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> Posted by Sonja E. Kelly, Center for Financial Inclusion at Accion, and Sergio Navajas, Multilateral Investment Fund, Inter-American Development Bank

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

Financial institutions of all sizes around the world are joining the digital revolution. In our work and research at the Center for Financial Inclusion at Accion and the Inter-American Development Bank we have seen some best cases of institutions shifting toward digital as well as some failures. At the end of this month we’ll be discussing strategies to pursue digital innovation as part of the Foromic in Buenos Aires. (Join us for our session on Tuesday, October 31st at 11:15 am!) In the meantime, for institutions that want to start down the path of digital innovation, here are a few of our top strategy suggestions.

1. Make sure you actually want to digitize. Some institutions are digitizing because they have undertaken extensive research on what value digitization will bring to their institution. These analyses involve things like cost reduction, increased access, increased efficiency, better record-keeping, or all of the above. But others are digitizing, more or less, because they see their peers doing it. Remember when your mom told you not to jump off a bridge just because everyone else was? The same applies here. There are some institutions that will do just fine without pursuing a full digital strategy right now. And that is ok. A good rule of thumb here is you’re likely better off not digitizing at all if you are only going to “phone it in.”

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> Posted by Alex Silva, Executive Director, Calmeadow, and Jeffrey Riecke, Senior Communications Specialist, CFI

Impact investors, social investors, responsible investors…regardless of name, they claim to serve the greater good. In the world of financial inclusion, impact investors are supporting the development of financial markets that have inadequately served the base of the economic pyramid.

What happens when social investors exit from their financial inclusion investments?

Some exits are non-controversial, but what if responsible investors sell their stake to an investor that doesn’t place priority on the social mission? The risk of mission drift or abandonment is real, and responsible investors must consider it as they make their exit decisions. With financial inclusion sector trends suggesting that impact investing exits are going to become more frequent, it’s worth examining the topic in greater detail.

Investors exit for many reasons

It’s important, especially for critics of impact investors, to recognize that a decision to exit may arise from any number of factors, including factors internal to the investor.
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> Posted by Center Staff

FI2020 Week is a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world are participating in more than 30 events and sharing their voices over social media, with #FI2020.

FI2020 Week is nearing its end! Today is the final day. We’re sad too, but there are still lots of opportunities to get involved, and it’s been a lively four days. Also, we’ll continue to report out on all that happened, so there’s more to come! Along with the in-person events, there are a handful of webinars today, you can submit a call to action, or take part in the far-reaching social media conversations, which we’re capturing on the FI2020 Week site, here.

Since our last recap there have been dozens of events around the world bringing together stakeholders passionate about advancing financial inclusion. Here is a quick look at a few of those events:

Nkosilathi Moyo, CEO, VisionFund Zambia

Nkosilathi Moyo, CEO, VisionFund Zambia

In Lusaka, Zambia, representatives from a variety of organizations, including the Bank of Zambia, came together at an event hosted by VisionFund Zambia to discuss promoting financial inclusion by leveraging savings groups and microfinance institutions. Participating stakeholders identified three major gaps for achieving financial inclusion in the country: lack of a conducive regulatory framework; poor infrastructure; and information asymmetry between different players in the market. Moving forward, the participants agreed on the importance of convening and decided that an FI2020 event should be held each year until 2020. Additionally, the participants agreed, there needs to be a stronger focus on establishing strategic partnerships between mobile network operators, financial service providers, NGOs, and government to develop cost-effective delivery channels that reach people in rural areas.

Forty-five leaders in financial capability, financial literacy, and financial health came together at a roundtable in Washington, D.C. to review a draft paper on innovations in financial capability written by the Center for Financial Inclusion in partnership with the JPMorgan Chase Foundation. The event was hosted by the Institute of International Finance. The draft paper focuses on seven principles to re-orient financial capability building toward customer needs and behaviors, with a call to action to all stakeholders—providers, governments, social sector organizations, financial capability providers, and donors—to make this shift.

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> Posted by Center Staff

Next week, CFI will launch the first-ever FI2020 Week. From November 2-6, 2015, over 25 partners across the globe will organize conversations exploring the most important steps to achieving financial inclusion.

FI2020 Week will bring together diverse stakeholders to conduct interactive and participatory events, each of which will produce calls to action. The range of participants will include banks, insurance companies, payment companies, telecommunication companies, policymakers, regulators, NGOs, microfinance institutions, investors, financial inclusion support organizations, financial capability experts, and fintech companies, from around the world. All of these participants will focus on the question, “What is an important action needed in your country (or industry segment) to advance financial inclusion?”

We want YOU to join us! Throughout the week, many FI2020 Week partners will hold webinars – an opportunity for those who will not be attending in-person FI2020 Week events to participate in a variety of interesting conversations. The webinars cover a full range of topics, from client protection in mobile money use, to incorporating financial capability into product design. Check them out below and register now to join hundreds of people around the world in FI2020 Week.

And for more information, check out our Storify feed of social media and blog postings on the FI2020 Week website here and follow #FI2020 on Twitter for the latest updates.

Client Protection and Technology: The GSMA Code of Conduct for Mobile Money Providers
Hosted by: GSMA
Date: November 4, 2015
Time: 9:00 am – 10:00 am EST

This session will discuss how the GSMA – the global association for mobile network operators – is working with its members to ensure that mobile money services are safe, reliable, and secure, and that customers are treated fairly. The Code of Conduct for Mobile Money Providers includes eight high-level principles addressing topics such as safeguarding customer funds, AML/CFT, training and monitoring of staff and agents, reliable service provision, security, and fair treatment of customers. This session will provide a brief background to the Code of Conduct initiative and outline the plan for implementation of the Code. It will be useful for regulators, financial inclusion specialists, consumer protection advocates, and any other stakeholders who are interested in understanding what mobile operators are doing to ensure the safety, reliability, and fairness of mobile money services.

Register now!

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> Posted by the Access to Finance Unit, Multilateral Investment Fund, Inter-American Development Bank

With fertility rates falling and life expectancy on the rise, the world’s population is aging rapidly. And though increasing longevity can be considered a triumph of development, for Latin America and the Caribbean, this rapid aging presents a serious challenge: the population is not financially prepared to support itself during old age.

According to the Inter-American Development Bank’s (IDB’s) book Better Pensions, Better Jobs, by the year 2050 there will be three times as many people over the age of 65 as there are today in the region. However, if trends continue, by this date only one in two seniors will have saved for a pension. This means that about 130 million workers are not saving for their pension.

In response, several countries have taken efforts towards increasing pension coverage to lower-income and vulnerable segments through non-contributory pension schemes. From 1990 to 2013, 13 countries in the region implemented programs aimed at expanding non-contributory pensions. Still, even those that receive pensions are finding their value, generally less than US$10 per day, insufficient to cover their basic needs. This means that current and future generations of seniors will have to rely on alternative sources of income to complement their pensions.

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> Posted by Sonja Kelly, Fellow, CFI

Participants in a workshop on aging and financial inclusion, organized by the Center for Financial Inclusion at Accion and HelpAge, held last week in New York City at MetLife.

When we wrote about the topic of aging in our recently-released paper Aging and Financial Inclusion: An Opportunity, I have to admit that I was skeptical that any stakeholders would be motivated to action — regardless of how compelling the paper was. Aging, I thought, is something people feel uncomfortable talking about, whether because they worry about their own old age, or that of their parents, or because they consider older people an uninteresting market segment. Whatever the reason, I was worried that our effort to call attention to this issue would fizzle out and fade into the internet abyss.

I was thrilled to be proved wrong.

Last week, discussing the new paper in our various meetings in Washington, D.C. and in New York City and in a global webinar, we learned that much more is happening in this area than we had initially known, and that more people are willing to consider what aging may mean in their own work than we expected.

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> Posted by Sonja Kelly, Fellow, CFI

If there’s one thing we’ve learned in taking a close look at financial inclusion efforts around the world, it’s that context matters. That’s why we are excited to be part of the team releasing the Global Microscope 2014: The Enabling Environment for Financial Inclusion. The Microscope is carried out by the Economist Intelligence Unit (EIU) with sponsorship and guidance from the Multilateral Investment Fund of the IDB, CAF, and Citi. The Microscope evaluates the environment for financial inclusion in 55 different countries and provides powerful signals to policymakers in each country on their progress. Which countries topped the list and which have the most room to grow?

We’ll tell you, but first, it’s important to know what the results mean. Each country inspected in the Microscope is assessed on 12 indicators that consider best practices in national regulatory environments and institutional support for providers serving clients at the base of the pyramid. Indicators range from government support for financial inclusion, to supervision of microfinance and other financial products, the status of credit reporting, regulations governing mobile banking and, last but not least, consumer protection.

This year is an important one in the publication’s eight year history because the focus shifted from microfinance to the environment for financial inclusion, a process that involved adapting the framework to account for today’s diversity of providers and products. What we were surprised by, however, was just how little a difference this made in the rankings. We charted last year’s results on the microfinance environment against this year’s results on the financial inclusion environment and we found a very high correlation between the two (see figure below). Environments that are enabling for microfinance are often environments that are enabling for financial inclusion. Six countries from last year’s top 10 were in this year’s top ten. Read the rest of this entry »

> Posted by Jeffrey Riecke, Communications Assistant, CFI

Peru ranks as the developing country with the best environment for microfinance, followed by Bolivia, Pakistan, the Philippines, and Kenya, in that order. Latin America and the Caribbean is ranked as the best region in the world for microfinance, followed by Sub-Saharan Africa, Asia, Eastern Europe and Central Asia, and lastly the Middle East and North Africa. Globally, the microfinance industry is improving, fueled largely by an increase in credit bureaus, improving client protection, and the spread of regulatory frameworks for mobile banking.

These are a few of the big takeaways from the Global Microscope on the Microfinance Business Environment 2013, which was launched yesterday in Guadalajara at the IDB’s 2013 Foromic conference. Now in its seventh year, the Global Microscope annual series examines the environment for microfinance – and increasingly financial inclusion – by considering the national regulatory environment and the corresponding institutional framework.

Originally developed by the Economist Intelligence Unit in collaboration with the Multilateral Investment Fund and CAF, this year’s study is also sponsored by Citi Microfinance and CFI. This year’s report scores 55 countries, and in general, the global picture is promising. Since last year, 30 countries improved their scores, 19 fell back, and the scores of six countries remained the same. The majority of improvements this year came from advancements in institutional frameworks. The scores for regulatory framework and practices mostly declined.

As a region, Latin America and the Caribbean countries claimed half the slots in the global top ten, with Peru maintaining its previous ranking as the top country in part through improvements in regulation for mobile banking. Unlike the rising score for Peru, Bolivia’s score fell, due to restrictive new legislation, although not far enough to dislodge Bolivia from its number 2 ranking.

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Support for the Smart Campaign will allow client protection assessments, certification testing, pilot projects, and translation and dissemination of tools to foster adherence to Client Protection Principles at leading microfinance institutions.

Washington, DC, January 30, 2012 — The Smart Campaign, a global initiative to incorporate strong client protection principles across the microfinance industry, will receive support from the Multilateral Investment Fund (MIF), member of the Inter-American Development Bank (IDB) Group to help Latin American and Caribbean  microfinance institutions  incorporate client protection practices into their operations.

The support will work to institutionalize adherence to the Smart Campaign’s Client Protection Principles, which include  appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, privacy of client data, and mechanisms for complaint resolution, in four primary ways:

  • Understanding the current state of client protection practice via in-depth Client Protection Assessments of twenty microfinance institutions (MFIs);
  • Changing client protection practices via pilot implementation of recommendations from the Smart Assessments;
  • Piloting the certification process of ten microfinance institutions as a crucial step to raise client protection standards in the industry; and
  • Making Smart Campaign tools more broadly available in Latin America through translation and dissemination of those tools and materials into Spanish and Portuguese.

“Support from the MIF comes at a critical time in the life of the Campaign and will ensure that the experience of microfinance institutions in Latin America and the Caribbean is taken into account when defining adequate standards for client protection worldwide,” said Isabelle Barrès, Smart Campaign Director. Read the rest of this entry »

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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.