Mayada El-Zoghbi

Press Release

<strong>Washington, DC, September 9, 2019</strong>—Global nonprofit Accion announced today that <a href="/bio/mayada-el-zoghbi">Mayada El-Zoghbi</a> has joined as new Managing Director of the Center for Financial Inclusion at Accion (CFI), an action-oriented think tank that develops insights, advocates on behalf of clients, and collaborates with stakeholders to achieve a comprehensive vision for financial inclusion.

“Throughout her career, Mayada has been at the forefront of the inclusive finance community,” CFI Advisory Council chair Paul Tregidgo said. “This alignment with the focus of the Center for Financial Inclusion at Accion, and her recent work on emerging topics in financial inclusion – like the relationship between financial services and well-being, and ways to extend financial services to the most excluded like women, youth and the forcibly displaced – uniquely position her to lead the Center into the future.”

“For more than a decade, CFI has played an important role, challenging and engaging the financial services industry to better serve, protect, and empower people around the world. I am pleased that Mayada El-Zoghbi has accepted to join as the new managing director. Her extensive experience in research and advocacy position her as the right leader to build on CFI’s strong foundation of innovative, industry-shaping work,” said Accion CEO and President Michael Schlein.

Mayada has been a leader in financial inclusion for some time. She comes to CFI from CGAP, a World Bank-based think tank, where she served as Lead for Strategy, Research &amp; Development, and previously managed CGAP’s work with the donor and investor community. From 2002 to 2009, Mayada founded and then managed a development consulting firm. She has also led numerous technical assistance, evaluation, and research assignments; served as a research director for a USAID initiative; and lectured at Columbia University's School of International and Public Affairs (SIPA). She started her career working with several nonprofit organizations establishing inclusive financial institutions in Bosnia and Herzegovina, Croatia, Kosovo, and the Palestinian Territories.

Mayada holds a master’s degree in international affairs from SIPA at Columbia University and a bachelor's degree in business from the University of Minnesota. A dual national of Egypt and the United States, she is fluent in English and Arabic.

In its first decade, the Center for Financial Inclusion at Accion established itself as a powerful advocate for the protection and empowerment of underserved clients. It established the world’s first global consumer protection campaign - the Smart Campaign - which has set standards for inclusive financial services that have now been adopted by 100 institutions serving over 40 million people around the world. Its other initiatives include executive leadership training opportunities like the Africa Board Fellowship Program and Harvard Business School-Accion Program on Strategic Leadership in Inclusive Finance; the Financial Inclusion Equity Council, a membership organization for equity investors in microfinance institutions; and extensive research on emerging issues related to financial inclusion.

<strong>###</strong>

<strong>About the Center for Financial Inclusion at Accion</strong>

The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank that engages and challenges the industry to better serve, protect, and empower clients. We develop insights, advocate on behalf of clients, and collaborate with stakeholders to achieve a comprehensive vision for financial inclusion. We are dedicated to enabling 3 billion people who are left out of – or poorly served by – the financial sector to improve their lives.
<a href="http://www.centerforfinancialinclusion.org/">www.centerforfinancialinclusion.org</a>
<a href="https://twitter.com/CFI_Accion">@CFI_Accion</a>

<strong>###</strong>

<strong>Media Contact</strong>

Center for Financial Inclusion at Accion
<a href="/bio/virginia-moore">Virginia Moore</a>
<a href="mailto:vmoore@accion.org">vmoore@accion.org</a>
+1 202.393.5113

Mayada El-Zoghbi Is the New Managing Director of the Center for Financial Inclusion at Accion

With support from the Citi Foundation and FMO, CFI launches board effectiveness program for leaders at the nexus of social enterprise and financial services. 

<strong>WASHINGTON, DC, August 27, 2019</strong> – The Center for Financial Inclusion at Accion (CFI) has launched an executive education program for financial service providers serving low-income communities in emerging markets. Through peer learning and exchange, the <a href="/about/what-we-do/board-leadership-for-impact-program">Board Leadership for Impact Program</a> will empower executives and board members to foster client centricity, lead digital transformation, sustain business growth and drive social impact. In partnership with the <a href="https://www.citigroup.com/citi/foundation/">Citi Foundation</a> and <a href="https://www.fmo.nl/">FMO</a>, the Dutch development bank, supporting program implementation and participant scholarships, the Board Leadership for Impact Program will offer multiple in-person workshops per year coupled with a robust virtual portal.

Derived from CFI’s five-year <a href="https://content.centerforfinancialinclusion.org/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship Program</a>, which fostered the growth and development of more than 300 executives and board members of financial service providers serving more than 10 million clients in Africa, the Board Leadership for Impact Program will now expand to include early stage to mature companies offering financial services to underserved customers that operate in emerging markets around the world.

“Our experience with leadership development through peer exchange will inform our efforts through this new program to cultivate a community of leaders who have the skills and the network to help their organizations thrive,“ said <a href="/bio/deborah-drake">Deborah Drake</a>, Vice President, Center for Financial Inclusion at Accion. “Tackling challenges like achieving sustainable growth or pursuing digital transformation, particularly as a mission-driven organization, takes strategic leadership at the board level.”

Through role play, simulations and facilitated discussion, participants will gain new perspectives, skills, and knowledge on topics critical to social enterprise growth and impact, including risk management, board dynamics, digital transformation and inclusive digital finance. They will join an active community of alumni of the Center for Financial Inclusion at Accion’s <a href="https://www.centerforfinancialinclusion.org/get-involved#fellow-exec-ed">executive education programs</a>.

“By developing and strengthening leadership skills that drive business growth and social impact, our partnership with the Center for Financial Inclusion at Accion will help accelerate financial inclusion and economic progress around the world,” said Florencia Spangaro, Director of Programs, Citi Foundation.

“FMO is a proud partner of Accion for over a decade and we realize that creating a lasting impact starts in the board room. Strengthening the management of financial service providers and enterprises will help ensure business longevity and commitment to underserved customers,” said Gerbrich Salverda, Capacity Development Officer at FMO.
<p style="text-align: center;"><strong>###</strong></p>
<strong>About the Center for Financial Inclusion at Accion</strong>

The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank that engages and challenges the industry to better serve, protect, and empower clients. We develop insights, advocate on behalf of clients, and collaborate with stakeholders to achieve a comprehensive vision for financial inclusion. We are dedicated to enabling 3 billion people who are left out of – or poorly served by – the financial sector to improve their lives.
<a href="http://www.centerforfinancialinclusion.org/">www.centerforfinancialinclusion.org</a>
<a href="https://twitter.com/CFI_Accion">@CFI_Accion</a>
<p style="text-align: center;"><strong>###</strong></p>
MEDIA CONTACT

Center for Financial Inclusion at Accion
<a href="/bio/virginia-moore">Virginia Moore</a>
<a href="mailto:vmoore@accion.org">vmoore@accion.org</a>
+1 202.393.5113

The Center for Financial Inclusion at Accion Launches Executive Education Program for Financial Service Providers to Enable Business Growth and Social Impact

Citi Foundation provides $1.2 million to CFI to strengthen leadership development and capacity building globally.

<strong>WASHINGTON, DC, February, 12, 2019</strong> – The Center for Financial Inclusion at Accion (CFI) and the <a href="https://www.citigroup.com/citi/foundation/">Citi Foundation</a> announced a new partnership to strengthen financial institutions specializing in reaching underserved communities in emerging markets. The Citi Foundation is providing $1.2 million in funding to support the three-year initiative.

“Our partnership with the Center for Financial Inclusion at Accion will help develop and strengthen the next generation of financial inclusion leaders who in turn will accelerate financial inclusion and economic progress for families and communities across the world,” said Florencia Spangaro, Director of Programs, Citi Foundation.

Through peer-to-peer learning and executive education programs, CFI builds organizational and human capacity around the globe to deepen and sustain financial inclusion. Its programs include the <a href="/about/what-we-do/hbs-accion-program-on-strategic-leadership-in-inclusive-finance/">Harvard Business School (HBS)-Accion Program in Strategic Leadership in Inclusive Finance</a> (SLIF), an intensive week-long course providing management and leadership training to those shaping the microfinance industry; and the <a href="/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship Program</a> (ABF), a governance focused six-month peer learning and exchange program for board members and executives of African financial institutions serving low-income clients. Citi Foundation funding will support both programs, supporting scholarships for HBS-Accion SLIF participants who demonstrate financial need and supporting the optimization and expansion of ABF.

“We are grateful to the Citi Foundation for recognizing the importance of investing in leaders who are working on-the-ground toward financial inclusion,” said <a href="/bio/deborah-drake">Deborah Drake</a>, Vice President, CFI, and head of the governance portfolio. “ABF and HBS-Accion SLIF alumni gain useful skills and knowledge, particularly around governance issues, as well as new relationships and strong networks that they can use immediately and draw on over time.”
<p style="text-align: left">Additionally, the Citi Foundation’s support will contribute to the launch of a new global executive education program to help C-suite leaders and board members of financial institutions effectively and sustainably serve underserved communities. Arriving in fall 2019, with seminars in Asia and Africa, this new program will focus on governance, risk management, growth, client centricity and other mission-critical issues.</p>

<p style="text-align: center"><strong>### </strong>

<strong>About the Center for Financial Inclusion at Accion</strong>
The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank that engages and challenges the industry to better serve, protect, and empower clients. We develop insights, advocate on behalf of clients, and collaborate with stakeholders to achieve a comprehensive vision for financial inclusion. We are dedicated to enabling 3 billion people who are left out of – or poorly served by – the financial sector to improve their lives.
<a href="https://www.centerforfinancialinclusion.org">www.centerforfinancialinclusion.org</a>
<a href="https://twitter.com/CFI_Accion">@CFI_Accion</a>

<strong>About the Citi Foundation </strong>
The Citi Foundation works to promote economic progress and improve the lives of people in low-income communities around the world. We invest in efforts that increase financial inclusion, catalyze job opportunities for youth, and reimagine approaches to building economically vibrant cities. The Citi Foundation's "More than Philanthropy" approach leverages the enormous expertise of Citi and its people to fulfill our mission and drive thought leadership and innovation. For more information, visit <a href="https://www.citigroup.com/citi/foundation/">www.citifoundation.com</a>.

<p style="text-align: center"><strong>### </strong>

MEDIA CONTACT

Center for Financial Inclusion at Accion
<a href="/bio/virginia-moore">Virginia Moore</a>
vmoore@accion.org
+1 202.393.5113

The Center for Financial Inclusion at Accion and the Citi Foundation Announce Partnership to Strengthen and Expand Executive Leadership in the Financial Inclusion Sector

New technology is delivering considerable benefits to the financial inclusion market – but is also creating new risks that service providers need to manage if they are to succeed. This is the main conclusion of a new survey of the risks (or Banana Skins) in the provision of financial services to people in emerging markets who have little or no access to these services.

Technology Risk Is High in Financial Inclusion Market

<strong>Washington, D.C. (June 25, 2018)</strong> — The Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance (IIF), with support of MetLife Foundation, released a report that examines how new types of data and new data tools present an unprecedented opportunity for financial service providers to understand and serve clients—particularly credit-seeking "thin-file" clients who are otherwise excluded from the formal financial sector

New Report: Banks Increasingly Embrace Data to Reach Underserved Customers

Press Releases

Using an index to score complex policy and regulatory environments has its pluses and minuses. 

Blog Post

The Economist Intelligence Unit’s <a href="https://centerforfinancialinclusion.org/global-microscope-2019/">Global Microscope</a> is a robust data set that offers a deep dive into the policies and regulations that are considered important for financial inclusion in 55 countries. The indicators are derived from an expert-based consultation process to identify the most likely policy and regulatory conditions under which financial access and usage is likely to thrive.

The Microscope’s approach is to bundle the indicators into an index so that performance across countries can be compared easily. It also allows the EIU to simplify a set of complex conditions in which no one indicator can sufficiently signal a country’s environment for financial inclusion. Using an index approach to aggregate the indicators has both positive and negative implications. On the positive side, it simplifies a complex set of variables into a score than can easily be understood; a low score is bad and a high score is good. An index also creates a certain level of competition among countries that are covered in the index. Like with other indices that use this approach, such as <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf">Doing Business</a>, many countries put resources behind improving their score year in and year out. The ranking serves as motivation for action.
<blockquote>An index allows the EIU to simplify complex conditions in which no one indicator can signal the environment for financial inclusion.</blockquote>
On the other hand, there are several drawbacks with the use of indices for something as complex as the policy and regulatory environment in a country for financial inclusion. The first drawback is squaring the results with the evidence on the ground. According to the EIU’s Microscope, Colombia has the highest score, 82, in the enabling policy and infrastructure index, yet Colombia’s access figures from the <a href="https://globalfindex.worldbank.org/">2017 Global Findex</a> shows that the country’s financial access is only 46 percent for adults over 15. This is significantly lower than the global average of 69 percent and lower than the 63 percent average in developing countries. A country like Bangladesh is ranked very low in the Microscope (38), but has higher access figures than Colombia, reaching 50 percent in the latest Findex round.

So why is there such a disconnect between a country’s ranking on Microscope with its access and usage data from Findex? It shouldn’t surprise anyone that the reality on the ground can lag behind regulations. For example, while the US has equal-rights legislation on the books, experience among minorities in the US confirms frequent and continued discrimination in practice. So it isn’t a surprise that even though some countries have favorable policy and regulatory conditions for financial inclusion, there may be cultural issues or social norms that aren’t in line with the regulatory change and may require time and additional effort to change. Change may also require enforcement or supervisory capacity to ensure that there’s compliance with policies and regulations.

But perhaps more importantly, policies and regulations are only part of the financial system, and financial service providers and the users of the financial system have many other influences on their choices and behaviors. If we’re only looking at the policy and regulatory viewpoint, we’re not seeing the full picture of what drives outcomes on the ground.
<blockquote>If we’re only looking at the policy and regulatory viewpoint, we’re not seeing the full picture of what drives outcomes on the ground.</blockquote>
The second drawback is lack of clarity on which policies actually matter. The Microscope tracks five domains with a total of 69 indicators. Each of these indicators has an equal weight in the score. But is it true that each indicator is equally likely to drive inclusion? The Microscope doesn’t do enough to help countries prioritize from among the 69 indicators it tracks. For example, in the new indicators on women’s financial inclusion, variables such as “non-discriminatory access to IDs” and “differences in access to a mobile phone between men and women” are included as indicators. How important is one or the other towards women’s financial inclusion? When everything is important, nothing is. The index may be inadvertently contributing to either paralysis or misguided prioritization by policy makers.
<blockquote>The Microscope doesn’t do enough to help countries prioritize from among its 69 indicators.</blockquote>
Regulators and policy makers are looking for evidence on what works to drive financial inclusion. This is where there is potential for researches and EIU to take this important data set and do additional analysis to identify which of the indicators correlate with results on the ground. The <a href="http://documents.worldbank.org/curated/en/926401524803880673/pdf/125804-PUB-REPLACEMENT-PUBLIC.pdf">World Bank’s Women, Business and the Law 2018</a> publication did a deep dive on financial inclusion which did this type of analysis linked to women’s financial inclusion, for example

While correlations have their own set of limitations, they are nonetheless a step closer to helping us unpack which policies and regulations are priorities to drive inclusion. In the next round of the Global Microscope, we’d like to see less emphasis on rankings and much more effort devoted to helping policy makers understand which policies and regulations should be prioritized.

What’s in a Score? Reconciling Financial Access and Usage With the Microscope Rankings

Jessica  Galimberti

Learn More

The Handbook on Consumer Protection for Inclusive Finance fills a void created by legal and regulatory shortcomings, inconsistent oversight, competing or overlapping regulatory mandates, and the inability or lack of enforcement. 

With the expansion of digital financial services (DFS) for the underserved, policymakers and regulators must set the conditions to allow innovative financial products to flourish while providing the market guardrails that ensure customers, especially those accessing financial services for the first time, can access DFS with confidence and adequate protections.

According to the World Bank’s most recent Global Financial Inclusion and Consumer Protection Survey, more than 95 percent of the 124 respondent jurisdictions have some kind of <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/28998/122058.pdf?sequence=5&amp;isAllowed=y">financial consumer protection legal framework</a>. Other studies, such as the <a href="https://centerforfinancialinclusion.org/global-microscope-2019/">Global Microscope</a> series and the World Bank's <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/28996/122011-PUBLIC-GoodPractices-WebFinal.pdf?sequence=1&amp;isAllowed=y">Good Practices for Financial Consumer Protection</a>, have demonstrated that legal and regulatory responses to consumer protection risks have been strengthening over time. Such developments are important accomplishments and demonstrate the prioritization of consumer protection as an enabler of financial inclusion. However, our work doesn’t stop there.
<h2>The Opportunity</h2>
Not all financial consumer protections frameworks are effective in addressing key consumer protection risks for the financially excluded. In some cases, elements of such frameworks may even impede financial inclusion goals. Common challenges include legal and regulatory gaps, disproportionate (non-risk-based) interventions, inconsistent oversight, competing or overlapping regulatory mandates, and the inability or lack of enforcement. These challenges are exacerbated by a rapidly changing sector where digital technologies have introduced new providers, products, business models and delivery channels. Appropriate legal and regulatory responses can help to mitigate new and evolving risks while promoting responsible inclusive finance, stronger markets, and better served clients.
<h2>Our Contribution</h2>
To address the demand for practical resources to promote strong legal frameworks for responsible inclusive finance, CFI, DLA Piper’s global pro bono initiative, New Perimeter, and the legal team at Accion developed the <a href="https://centerforfinancialinclusion.org/handbook-on-consumer-protection-for-inclusive-finance/">Handbook on Consumer Protection for Inclusive Finance</a>. Organized around the <a href="https://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">Client Protection Principles (CPPs)</a>, the Handbook expands on its predecessor, the <a href="http://smartcampaign.org/tools-a-resources/1049-model-law">Model Law and Commentary for Financial Consumer Protection (Model Legal Framework)</a> to address the unique characteristics of digital financial services. It’s informed by CFI's <a href="https://www.centerforfinancialinclusion.org/consumer-protection-in-a-digital-age">Consumer Protection Standards for Digital Credit</a>, which provide a shared set of practices for responsible digital lending through a provider lens, and updated Guidance for these standards. It also reflects consultation with experts and practitioners, experience from our work with regulators and financial service providers (including fintech companies), research on 19 regulatory environments, and guidance issued by international organizations and collaborative working groups.

The Handbook complements existing tools and guidance by distilling recommended legal and regulatory approaches for financial consumer protection into illustrative and user-friendly model language with explanatory commentary. Like the Model Legal Framework, the Handbook is intended for a broad range of stakeholders and is designed to be used in several ways: to develop or revise financial consumer protection legal frameworks, to serve as a diagnostic tool to assess existing frameworks, and to support dialogue and collaboration between government and industry.
<blockquote>The Handbook distills recommended legal and regulatory approaches for financial consumer protection into illustrative, user-friendly language and commentary.</blockquote>
<h2>What’s New?</h2>
The Handbook comprehensively updates the Model Legal Framework, including new and revised provisions and commentary related to DFS. It significantly expands recommendations regarding the privacy and security of consumer data, which traditional consumer protection frameworks may not address or where standalone data privacy regimes do not exist. In addition, the Handbook advocates for strong internal controls in the design process for products, services and delivery channels to support the concept of “consumer protection by design” in addition to monitoring consumer outcomes. It also tackles questions around algorithm-based lending, transparency safeguards for digital interfaces, third-party accountability, fraud, and coordination among supervisory authorities with converging regulatory mandates, among other topics.

No single resource can address every issue relevant to financial consumer protection, but the Handbook focuses on key areas of consumer risk based on consensus in the responsible inclusive finance ecosystem. As recommendations around strong consumer protection policy continue to evolve, so too will future editions of the Handbook, and we welcome your comments and feedback.

New Handbook Addresses Demand for Practical Legal Resources About Consumer Protection in a Digital World

Bobbi Gray

During this time of asking what financial inclusion is for, Bobbi Gray of Grameen Foundation offers 3 notions that should be put out to pasture. 

I’m a Freakonomics junkie. Stephen Dubner, the host, presents one of the more entertaining ways to consume the latest research.

In 2015, Freakonomics produced a podcast with the title “This Idea Must Die,” based on a book of the same name, where he interviewed scientists and researchers to explore ideas they believed were ready for retirement because they were getting in the way of progress.

If Stephen were to call and ask me this question about financial inclusion, here’s what I’d say:
<h2>Outdated Idea #1: Financial Inclusion Has a Single Purpose</h2>
Financial inclusion is a means to an end and serves as a platform for other development outcomes. For example, at Grameen, we've advocated that public health and financial services work together to help people improve their lives. The financial services sector must design better<a href="https://grameenfoundation.org/resource/developing-next-generation-health-financing-instruments-households-drawing-lessons-learned"> health financing</a> products for low-income households and the health sector needs to make sure quality health services are available. Without both, services are fragmented, ineffective and often result in failure.

The very same can be said of agriculture. Agricultural financing is a well-recognized gap in the agricultural sector. Farmers can’t invest in good agricultural practices or farm renovations without financial products that are designed to help them respond to those needs. The ultimate goal here isn’t financial inclusion, but access to financial services is a critical driver for these other outcomes.
<h2>Outdated Idea #2: Women’s Financial Inclusion Only Involves Women</h2>
I’d like to retire this idea, too. Increasingly, we’re building on evidence and experiences that demonstrate how social norms influence women’s access to and use of resources, whether they be financial, health, agricultural services. With FinEquity’s and SEEP’s working groups on women’s financial inclusion and economic empowerment continuing to coordinate learning and responses to ensure women are not left behind, I’m hopeful that we’re at a tipping point of this being a commonly held belief. In addition to these two groups, Grameen is part of a consortium of actors called <a href="http://www.wageglobal.org/">Women and Girls Empowered</a> (WAGE) that tries to address the legal, financial, business and social barriers that women entrepreneurs face globally. In countries like El Salvador, where conflict and gender-based violence (GBV) severely impede women’s progress, we’ve learned that despite financial institutions having no mandate to address GBV, women wished they were more sensitive to these dangers.

The sooner we can think about how to provide financial services to women that effectively involve men, the sooner I believe we’ll see real change. Many women make few financial decisions on their own, but rather in collaboration with, or worse, under duress of another person. Ultimately, while we measure the financial inclusion of individuals, we may inadvertently underestimate the importance of households.
<h2>Outdated Idea #3: Financial Inclusion Is Always Positive</h2>
Finally, I’d like to suggest the idea that financial inclusion is always good should die as well. This has resulted in researchers like me monitoring and evaluating for positive impact and rarely for negative impact. We are at risk of confirmation bias and losing opportunities to learn why some products work better for some and not so well for others. We should assume no product works well for everyone and design our monitoring and evaluation processes accordingly.

We must recognize that the world of financial inclusion is nuanced. The idea that microcredit is good for people should die. So should the idea that microcredit is bad. The real answer? “It depends.” Microcredit works well for people who can benefit from the investment in a business. It can also help people respond to emergencies and avoid greater catastrophes. But for some, it results in over-indebtedness, financial stress, child labor, and GBV.
<blockquote>The idea that microcredit is good for people should die.</blockquote>
The same can be said about other financial products. Commitment savings are great, but if the commitments are too hard, having savings locked up can be bad. Good insurance products protect people from catastrophes and bad ones waste people’s meager resources on a product that never brings them any benefit. It all depends. Our mandate should be to continually improve, improve, improve, just like the world’s best product companies do.

What long-held beliefs or ideas do you believe are impeding financial inclusion progress and too must die? I invite your ideas. Comment below!

These Ideas Must Die: Notions Impeding Financial Inclusion Progress

Monica Brand Engel

The world’s capital markets are the one resource that’s plentiful enough to tackle global poverty, writes the Quona Capital Co-founder and Partner.

<h3>You’ve been working towards financial inclusion for the majority of your career: as a loan officer, through to Accion, and now with Quona. Why is financial inclusion so important to you?</h3>
<strong>MBE</strong>: Financial inclusion resonates with me because it’s a powerful lever for change that works on both micro and macro levels. I grew up living in both “developing” and “developed” contexts, so the notion that innovation and markets have the power to influence people’s daily lives and economic systems became evident to me from an early age.

One of my mentors used to say, “We can't be patient with poverty.” He instilled in me the idea that markets work much more quickly than governments or foundations.

I also fundamentally believe that to address a problem as massive as global poverty, we need to mobilize a resource that’s also plentiful: the world’s capital markets. Financial inclusion is about harnessing the power of these markets and putting them in the hands of everyday individuals and entrepreneurs.
<blockquote>Financial inclusion is about harnessing the power of markets &amp; putting them in the hands of everyday individuals and entrepreneurs.</blockquote>
On the micro-level, financial inclusion is one of the most powerful mechanisms to change peoples’ daily quality of life. Innovations like mobile money have had an incredible impact on the lives of people all over the world. Rather than walking 20 kilometers to pay a bill and taking children out of school to watch the livestock, farmers in Kenya can now pay by entering codes on their cell phones. This has a huge impact on the farmers’ productivity, and it was only made possible within the past 10 years. Democratizing access to financial services to previously underserved populations has shifted the way people can expand their businesses and grow their household income.
<h3>The number of impact-driven investors, many of whom have a much broader focus on impact than Quona does, has increased globally. To what extent you think Quona’s narrow focus on financial inclusion has either accelerated or impeded success, both at a fund level and a company level?</h3>
<strong>MBE</strong>: When we created <a href="https://quona.com/">Quona,</a> we were in an era of industry building, when the “impact investing” moniker had just been developed. It was early, and it involved a lot of well-intentioned people launching funds. It quickly became clear to us that we wanted to be a point of light in this field and have our social and financial performance demonstrate how profit and purpose can be mutually reinforcing.

The decision to focus Quona on fintech specifically within financial inclusion was quite deliberate, informed by over a decade of experience seeing microfinance be successful. Traditional financial services had hit a wall. We needed new approaches that balanced tech-and-touch in a more nuanced way so that we could achieve our goal of radically improving both access and quality of financial services to the underserved.

Coinciding with the early growth of impact investing – and the realization that fintech for financial inclusion should be our focus – were enormous concurrent technological and demographic trends that made it the perfect time to launch a fintech fund. First, you had the proliferation of mobile phones and smartphones in emerging markets, which put the power of a computer in the hands of an underserved person. Second, you had the expansion of internet access and 4G more globally, which allowed social media to take off and enable business models, like software as a service, and other cloud-based models, which dramatically changed the cost structure and what I call the “physics of business.” The third key trend is that the data created by this digital footprint and this massive demographic trend of emerging market consumers using this technology generated a tremendous data base of information to be mined for understanding, underwriting, and communicating with consumers.

All of a sudden, we had the power of analytics that could help reduce the cost of launching and running these business models, and also open new doors about the types of customers that could be acquired and served. These trends converged when we were deciding to launch our fund, and they have been key to our financial success and in our ability to invest in companies that are changing the game of financial services to include populations that were previously underserved at scale.

In terms of the impact that focusing on financially underserved populations has on our investees, there’s a big difference between a great idea, a good business, and a smart investment. As investors, we're looking for the latter – smart investments – which requires ticking some different boxes.

In order to be a good investment, a company obviously needs to have a great business, great unit economics, and a compelling value proposition. But beyond that, a good investment requires the "defensibility" that technology innovation can bring and an enormous addressable market to earn the kind of risk-adjusted returns we're looking for. That's where focusing on inclusion is such a powerful proposition. The types of problems our investees are solving are basic, daily problems.

Consider fintechs doing small business lending in emerging markets. They’ve seen traditional banks and microfinance institutions fail to offer loans to small businesses profitably, because the cost to acquire customers is too expensive, or the cost to underwrite is too difficult. These fintechs focusing on underserved populations are leveraging their tech, information flows, total addressable market and lack of competition to become good businesses and more compelling for investors like us than the fintechs focusing on the top 1 to 10 percent of the population.

On top of having an enormous total addressable market, a good investment also needs to have a certain level of customer-centricity to have long-term success. The quality of services or products -- i.e. how accessible, usable, expensive, etc. -- that a fintech is offering is important to us, both from a returns perspective and from a financial inclusion perspective.
<h3>One of Quona’s driving investment themes is “profit meets purpose.” Are there any tradeoffs there?</h3>
<strong>MBE</strong>: We are lucky to work in a sector where there's a lot of mutual reinforcement. Because we work where addressable markets are so large and critical, that leads us to places that are the most underserved or where quality suffers.

That said, there are tensions. Sometimes there are short-term decisions made that might seem like a company or investee is drifting from its mission in favor of profit. An example is on pricing and which segments a company serves. Most of Quona’s portfolio companies do not exclusively serve low-income segments. Many of them have a mix of customers that are predominantly low or lower income and predominantly underserved, as well as a percentage of middle or high-income customers.

Serving a broad spectrum of customers might mean, in the short term, that some of their resources are focused on folks that are not highly underserved, but that's important for a few reasons. One is, it avoids concentration risk -- if they were focused on a specific segment it would make them vulnerable to competition or price margin erosion. Two, it allows them to provide the full range of services or products, so as their previously underserved customers evolve financially, they have appropriate services to grow with them.
<blockquote>Serving a broad spectrum of customers is important.</blockquote>
There are many benefits -- both social and financial -- of not exclusively focusing on the lowest income segments. In the short term, there's this resource allocation question, you can call it a “tradeoff,” but it’s a multiplicity of factors of companies having to answer business questions like:
<ul>
 	<li>How do I make sure that I have a robust financial performance and ongoing defensibility?</li>
 	<li>How do I make sure I have a cushion to deal with macroeconomic factors and the inevitable dips that happen in emerging markets?</li>
 	<li>How do I make sure I can grow with my customers?</li>
</ul>
None of these questions have a clear answer in terms of what that means for customer breakdown, but it does require consideration. Our firm shies away from setting specific, time-bound outputs, because we’ve seen unintended consequences with targets, like establishing a target of reducing the number of unbanked consumers, only to achieve our goal of millions of dormant bank accounts. We also understand that the businesses our companies run and the markets in which they operate are complex, require nuanced appreciation of multiple factors impact outcomes.
<h3>How should we measure success in financial inclusion?</h3>
<strong>MBE</strong>: I'm a big believer in measuring, so I love what I see in impact investing, where there are greater calls for rigor in measurement, and a desire to build performance monitoring systems as comprehensive as what we have for operational and financial metrics. Measuring and evaluating are a core part of Quona’s DNA. We’re proudly nerdy in that way.
<blockquote>Measuring and evaluating are a core part of Quona’s DNA. We’re proudly nerdy in that way.</blockquote>
The way we think about success is along three dimensions:
<ul>
 	<li><strong>Access</strong>: How do you get more underserved people in the mainstream and provide them access to a suite of financial services?</li>
 	<li><strong>Quality</strong>: Affordability, accessibility, convenience, usage, etc. This is important to us because just focusing on access or targets can lead quality, usage and (ultimately) retention to suffer.</li>
 	<li><strong>Markets</strong>: From increasing capital flows to markets where the capital stack is thin, to making market rates more competitive, to giving small businesses more leverage, what is the indirect impact that our companies are having on their markets?</li>
</ul>

Focusing on the Underserved, Serving the Bottom Line: a Q & A With Monica Brand Engel

Islam Zekry

Credit scoring is critical to modern finance, and we can put it to work -- profitably -- to support the underserved. 

The essence of the financial industry is symbiotic relationships, where all participants have a winning angle, depositors get interest on their funds, project owners get funding, and the middleman gets a cut. If financial institutions fail to offer an incentive for one of the parties, the whole system would stop working, this is why financial inclusion must serve the bottom line, because that insures the presence of an inclusive ecosystem of professionals who can work to build out services for the underserved.

Questions such as “What’s in it for the unbanked?” and “How do I make everyone benefit?” have been challenging the world of finance and financial inclusion. When it comes to the low-income segment, banks are the ones who could not find the right angle. A staggering <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017 Findex full report_chapter2.pdf">1.7 billion adults are estimated to be unbanked</a> worldwide. With modest funds and no credit history, they are expensive to serve in the conventional banking channels and are often thought to have low potential to create value.

When we approached the issue, we considered three main areas of potential service offerings: payments, deposits and lending. Despite the potential for payments to integrate more people in the financial system – and still be profitable for the institutions and convenient for the customers – there was high competition in that area and financial institutions have little chance to differentiate between the services they offer compared to each other. Deposits couldn’t present a stable revenue stream, so offering credit became the best possible solution. Credit scoring is crucial for this.
<h2>Credit Scoring: A Birds-Eye View</h2>
Credit scoring plays a vital role in economic growth by helping expand access to credit markets, lowering the price of credit and reducing delinquencies and defaults. In the US and Europe, credit scoring helps drive the economy and makes credit affordable.

For consumers, credit scoring is the key to home ownership and consumer credit. It increases competition among lenders which drives down prices. Decisions can be made faster and cheaper, more consumers can be approved, and risk is spread more fairly so vital resources -- such as insurance and mortgages -- are priced more fairly.

For businesses, especially small and medium-sized enterprises, credit-scoring increases access to financial resources, reduces costs and helps manage risk.
For the national economy, credit scoring helps smooth consumption during cyclical periods of unemployment and reduces the swings of the business cycle. By enabling loans and credit products to be bundled according to risk and sold as securitized derivatives, credit scoring connects consumers to secondary capital markets and increases the amount of capital that is available to be extended or invested in economic growth.
<h2>From Thin to Thick Credit Files: Where Data Can Help With Viability</h2>
As beneficial as credit scoring is to the economy writ large, banks had to find a different way to assess the credit worthiness of the underserved.

That is where data can play a major role. Alternative credit scoring and predictive models are a solution that would make credit lines for unbanked faster, cheaper, and credit worthy. While the traditional and most common way to evaluate the creditworthiness of individuals is their credit history, this is simply not available for unbanked people. They rely on cash and don’t have any traceable financial history; they have thin credit files in a banking industry that prefers thick ones. Therefore, we turn to different behavioral attributes that would allow us to create credit scoring. This system relies on factors that are available for everyone and are easily traceable. The data comes from social media, smart phone data such as contact lists, or GPS data, and monthly utility bills. In time, this approach will turn these clients from thin to thick files and they become regular bank clients.
<blockquote>Alternative credit scoring and predictive models make credit lines for unbanked faster, cheaper, and credit worthy.</blockquote>
Through machine learning, credit organizations can create predictive models based on these attributes. They can establish a credit score that has proven to be very reliable and has the potential to forecast the amounts a person could borrow and the possibility of repayment. This methodology provides people with a much-coveted service in a timely manner and allows the organizations to be profitable without having to deal with a lot of extra risk.

For example, working with a ride hailing service providers, CIB <a href="https://centerforfinancialinclusion.org/accelerating-financial-inclusion-with-new-data-2/">conducted a pilot to create an alternative credit scoring</a> for drivers based on their behaviors, their ratings, and the comments customers leave. The new methodology enabled us to integrate a segment – one that did not have access to financial services – and, in turn, they had lower default rates than any other sub-segment in the current portfolio.

Creating this beneficial relationship between institutions and unbanked segments gives profit incentives for both parties. However, several hurdles remain to complete the cycle, including onboarding a large number of people despite regulatory constraints. The majority of financial institutions have reached the conclusion that the best way to serve unbanked segments is through digital channels that would funnel into traditional channels, but we have to keep in mind that onboarding these clients would still require a lot of work in terms of marketing, reach, and maintaining a complaint process. These are issues that banking and governments are still working on.

How Alternative Credit Scoring Can Work for the Unbanked...and the Bottom Line

Latest Blog Posts

Isabelle Barrès

Mayada El-Zoghbi and Isabelle Barres will share insights on client protection and responsible finance as part of the official program during European Microfinance Week 2019. Join us!

Mayada El-Zoghbi and Alexandra Rizzi will share insights on client protection and responsible finance as part of the official program during European Microfinance Week 2019. 

Mayada El-Zoghbi and Isabelle Barres will share insights on client protection and responsible finance as part of the official program during European Microfinance Week 2019. 

Event

We are pleased to participate in the following two sessions during the official program at European Microfinance Week 2019. Join us!
<h2>Atlas Data Platform: A New One-Stop-Shop for the Sector</h2>
<h3>Thursday, November 21, 2019
3:45 - 5:15pm (local time)</h3>
<a href="/bio/isabelle-barres">Isabelle Barres</a>, Campaign Director, <a href="/about/what-we-do/the-smart-campaign">The Smart Campaign</a>, joins on a panel alongside BFR, CERISE, MFR and SPTF to demo and discuss the Atlas Data Platform on pricing, client protection, social, environmental and financial performance of approximately 600 financial service providers (FSPs) from 70 countries. Investors, networks, researchers and other subscribers will be able to use this data to benchmark FSPs with peers, monitor their evolution, consolidate portfolios, review country profiles, research industry trends, and analyze data through the lens of the Sustainable Development Goals. The Atlas Data Platform will be launched in 2020.
<h2>Responsible Client Choices in Finance: Whose Responsibility Is It? (Closing Plenary)</h2>
<h3>Friday, November 22, 2019
3:30 - 4:45pm (local time)</h3>
CFI Managing Director <a href="/bio/mayada-el-zoghbi">Mayada El-Zoghbi</a> joins Gerhard Coetzee, CGAP, Tim Odgen, Financial Access Initiative, and Roshaneh Zafar, Kashf Foundation, to debate the tension between client choice and client protection. While client protection is a foundation of responsible finance, implementing it requires wrestling with a fundamental question: when does protection become a paternalistic limitation on client choice?  Among responsible finance adherents, there is universal agreement that clients should be provided with clear, simple information in order to make financial decisions. But often this is seen as insufficient, and institutions and regulations go further, limiting or prohibiting certain practices because they are deemed irresponsible—thus also limiting client choices. This session will use a free debate format to explore the challenge of balancing between these two objectives—client choice and client protection.

European Microfinance Week 2019

Join social enterprise leaders for a two-day board effectiveness and inclusive finance workshop in Nairobi, Kenya.

Board effectiveness executive education for social enterprise leaders

<div class="sc-htpNat keAZAq">
<div class="sc-gisBJw iCFDng sc-bwzfXH doQVok">
<div class="sc-htpNat bBOJNH">
<p class="text-block__article sc-kjoXOD hLBZML">The <a href="/about/what-we-do/board-leadership-for-impact-program">Board Leadership for Impact Program</a> (BLI) is dedicated to empowering corporate leaders in the social enterprise sector to <strong>achieve business growth and social impact</strong>. By focusing exclusively on executive leadership and reframing board effectiveness as a strategic imperative, BLI strengthens leadership and management to ensure these companies sustain business growth and drive social impact.</p>

<h2><a href="https://share.hsforms.com/11LBhbUiDRTu78o7jWigVYA3v9yk">Register Today</a></h2>
<h3 class="text-block__article sc-kjoXOD hLBZML">Join a select group of social enterprise leaders at the BLI Nairobi 2020 Workshop,  February 23-25, 2020, at the Fairview Hotel in Nairobi, Kenya.</h3>
BLI is offered as a two-day interactive workshop where participants gather with faculty and facilitators for role play, simulations, discussions, and more. Workshops are augmented with a robust virtual portal where participants can access resources and videos, participate in discussions, and stay connected with hundreds of leaders in our global network. At this inaugural workshop, attendees will have the opportunity to engage with peers on issues critical to social enterprise growth and impact, including digital strategy and culture, data, partnerships and financial inclusion in the digital age.

The BLI Nairobi 2020 Workshop tuition is $3,000 USD, excluding airfare and lodging.
<h4>Questions</h4>
Learn more about the <a href="/about/what-we-do/board-leadership-for-impact-program">Board Leadership for Impact Program</a> and <a href="mailto:gjaso@accion.org">contact us</a> if you have questions or need more information.

</div>
</div>
</div>

Board Leadership for Impact Nairobi 2020 Workshop

Upcoming Events

A leading Colombian news outlet features a photo of the CFI Managing Director speaking at FOROMIC, an annual conference on microfinance and entrepreneurship in the Latin American and Caribbean region. The Global Microscope 2019 was formally unveiled at the conference. 

News

The <a href="https://www.elespectador.com/economia/colombia-lidera-entorno-para-la-inclusion-financiera-regional-articulo-888988">article</a> (in Spanish) notes that Colombia -- along with Peru, Uruguay and Mexico -- lead the <a href="https://centerforfinancialinclusion.org/global-microscope-2019/">Global Microscope 2019</a> rankings this year. Supported by CFI and the Bill &amp; Melinda Gates Foundation, an updated Microscope is published every year by the <a href="https://www.eiu.com/n/">Economist Intelligence Unit</a>. It assesses the enabling regulatory environment for financial inclusion in 55 countries worldwide.

<a href="https://events.iadb.org/calendar/event/20252?lang=en">FOROMIC</a> is hosted by the Inter-American Development Bank (IDB).

In El Espectador: CFI, Mayada El-Zoghbi Mentioned in Microscope Coverage

Eric Noggle

Eric Noggle, Senior Research Director, talks to Good ID about the intersection between good digital ID and broader socio-political change. 

Following the <a href="/id2020-summit-2019">ID2020 Summit</a> in September, Eric Noggle, Senior Research Director, talks to Good ID about the intersection between good digital ID and broader socio-political change. Read more in <a href="https://www.good-id.org/en/articles/everything-connected-making-good-id-matter/">Everything Is Connected: Making Good ID Matter</a>.

Eric Noggle, Senior Research Director, on Making the "Good ID" Movement Matter

Watch

Mayada El-Zoghbi poses the question to Her Majesty from the Netherlands during a UN General Assembly event on financial inclusion in September 2019. 

Mayada El-Zoghbi poses a question to Her Majesty from the Netherlands during a UN General Assembly event on financial inclusion in September 2019. 

The event, “<a href="https://www.unsgsa.org/resources/news/unsgsa-queen-maxima-world-leaders-participate-unga/">Financial Inclusion for Development: Building on 10 Years of Progress</a>,” included the participation of António Guterres, UN Secretary-General; David Malpass, President of the World Bank; Melinda Gates, Co-Chair of the Bill &amp; Melinda Gates Foundation; Dan Schulman, President and CEO of PayPal; and Ajay Banga, President and CEO of Mastercard.

Watch Mayada ask Queen Maxima about measuring financial inclusion's progress within the framework of the SDGs, and how financial inclusion contributes to achieving the SDGs by 2030. Queen Maxima is the <a href="https://www.unsgsa.org/">United Nations Secretary General's Special Advocate for Inclusive Finance for Development</a>.

More video coverage of the event can be found <a href="http://webtv.un.org/search/financial-inclusion-for-development-building-on-10-years-of-progress/6089500721001/?term=finance%20for%20development&amp;lan=english&amp;sort=date">here</a>.

&nbsp;

CFI Managing Director Asks Queen Maxima About Financial Inclusion's Role in the Sustainable Development Goals

Hema Bansal

Consumers are being charged sky-high interest rates on easy credit, leading to desperation—or worse—according to the piece. 

Bansal, the <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign">Smart Campaign</a>'s Senior Director in South and Southeast Asia, notes that the problem over-indebtedness is more severe in the island country than elsewhere.

She also points out that the government's decision to write off business loans of up to 100,000 rupees falls short.

"One-off measures will not do, says Ms Bansal: Sri Lanka needs properly enforced rules that prevent over-indebtedness and ensure fair treatment of borrowers."

<strong>Read the <a href="https://www.economist.com/finance-and-economics/2019/08/15/microfinance-is-driving-many-sri-lankan-borrowers-to-despair">full article</a> (soft paywall).</strong>

In The Economist: Hema Bansal on Over-Indebtedness in Sri Lanka

The CFI Vice President notes that Facebook's Libra presents an opportunity to answer key questions about protecting the underserved. 

Barres's questions that Libra's developers should consider when innovating for the new cryptocurrency are:
<ul>
 	<li>What would data privacy agreements look like if we wanted them to be understandable, fair and with an option to opt out?</li>
 	<li>How would algorithms that did not discriminate be set up?</li>
 	<li>How might fully transparent, low-cost and high-quality products and services that truly solve problems be brought to bear?</li>
</ul>
Read the <a href="https://www.euromoney.com/article/b1g0hvpnhqmyg0/cryptocurrency-facebook39s-libra-is-this-how-we-get-to-responsible-fintech">full article in Euromoney</a>.

In Euromoney: Smart Campaign's Isabelle Barres Poses Questions About Libra

CFI in the News

News & Events