We’ve been running the CFI Fellows Program for almost two years, with generous funding this year from the Rockefeller Foundation. The program has been a terrific experiment for many reasons. Now, while our current cohort of fellows is hard at work conducting their research, is a great time to stop and share some lessons we’ve learned along the way. The findings emerging from the program have also quickly become part of the continued learning and development of our expertise as an organization. Our staff engage closely with the fellows as they work, drawing from and contributing to their expert-level knowledge. And, on a personal level, I have come to understand financial inclusion in new ways.
As we’ve sourced topics, selected fellows, and engaged with knowledge communities, we have learned a great deal about people, organizations, technology and global trends. (You can see some of the specific findings coming out of the program here.) We also have gleaned observations about the nature of inquiry in financial inclusion, who cares about deeply understanding financial inclusion, and why financial inclusion matters.
Here are the top 10 things that I’ve learned thus far in the process of working on the CFI Fellows Program.
- There is not one financial inclusion industry. For each of the different fellows’ research projects, our communications staff asks the CFI Fellows program staff to define the audience. What we’ve found is that the “financial inclusion industry” is not a monolithic industry. Instead, it is a collection of subsets of industries that are focused on lower-income, unbanked, or emerging market customers. When we communicate with this hodgepodge of people, we have to understand that their motivations and interests may differ. Some care about social mission, some are purely commercial; some care about stability of the financial system, and some about social equality. These communities do convene together, but they often speak different languages—and the financial inclusion knowledge-building community must be responsive to this diversity.
- Financial inclusion is facing significant questions… but many of them are perennial. Last year we undertook research on how microbusinesses become SMEs and on whether and how G2P payments facilitate financial inclusion. Neither of these questions are new, but these still-unsolved questions are critical to understanding how to move forward in serving customers at the base of the pyramid. We’re hoping that our work on these kinds of questions will contribute to future progress. Nevertheless, the fact that at the close of these fellows’ projects substantial uncertainties still surround these questions is a finding in itself.
- One of the most perennial questions concerns the end goal of financial inclusion. At the turn of the century, the financial inclusion community was promoting microfinance as a poverty alleviation tool. About a decade ago came a swell of randomized controlled trials challenging blanket statements of this nature. Since then, however, there has not been consensus on what should take the place of poverty alleviation as the goal of financial inclusion. While our conversations to identify research questions often turn to this question, we have not been able to craft a research question that would effectively answer it. The more uncontroversial claim is that financial inclusion, done correctly, produces satisfied and empowered clients, but we have yet to agree on more ambitious claims about what financial inclusion means for clients of financial services—and this lack of a true north is a problem.
- Underneath the interest in digital is a false assumption that it’s a whole new world. In fact, digital is often just a different way of doing many of the same things we’ve always done. If we frame digital and technology trends as different means towards similar end-goals in the lives of clients of financial services, we can draw lessons from the history of the provision of financial services. Microfinance institutions, for example, have long maintained regular contact with their clients through loan officers as a way of ensuring high repayment rates and client retention. Shifting this regular contact and loan disbursement to mobile technology is merely a different way of achieving the same objectives. Of course, there are unique tradeoffs to switching to digital channels—and this is where the most interesting research will focus in the coming years (see number 5).
- Addressing the concerns that digital finance brings up requires the expertise of really smart people, including many who haven’t been thinking about financial inclusion. To better understand both new players and technological aspects of digital financial services we need new people joining the knowledge-building community. This year one of our fellows, Patrick Traynor, is a computer scientist—and who better to understand data security? We also need blockchain experts and cybersecurity experts. On the other end of the expertise spectrum, we continue to need anthropologists and sociologists. This new era of financial inclusion requires an unprecedented diversity of thinkers and researchers.
- We don’t have a clear understanding of what we’re giving up as we move toward a new equilibrium of providers and products. In the move to digital we are clearly giving up cash. But what else are we giving up? Is it just that we are giving up a reliance on human-to-human interaction as money is made electronic? Or are we going to lose entire providers segments? As we charge forward to a new equilibrium of providers and products it would be important to acknowledge and understand who might be left behind and why. This year, our fellows Alexis Beggs Olsen, Misha Sharma, and Shreya Chatterjee are moving forward with the question of what human touch does—and should—look like in a digital age. We are looking forward to making some progress on this issue.
- Digital is sexy, but traditional topics are getting more substantive. CFI’s webinars that contain “digital” in their titles tend to draw more listeners. However, I have personally been impressed with the way that our community’s discourse on more traditional topics has deepened and matured, even if it’s not as sexy per se. Christy Stickney’s work on MSMEs last year, for example, which took a deep look at the lives and strategies of an important target group (high-growth microenterprises), was met with introspective and productive questions, and we continue to see interest in engaging with the topic.
I have personally been impressed with the way that our community’s discourse on more traditional topics has deepened and matured, even if it’s not as sexy per se.
- The business case for financial inclusion is still opaque, but there is hope to understanding it. We have been pushing financial institutions to understand and acknowledge the business case for financial inclusion. While the business case is still not fully articulated, there seems to be more openness on the part of financial institutions to allow research on this and related questions. This year, we’re excited about Justyna Pytkowska’s research to understand whether there is a business case for financial capability interventions.
- People of many types of education and expertise are eager to research financial inclusion—and they have some great ideas. Our applicant pool for the fellows program is not limited to PhDs. We receive proposals from bankers, investors, consultants, people situated within microfinance institutions, and even central bank employees. We are thrilled by this interest in better understanding financial inclusion, and hope that this determined curiosity will spill over into the institutions and environments from which all of the fellows in our applicant pool emerge.
- The more we learn, the more we don’t know. Probably the most clichéd but relevant lesson I’ve learned is that there is far more to know than even an army of fellows can research—which is why knowledge sharing across institutions is so important. Fortunately, we have the tools to do this, with blogs, webinars, and regular email communication. We are eager to continue to share and curate information that we receive as we move forward with this program.
We will be releasing even more research from this program over the coming months, so stay tuned!
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