BRAC
The following post was originally published on NextBillion.
It is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.
The integration of mobile money into microfinance operations is one of the most exciting yet challenging prospects facing microfinance providers today. Mobile money presents a fast, cost-efficient and flexible alternative delivery channel through which money can be transferred, loans can be repaid and savings can be deposited. Yet, globally, active usage of mobile money on a 90-day basis remains low, at around 33 percent.
BRAC has been gradually integrating mobile money into its microfinance operations since 2011. Among many of its microfinance clients, who are predominantly poor rural women, the prospect of transacting with money via mobile phone instead of cash at first seems suspicious and daunting. In seeking to promote responsible, confident and active use of its financial services, BRAC has introduced a number of initiatives. These have included investing heavily in client protection, customer service and financial education and developing mobile money use cases that made sense to the average microfinance client, such as using mobile money to pay deposits into monthly savings schemes.
As part of Financial Inclusion Week, which this year puts the spotlight on keeping clients first in a digital world, we spoke to one of BRAC’s clients about her experience using mobile money in microfinance. A client for more than 10 years, Maloti Rani Das has witnessed several key changes that have in turn changed her experience and view of microfinance. In a brief one-on-one interview, she took us through her journey with BRAC, from why she borrowed her first loan, her feelings when she first started using mobile money, and what has helped her become a confident user.
> Posted by Center Staff
This post is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.
On day three of Financial Inclusion Week 2016 we were excited to see conversations happen around the world, including in Rwanda, Bangladesh, and Australia. We offer a rundown of these events and the vibrant online conversation below.
The week is nearing a close but there are still plenty of upcoming events and ways to get involved. Be sure to share your thoughts on Twitter with #FinclusionWeek, join tomorrow’s webinar with Innovations for Poverty Action, or submit a client quote and photo to our collection of client insights.
VisionFund International hosted a webinar (two webinars, in fact, to accommodate for different timezones) focused on the future of digital financial services. The webinar centered on how VisionFund is using technology to lend to smallholder farmers at the right level, and at the right time. During the webinar, Tom Allen and Justin McAuley, Director of Change and Programs and Director of Global Digital Architecture at VisionFund, highlighted a new application they developed which uses available geographic and market data to better extend their products to smallholder farmers and manage risk. You can watch the full webinar here.
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> Posted by Shreya Chatterjee, Senior Research Associate and Misha Sharma, Project Manager, IFMR LEAD
Self-Help Groups and the Need for Digitization
Despite efforts from all quarters, 2 billion people globally are still excluded from formal sources of financial services. Digital financial inclusion has emerged as the new wave in the hope that it will reach the last mile consumer in the most convenient and affordable manner. In the context of India, digital financial inclusion is still a work in progress. As per the 2015 Financial Inclusion Insight survey, 49 percent of Indian adults are digitally included – i.e., they have digital access to a financial account. However, usage of these digital accounts remains debatable. Similarly, only 0.4 percent of adults in India use mobile money, primarily due to the key challenges of poor infrastructure and lack of financial know-how. The financial inclusion divide is even more glaring among poor women. Indian women are 8 percent less likely to own a formal financial account and 12 percent less likely to use digital services offered by these accounts. Digital modes of enhancing financial inclusion for women by targeting self-help groups (SHGs) could be one potential channel for accelerating and promoting digital financial inclusion in India.
> Posted by Steve Waddell, Principal, NetworkingAction
Financial inclusion is a large systems change challenge – it’s one that integrates a basic new goal into the working of the financial system. This is a very different challenge than simply opening a new branch or even policy reform. What are the implications of large systems change for traditional governance structures? Put another way, if an industry is significantly disrupted, does this affect the way it is governed? I recently dived into the question looking at the impact of financial inclusion on financial sector governance, including central banks. The was done in collaboration with Ann Florini, a governance expert and professor at Singapore Management University, and Simon Zadek, a visiting professor there and Co-Director of the UNEP Inquiry into the Design of a Sustainable Financial System.
The three of us have common interest in how multi-stakeholder processes might impact governance. Such processes in the case of financial inclusion involve business, government and civil society interests. With many diverse parties at the table, and many more such multi-stakeholder processes, is financial sector governance also becoming more multi-stakeholder? We decided to investigate the question of financial inclusion with a descriptive analysis of what has been happening in Kenya. We came to the topic with the understanding that multi-stakeholder process governance in itself is not necessarily good or bad compared with traditional government-dominated governance, but experience might indicate that it is necessary for advancing public good. The Center for Financial Inclusion defines full financial inclusion as:
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> Posted by Jeffrey Riecke, Communications Specialist, CFI
With their soaring ubiquity and utility, mobile phones are revolutionizing disaster and crisis relief, as recent experiences have shown. From Typhoon Haiyan in the Philippines to Ebola in West Africa, we’ve seen mobile networks help provide critical financial services, information, and communication – in every stage of a crisis. And all signs point to this support expanding.
A few weeks ago GSMA spotlighted a growing collective of mobile network operators (MNOs) working together to aid those hit by crisis. The Humanitarian Connectivity Charter, an initiative launched by GSMA in 2015, aims to unite the industry under a set of principles for harnessing mobile technology to support people affected by humanitarian emergencies. GSMA recognized four new member MNOs that signed onto the Charter, joining more than 60 other MNOs from around the world. By signing the Charter, MNOs commit to a common set of principles designed to enhance coordination, standardize preparedness and response activities, and strengthen partnerships between industry, government, and humanitarian organizations.
> Posted by Haset Solomon, Communications and Operations Associate, the Smart Campaign
La Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), the common central bank of eight West African countries (Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) has prioritized financial inclusion in the region. A recently announced financial inclusion strategy led by BCEAO in partnership with the several national Ministries of Finance aims to include 70 percent of the adult population by the year 2020. Financial access rates range from 7 to 34 percent across the region, according to the Global Findex.
BCEAO is expanding its financial inclusion efforts, including in mobile and e-money, and financial inclusion is slowly progressing in the region, but the opportunities and challenges of the member countries vary significantly, and serious client protection issues remain, particularly among unregulated institutions and in countries with weak national supervision and enforcement. A recent IMF spotlight on Senegal calls for steps to strengthen the sector’s governance through technical assistance to improve supervisory capacities and training to improve reporting standards and practices.
Weak supervision can lead to problems like those the Smart Campaign uncovered during its Client Voice research in Benin, where illegal microfinance institutions collected and disappeared with clients’ savings.
> Posted by Monique Maddy, President & CEO, Ezuza
The following post was originally published on The Huffington Post.
The Institute of International Finance (IIF) and the Center for Financial Inclusion (CFI) issued a timely report earlier this month: “The Business of Financial Inclusion: Insights from Banks in Emerging Markets.” This report is notable because its release comes at a time of expected – some would even argue inevitable – disruption within the financial services industry, specifically in the banking sector.
The report incorporates the key messages gleaned through in-depth interviews with 24 global, national, and regional institutions in 19 countries. The takeaways from these institutions are representative of the current state of banking in these markets and reveal how banks perceive both the opportunity and the challenge of achieving financial inclusion.
Currently, most, if not all, of the talk in the banking industry is about would-be disruptors—that is, the predators, not the prey. The report gives the prey’s perspective and outlines how they plan to confront the potential threat to their business in emerging markets.
I am the CEO of Ezuza, a mobile money company. Ezuza is a predator, one of those would-be disruptors that are all the rage these days. More and more companies, both large and small, are entering the financial services fray, looking to shake things up and grab a share of what has mostly been the exclusive domain of well-established and deep-pocketed financial institutions serving an equally well-established and predictable market.
> Posted by Hannah Sherman, Project Associate, CFI
In a world of rapid change, few organizations have all the capabilities needed to accomplish every aspect of their business. This is true for commercial banks, which often find success in adapting to new opportunities through partnering. CFI’s most recent publication, The Business of Financial Inclusion: Insights from Banks in Emerging Markets, a joint publication with the Institute of International Finance (IIF), illustrates how banks use partners to adopt new technologies and reach previously underserved markets.
The report, based on interviews with the financial inclusion leads at 24 banks, shines a spotlight on the role of banks as leaders in financial inclusion and discusses their specific strategies related to technology, data, financial capability, partnerships, and other issues.
The report found that banks create a variety of partnerships. The banks in our survey partner with telcos, payments companies, insurance companies, microfinance institutions, retailers, and consumer-goods companies. They work closely with governments for G2P payments and with international development agencies and donors that provide start-up capital for new financial inclusion initiatives. They also contract with digital technology providers such as data analytics companies, back-office systems providers, digital channel providers, financial capability providers, and other fintech firms.
Among many other areas, banks often use partnerships to improve on the following:
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> Posted by Michael Schlein, President and CEO, Accion
Over the last few years, we’ve made great progress in expanding financial access for those left out of the economic mainstream. From 2011-2014, more than 700 million people gained access to new financial accounts. If you’ve just been reading the headlines, you might assume that telcos and fintech start-ups are the primary forces driving that progress.
But the newest study from the Center for Financial Inclusion at Accion and the Institute of International Finance, “The Business of Financial Inclusion: Insights from Banks in Emerging Markets”, found that of the 721 million adults who gained access to new financial accounts between 2011-2014, 90 percent of them did so at more traditional financial institutions.
Telcos and fintech start-ups have been getting the headlines; the banks have been getting the job done. That’s important, exciting news.
This report shows that, for the first time, banks, all around the world, are seeing financial inclusion as a core business function. The Business of Financial Inclusion report shows that banks are creating lean, viable business models to reach customers they have never reached before. Digital payments are the main gateway for commercial banks to reach underbanked customers. They take many forms – transactional accounts, salaries and bill payments, G2P, and P2P. This means cheaper, more secure, and more convenient payments. Instead of spending hours traveling to make a single utility payment, mobile money allows you to push a button.
> 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.