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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.
> Posted by Jeffrey Riecke, Communications Specialist, CFI
Over the past few decades, across demographics and regions, the proportion of people in the United States with bank accounts has increased steadily, a new report from the White House details. More specifically, the report found that between 1989 and 2013: the percentage of U.S. households with bank accounts increased from 86 percent to 93 percent; the percentage of households in the bottom income quintile with bank accounts increased from 56 percent to 79 percent; among racial minorities, the percentage of households with bank accounts increased from 65 percent to 87 percent; and regional disparities have diminished, with financial inclusion increasing across all geographies. All of this progress in financial services access warrants acknowledging, of course, yet there remain sizeable gaps toward financial inclusion that call for immediate action.
For example, like most countries that enjoy high access rates, many banked Americans remain underserved. Twenty percent of households in the U.S. with bank accounts also rely on alternative/informal financial services. In 2013, roughly 5 percent of unbanked or underbanked households turned to payday loans, the White House report found. Indeed a few weeks ago we spotlighted new proposed regulation from the Consumer Financial Protection Bureau (CFPB) to rein in the growing high interest rate/fee-laden payday loan and short-term credit markets.
The United States also ranks dismally when it comes to financial literacy. In the S&P Global FinLit Survey, it was determined that 57 percent of the American population is financially literate, which puts the country at 14th globally, according to the S&P.
> Posted by Lindsay Lehr, Senior Director, Americas Market Intelligence
In Latin America, where 70 percent of people do not have a bank account, both the public and private sectors have honed in on financial inclusion as a strategic objective for growth. Mobile financial services for the unbanked have flourished in the region since 2007—there are nearly 40 live mobile money platforms, with five new launches in 2015. However, while mobile money efforts have been successful in Africa, uptake is dismal in Latin America, despite concerted efforts by every major telecom and bank to push such services out to users. Of 480 million adults in Latin America, there are a mere 15 million registered mobile money users (3 percent penetration), of which, only 6 million were active in the past 90 days. Deficient agent networks, technological illiteracy, non-interoperability, and the plain old convenience of cash can all be cited as reasons for poor mobile money penetration.
As a result, most mobile money services in the region are yet not profitable, causing some providers to move away from the unbanked. In a recent interview with Electronic Payments International, Miami-based technology provider YellowPepper noted, “Providing banking services to the unbanked wasn’t paying enough for us to survive, so for the time being we’ve left that market.” Banks and card networks are notably dedicating resources to launch services for their banked customers, including mCommerce mobile wallets and contactless merchant payments.
> Posted by Center Staff
In the first quarter (Q1) of 2015, smartphones comprised 47 percent of Africa’s market sales, while the market share of feature phones decreased by about 20 percent. Those are some of the big findings from the International Data Corporation’s “Q1 2015 Mobile Phone Tracker” released earlier this week. Examining both Africa and the Middle East, the report uncovered that between the two regions, compared to last year, smartphone sales increased by 66 percent during the first quarter of this year, totaling 36 million units. Nigeria and South Africa were the biggest smartphone markets on the continent, responsible for roughly 14 and 12 percent of sales respectively. By 2019, it’s projected that feature phone sales will dwindle to only 27 percent of the market in Africa and the Middle East.
The prevalence of inexpensive smartphones, aided in part through partnerships between mobile network operators and handset manufacturers, has helped fuel recent growth. Smartphones are being designed and introduced specifically for the African market. Harnessing supply chain efficiencies and accepting lower profit margins, handset makers are offering units in some cases as inexpensively as for US$30. According to market research firm GfK, globally, compared to the previous quarter, during Q1 of 2015 low-end smartphones saw a market share increase from 52 to 56 percent. Total smartphone sales increased by 8 percent to US$96 billion, while units sold increased by 7 percent to about 310 million. Most of this growth came from Africa, the Middle East, and emerging Asia-Pacific markets. Android is dominating in Africa. Eighty-nine percent of smartphones shipped in Africa during Q1 of 2015 were powered by Android – with about 45 percent of these priced below US$100.
> Posted by Rishabh Khosla, Senior Investment Analyst, Accion Venture Lab
The following post was originally published on SocialStory.
The Indian financial services landscape is undergoing a tectonic shift. The last few years have seen a renewed public focus on expanding financial inclusion. Building off prior programs, the government has invested in regulatory reform, improvements to the banking system, payments, and ID infrastructure. They have also announced a series of programs targeting the bottom of the pyramid (BoP) and micro, small, and medium enterprises (MSMEs). Simultaneously, we are beginning to see real shifts in the adoption of digital technologies and banking services (such as basic savings accounts and smartphones), driven by compelling use-cases, such as government subsidies, delivered directly into bank accounts, and rickshaw-hailing apps that use mobile wallets. Together these trends are unleashing tremendous innovation with the potential to speed financial inclusion for millions.
As investors in early and growth stage “social” enterprises that are speeding financial inclusion around the world, we believe startups are uniquely positioned to navigate this shifting technological, regulatory, and competitive environment. Indeed, financial sector reform in India has had many false starts, and there are still many regulatory and structural hurdles to be overcome. However, we believe India is nearing an inflection point with changes playing out in three areas that are giving birth to exciting startup financial services models: MSME finance, digital payments, and consumer services.
> Posted by Jamie M. Zimmerman, Senior Policy Consultant, CGAP
Achieving financial inclusion by 2020 will depend in large part on the proliferation of fast, affordable, and accessible digital financial services (DFS). Indeed these effective, scalable models were a clear theme at the FI2020 Global Forum hosted by CFI last fall. Yet as excitement for DFS dominated much of the public discussion, a small and diverse set of financial inclusion leaders convened a private side-meeting to discuss an often-overlooked question: what are the consumer risks to these new, innovative digital models?
The meeting, co-hosted by CGAP and UNCDF’s Better Than Cash Alliance, introduced the concept of “responsible digital finance” and revealed heightened awareness of and interest in an array of issues related to the potential consumer risks of digital financial services, including:
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