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

Press Release

<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

<strong>New York, NY (February 26, 2018) </strong>— MetLife Foundation provides $5.4 million to Accion for programs in Latin America, Eastern Europe, and Asia to leverage digital solutions to enhance underserved customers' financial capabilities and engagement.

Accion and MetLife Foundation Announce Expanded Partnership to Advance Financial Inclusion

<strong>Washington, D.C. (January 8, 2018) </strong>— The Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance (IIF), with the support of MetLife Foundation, today released a new report detailing the factors spurring inclusive insurance around the world. It reveals how both traditional and new insurers are breaking open new markets and reaching underserved customers through the use of innovative technologies, business models, product design, and partnerships, enabled by effective regulatory environments.

Insurers Leverage New Technologies and Reinvent Business Models to Reach Underserved Consumers, Report Finds

Press Releases

Elisabeth Rhyne

The Smart Campaign launches new standards and guidance for digital financial service providers. 

Blog Post

<em>This post was originally published on the FinDev Gateway <a href="https://www.findevgateway.org/blog">blog</a>.</em>

Last week the <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign">Smart Campaign</a> launched new <a href="http://www.smartcampaign.org/storage/documents/Digital_Credit_Standards_June_2019.pdf">standards</a> and <a href="https://www.smartcampaign.org/storage/documents/2019_06_19_Principles_Guidelines_FINAL2.pdf">guidance</a> covering digital financial services, especially credit. This is a milestone for the Campaign, and a step forward for protecting consumers who are accessing financial services digitally for the first time. We would like the standards to be widely used to guide the practices of both fintechs and traditional financial service providers undergoing digital transformation.

Through the in-depth research, piloting and consultation to prepare these standards, we have developed an approach to consumer protection for digital credit that is in many ways familiar and in other ways brand new. The Client Protection Principles, from transparency to fair and respectful treatment, continue to be the bedrock on which the standards are based, and many of the original standards still apply with few or minor changes.

But there is also big news in these standards. They shift the emphasis in application of consumer protection from staff and operations toward product design and delivery. When services are delivered primarily through front line staff or loan officers, clients are protected by ensuring that staff are well-trained and properly incentivized. With digital services, the consumer experience is embedded in the design of the product and user interfaces – largely in advance. This is a profound shift. To ensure consumer protection, digital financial service providers will need to institute practices in the design process to confirm that consumer risks are mitigated. These practices are only now emerging in the sector.
<blockquote>There's big news in these standards: They shift emphasis in application of consumer protection from staff &amp; operations to product design &amp; delivery.</blockquote>
For example, we propose that to protect clients against over-indebtedness in digital lending, where predictive algorithms substitute for repayment capacity analysis, providers must regularly review the choices embedded in the algorithm and selection of data points (ex ante measures), and they must monitor results in the portfolio and directly with clients (ex post measures).

Similarly, there is a broad shift in emphasis from Client Protection Principle #5, Fair and Respectful Treatment, to an expanded Client Protection Principle #1, reformulated as Design of Products, Services and Delivery Channels. In non-digital models the standards around fair treatment focus on staff behavior toward clients, such as codes of conduct and sanctions for lapses. In the new standards, more attention is given to ensuring that the design process incorporates client input and that predatory or deceptive sales and marketing techniques are not programmed.

Another big change in the standards is the elaboration of the Privacy of Client data principle, which has been reformulated as Privacy, Security and Integrity of Client Data. When the Smart Campaign began, data privacy was often regarded as the least important of the principles, but today it is a major concern, as financial service providers and their partners have, use and share so much more client data. Many providers have not yet determined what privacy policies to follow or how to implement them. Informed consent is a starting point, as the standards state, but we are also looking at ways to bake privacy protections into design. As more data is manipulated, stored and moved from place to place, risks increase for data breaches and misuse, prompting us to also deepen attention to cybersecurity.
<blockquote>As more data is manipulated, stored and moved, risks increase for data breaches &amp; misuse, prompting us to deepen attention to cybersecurity.</blockquote>
A final noteworthy shift is the use of partnerships (including agents) to deliver products, which makes it harder to assign responsibility for client mistreatment. For example, an agent may be managed by a network operator while selling products of a bank or other financial service provider. When something goes amiss, it should be made clear who is responsible to make the client whole. The standards call on providers to discuss relevant practices with partners and secure agreement for partners to meet high standards, wherever possible.

As a first cut at a complete set of consumer protection standards for digital services, we recognize that these standards will need to continue to be tested and refined. An enormous thanks to the organizations who worked with us to develop the standards, particularly the <a href="http://www.smartcampaign.org/about/fintech-protects-community-of-practice">Fintech Protects</a> community of practice and <a href="https://www.mf-rating.com/">MFR</a> (formerly Microfinanza Rating), as well as to the many people who provided comments and critique. We continue to welcome your feedback. Meanwhile, we call on digital financial service providers around the world to apply the standards so that they and their consumers will face fewer risks and receive the value they seek from using financial services.

Consumer Protection in a Digital Age

Eric Noggle

<h2>The First and Second Eras</h2>
<p>The first era began in earnest at the start of this century, when nations began considering the consequences that a lack of financial literacy could have on their economies. This concern resulted in the creation of the Organization for Economic Cooperation and Development’s (OECD) “<a href="https://www.oecd.org/daf/fin/financial-education/35108560.pdf">Recommendation on Principles and Good Practices for Financial Education and Awareness</a>” in 2005 and associated efforts to develop national financial education strategies. In 2015, the OECD reported that 59 countries had developed such strategies. As part of and in parallel to these strategies, institutions developed in-house financial education content or adapted content from major initiatives like the <a href="https://www.microfinanceopportunities.org/4-work-with-us/mfo-in-the-field/project-list/fecc/">Global Financial Education Program</a> developed by Freedom from Hunger and Microfinance Opportunities.</p>
<p>This era was predicated on the idea that developing financially literate people would unlock progress – households would be better able to manage their money and micro-entrepreneurs would make more productive use of microcredit.</p>
<p>The second era began about a decade ago, with a recognition that while literacy may be necessary, it was likely insufficient to unleash low-income clients’ full potential. Being literate was one thing, but what people really needed to be was capable, and capability involved more than just knowledge and skills. The financial inclusion industry set-out to determine what capability involved, and organizations coalesced around the idea that capability included knowledge, skills, and attitudes. Many organizations included other elements in their idea of capability too. For instance, <a href="https://www.centerforfinancialinclusion.org/a-change-in-behavior-innovations-in-financial-capability/">CFI’s</a> and the <a href="http://responsiblefinance.worldbank.org/publications/financial-capability">World Bank’s</a> financial capability definitions include behavior. I am not a fan of this. I think it conflates a short-term outcome (developing knowledge, skills, attitudes) with the next stage in that process (better behaviors). A <a href="https://www.centerforfinancialinclusion.org/what-is-financial-capability">post</a> from this blog by Microfinance Opportunities – which owns the top hit on Google for “What is financial capability” – includes self-efficacy and access in its definition (self-efficacy is defined in this context as an individual’s belief in his or her ability to manage money well).</p>
<p>The second era’s high point might have been in 2012, when the Citi Foundation and Monitor released their “<a href="https://www.citigroup.com/citi/foundation/pdf/bridging_the_gap.pdf">Bridging the Gap</a>” report extolling the possibilities of a business case for financial capability. The possibilities raised by the report went unrealized during the next few years and funding for financial capability work largely dried up.</p>
<p>Arguably, the harbinger of financial education’s decline was the lack of rigorous evidence linking it to literacy, capability, or other client outcomes. During the second era, researchers began conducting a series of randomized control trials and other studies. While some studies did show positive impacts, the totality of the evidence suggests that financial education is not a consistently effective intervention.</p>
<h2>The Third Era</h2>
<p>During these research efforts, the third era – the era of the behaviorists – began. Behavioral economics – with its focus on uncovering cognitive biases, delineating how people make decisions, and developing behaviorally-informed techniques to promote behavior – has been widely accepted as a potential solution to the financial education problem. Rather than invest in costly, traditional education programs, believers in behavioral economics tout the potential of things like rules-of-thumb, default options, and reminders to influence outcomes more effectively than intensive curricula. The evidence supporting this perspective is strong and growing (see insight2impact’s impressive <a href="http://access.i2ifacility.org/Behavioural_Science/">compendium</a> of studies examining the efficacy of behavioral principles).</p>


<p>Behaviorally-informed interventions can be incredibly powerful tools, but they have shortcomings. A good portion of the evidence supporting their efficacy comes from lab experiments, they are limited in their application, and there are situations in which the intervention doesn’t work or the results fade (consider these examples from Washington University&#8217;s <a href="https://csd.wustl.edu/16-19/">Center for Social Development</a>, Yale’s <a href="https://www.econstor.eu/bitstream/10419/26980/1/593239253.PDF">Economic Growth Center</a>, <a href="https://publications.iadb.org/publications/english/document/SMS-Messages-for-Financial-Inclusion-in-the-Dominican-Republic.pdf">Inter-American Development/Multilateral Investment Fund</a>, and <a href="https://anettjohn.com/docs/John_When_Commitment_Fails.pdf">Anett John</a>). There is also no evidence that behavioral interventions improve people’s rational decision making in the long term. In other words, they don’t build knowledge, skills, attitudes, or behaviors that transfer to other areas of their lives.</p>
<p>There is a compelling case to be made that building capability could yield more far-reaching outcomes. Consider this <a href="http://pubdocs.worldbank.org/en/853161495654747595/E3-carter-laajaj-yang-subsidies-savings-spillovers.pdf">World Bank research paper</a> on savings behavior in Mozambique, which shows that financial education about formal savings leads people to save more in more institutions, suggesting that learnings were portable outside the study context. Across the world, in China, this <a href="https://faculty.chicagobooth.edu/workshops/finance/past/pdf/song_pension_12-01-12.pdf">University of Chicago study</a> on teaching the concept of compound interest within the context of pension accounts shows some evidence that respondents applied the concept in other areas of their lives. While it is not a randomized control trial, this <a href="https://www.nber.org/papers/w21505.pdf">NBER multi-country study</a> shows that better business practices – including marketing practices, inventory control, record keeping, and financial planning – are positively correlated with survival rates and sales growth of micro, small, and medium enterprises (MSMEs). In <a href="http://documents.worldbank.org/curated/en/884291527663849364/pdf/126687-18-6-2018-9-32-12-InvestigatingSMEFinancialCapabilitiesFINALWEB.pdf">this paper</a>, World Bank researchers showed a similar correlation.</p>
<p>How do we square that building capability may lead to more durable and expansive impacts with the evidence to-date about financial education? One potential issue, which I haven’t seen discussed much, is the quality of the education programs that are being evaluated.</p>
<h2>Lessons from Teaching</h2>
<p>Delivering quality education – regardless of whether it’s in the classroom or online, and whether it lasts for a day or a year – is a hard thing to do well. In my previous life, I was a high school math teacher, and as part of my job, I immersed myself in pedagogy, trying to learn how to do my job better. There were several principles that I would deploy in my classroom to reach students: differentiating curriculum so students were met at their ability level; scaffolding lessons (separating complex ideas into easier to learn chunks) to avoid cognitive overloading; spiraling content (coming back to things over and over again) to reinforce learning over time; and making sure no single part of an hour long lesson lasted more than 10 minutes to keep things engaging.</p>
<blockquote><p>If you implement a mediocre education program, mediocre results shouldn’t be a surprise.</p></blockquote>
<p>Few, if any, of the financial education programs I have seen employ these elements, so every time I read about a failed financial education experiment, I question how well the curriculum was designed and delivered. Unfortunately, most academic reports don’t provide enough detail on the delivery, and within financial inclusion, researchers aren’t spending much time testing pedagogical techniques. The point is that if you implement a mediocre education program, mediocre results shouldn’t be a surprise.</p>


<p>Thankfully, several organizations are recognizing that methods matter. At CFI, we suggested <a href="https://www.centerforfinancialinclusion.org/a-change-in-behavior-innovations-in-financial-capability">seven behaviorally-informed ideas</a> that should be incorporated into financial literacy and capability efforts. The Consumer Financial Protection Bureau also has a set of <a href="https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201706_cfpb_five-principles-financial-well-being.pdf">five principles</a> for effective financial education programs, which include tips that will sound familiar, including tailoring financial education to specific circumstances, linking education to the right moments, and providing actionable concrete tasks. Innovations for Poverty Action has <a href="https://www.poverty-action.org/sites/default/files/publications/Beyond-the-Classroom-Financial-Education-Brief.pdf">similar principles</a>, and they also recommend making it entertaining and targeting it to youth.</p>
<p>My hope for the fourth era is that we pull the best pieces from the lessons referenced in this blog: financial education will be delivered so that it is scaffolded, differentiated, and entertaining; learners will be presented with content regularly and ideally at critical moments; the best parts of behavioral economics will be incorporated to avoid our worst cognitive biases and reinforce good behaviors; and through these collective efforts we will achieve gains that are sustainable beyond one study, product, or provider.</p>


Financial education alone isn't the answer to improving client outcomes, but we shouldn’t forsake education for behavior-only approaches.

The current focus on client outcomes – as demonstrated by the proliferation of frameworks describing financial health, well-being, or similar all-encompassing concepts – has renewed attention on how we achieve positive impact for clients. Currently, the behaviorists – those who believe an understanding of cognitive biases and deft application of behavioral insights in intervention design can lead to superior outcomes – rule the day. Meanwhile, financial education, traditionally seen as an enabler of better client outcomes, has become debatable, as research has shown that traditionally delivered education programs provide mixed results at best. Collectively, these trends are giving way to the narratives that client outcomes are achievable through behavioral interventions and that financial education is an ineffective relic of the past.
<blockquote>Current trends are giving way to narratives that client outcomes are achievable through behavioral interventions, and that financial education is an ineffective relic of the past.</blockquote>
This is a dangerous story. It positions the concept of education as an antagonist to behavioral insights rather than as a collaborator, and it presumes that behavioral interventions are superior to educational ones. This post aims to re-balance that narrative.

A quick point of order: financial education and financial literacy are often used interchangeably – in colloquial conversation this makes sense (“educated” and “literate” are synonyms, after all) but using them interchangeably confuses the delivery of education with its intended outcome (literate clients). I use the term financial education to refer to the process of teaching knowledge and skills and financial literacy as the state in which one possesses financial knowledge and skills.

A Fourth Era: Balancing Behavioral Interventions with Quality Education

Rachel Morpeth

Young people flocking to better pay in urban hubs is just another symptom of an over-indebtedness problem that requires modern solutions. 

The term “rural brain drain” was popularized nearly a decade ago when two sociologists published a book documenting <a href="https://www.wired.com/2010/02/how-do-we-stop-hollowing-out-the-middle-of-america/">their experience living in Iowa</a>. Their goal was to understand the exodus of a young, educated workforce from rural areas to urban hubs. Today there are many factors contributing to this population shift, among them deindustrialization, lack of high-paying jobs, and weak broadband connectivity. A <a href="https://www.federalreserve.gov/publications/files/consumer-community-context-201901.pdf?mod=article_inline">Federal Reserve</a> report published earlier this year brought to light another reason for this phenomenon that dozens of states are grappling with: student loan debt.

The student debt crisis made headlines in 2010 when student loan debt surpassed credit card debt in the United States, at a staggering $1.56 trillion today, student debt is growing much faster than <a href="https://www.finder.com/student-loans-to-overtake-mortgages">mortgage debt</a> (10.4 percent per year versus 0.6 percent for mortgages). According to the Federal Reserve Bank of New York, nearly two-thirds of this financial burden falls on Americans under the age of 39.

As young people are increasingly burdened by student debt, they are flocking to the places that offer high-paying jobs: cities. According to Pew Research, <a href="https://www.pewresearch.org/fact-tank/2018/03/16/how-millennials-compare-with-their-grandparents/">88 percent</a> of millennials live in metropolitan areas. The average age is higher in <a href="https://www.citylab.com/life/2018/05/mapping-americas-aging-population/561200/">the Midwest and the Appalachians</a>, regions that are struggling to keep pace with urban hubs in terms of broadband access, variety of jobs, quality of higher education institutions, and other success factors in today’s markets. As evidenced by the Fed’s report, individuals with student debt are less likely to remain in rural areas than those without debt. Furthermore, nearly two-thirds of the students most burdened by debt leave rural areas within one year after entering repayment. The term for this migration pattern has been coined the “rural brain drain,” and its impacts on the economic vitality of these regions are increasingly apparent. The inability of rural areas to attract a young, educated workforce is deepening the rural-urban divide.
<blockquote>Young people are flocking to the places that offer high-paying jobs: cities.</blockquote>
Some may argue that widespread access to education loans has created better opportunities for younger populations all over. However, according to U.S. Census data, wages have been stagnant since the 1970s, while the average cost of public college tuition has increased almost four fold. Simultaneously, homeownership among those under 35 has dropped <a href="https://www.census.gov/library/stories/2018/08/homeownership-by-age.html">10 percent</a> since 2006, and birth rates have declined every year since 2007. People in the age groups we might expect to be buying homes, settling down, and raising the next generation cannot afford to do so.
<blockquote>Wages have been stagnant since the 1970s, while the average cost of public college tuition has increased almost four fold.</blockquote>
We often look to countries like Finland, Denmark, and Norway, which offer tuition-free college to their citizens, as paradigms of what could exist here at home. Which country has the best model for us to try to replicate? According to former Secretary of Labor Robert Reich, the answer is <a href="http://inequalityforall.com/wp-content/uploads/2014/12/A_Visual_StoryPDF.pdf">the United States</a>. In post-war America, tuition fees were waved for veterans, and there was a massive proliferation of public universities. The GI Bill was one of the important factors that led to a tripling of the number of Americans with a bachelor’s degree from 1950 to 1977, and these educated workers helped the U.S. to grow to have the largest and most prosperous middle class in the world. At this time, public tuition was about 6 percent of an average male salary, compared to today’s 25 percent.

Times have changed, however, and modern problems require modern solutions. Refinancing and forbearance can provide some relief, but they ultimately increase debt in the form of interest. Other <a href="https://www.forbes.com/sites/andrewjosuweit/2017/11/05/6-ways-congress-can-help-ease-the-student-loan-crisis/#1cdcbb656cf6">proposals</a> to remedy the student debt crisis include erasing all debts, boosting the tax deduction for those making on-time payments, expanding the Pell grant program, creating a tiered system that lowers or eliminates debt based on income, and proper adherence to the <a href="https://www.nerdwallet.com/blog/loans/student-loans/public-service-loan-forgiveness/">Public Service Loan Forgiveness Program</a>. The latter program was created in 2007 to forgive remaining student loan balances of those who have worked for 10 years in public service. In 2017 applicants first became eligible for relief through this program, which has a two-year budget of $700 million. However, as of April this year, only 1.5 percent of those funds have been utilized. While the <a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/temporary-expanded-public-service-loan-forgiveness#how-qualify">requirements</a> for forgiveness are publicly available, the Department of Education has come under fire for not providing clear guidance to successfully navigate them.

Some believe that a policy to eliminate all or most student debt would be a major <a href="https://www.marketwatch.com/story/canceling-14-trillion-in-student-debt-could-have-major-benefits-for-the-economy-2018-02-07">economic stimulus</a>, spurring job creation and narrowing the wealth gap over the next decade. Our recent history proves that a well-educated population fuels a virtuous cycle of growth through competitive wages, increased tax revenues, and expansion of jobs. An affordable education lies at the foundation of this cycle, and will be a key factor in creating a more economically inclusive rural and urban America.

Rural America: Another Casualty of Student Loan Debt?

Smart Campaign at a Glance

Founded in the aftermath of the 2009 financial crisis, Smart has embedded client protection into a variety of sector products and practices. Now, risks from digital financial service provision are giving rise to new standards of protection. 

This week the <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign/">Smart Campaign</a> is celebrating its 10th anniversary year with a bang by releasing its new standards for digital financial services. These standards represent the opening of a new phase for Smart to meet the growing challenges of the digital age.

The Smart Campaign began in the context of the 2008 global financial crisis. The financial system, and indeed the world economy, had just been brought down by interlocking defects in the financial system, a chain of events triggered by reckless lending in the U.S. mortgage market. A parallel phenomenon was taking place in the microfinance market in countries as diverse as India, Nicaragua and Morocco, with fast growth and commercialization leading to widespread over-indebtedness among customers, and a resulting backlash in public opinion. Customers suffered and providers lost the trust they had enjoyed. No greater object lesson can be imagined for prompting a focus on <a href="https://www.centerforfinancialinclusion.org/topics/consumer-protection">consumer protection</a>.

Smart quickly became a vehicle for the growing community of financial service providers, investors, regulators and support organizations who wanted to embed consumer protections into the microfinance sector. With the <a href="http://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">Client Protection Principles</a>, the community created a common language and, with detailed guidance, standards and tools, it improved consumer protection and built trust.

Over the past decade, Smart has expanded its reach into the broader financial inclusion sector, and now there are thousands of endorsers and networks of providers and practitioners around the world who are engaged in embedding client protection standards into their products and practices. Today, more than <a href="http://www.smartcampaign.org/certification/certified-organizations">115 financial service providers</a>, serving over 45 million customers, have been awarded the <a href="http://www.smartcampaign.org/certification/all-about-certification">Smart Certification</a> seal, which demonstrates their commitment to treat customers with fairness and respect. <a href="https://www.centerforfinancialinclusion.org/the-business-case-for-smart-certification">Investors have adopted</a> the standards in their due diligence and social impact assessments. Regulators in many countries rely on the principles and the Smart’s research to design policies that balance client risk with provider sustainability, taking the voices of both providers and clients into account. Smart has facilitated the collaboration needed to create a world in which clients can access financial services with confidence.

In recent years, Smart has examined the new risks emerging as financial inclusion goes digital. Digital financial services make access much more available and more convenient for many of the people who were previously excluded, but care is needed to get it right for the vulnerable. After much research and consultation, we've developed practical guidance and standards for digital providers.
<blockquote>After much research and consultation, we've developed practical guidance and standards for digital providers.</blockquote>
As we launch these new standards, we see some parallels with the situation ten years ago, though with different headline risks. In the mainstream economy, concerns over the <a href="https://www.centerforfinancialinclusion.org/financial-inclusion-responds-to-the-zuckerberg-moment">rising power of “big tech”</a> and the appropriate use of personal data are causing widespread anxiety and mistrust. In the financial inclusion sector, data privacy and protection are also <a href="https://www.centerforfinancialinclusion.org/consumer-harm-from-data-breaches-is-a-black-box">central concerns</a>. The Smart Campaign standards address these concerns, as well as more traditional issues like over-indebtedness and transparency, which must be handled differently when digital interfaces replace face-to-face. Smart commends digital financial services for giving more people greater access to powerful financial tools. Our goal is to ensure that the digital revolution develops in a way that is healthy for customers and providers alike.

A heartfelt thank you goes out to all who have been part of this movement. We are thrilled to continue this journey together with many partners who are old friends and many more who are new ones. As we celebrate a decade of practical action to instill good practices, we ask stakeholders across the sector to join us in ensuring that the digital revolution builds trusting relationships and mutual benefits for customers and financial service providers well into the future.

<em>Stay tuned for an upcoming post on the launch of the digital standards, which will provide in-depth discussion of the new standards. For now, this <a href="https://www.centerforfinancialinclusion.org/help-us-shape-standards-for-responsible-digital-lending">post from the standards’ comment period</a> provides more detail on what these standards are.</em>

Smart Campaign’s Next 10 Years to Start With New Digital Standards

Lauren Hendricks

Newly arrived South Sudanese refugees at the Bidi Bidi camp have few resources, but mobile money and agent banking are among several potential vehicles for financial inclusion. 

<em>Lauren Hendricks of the Grameen Foundation recently spent time at the Bidi Bidi camp. Below are her reflections.</em>

The Bidi Bidi refugee camp, in northwestern Uganda, is the largest refugee settlement in the country, and the second-largest refugee camp in the world, hosting 220,000 refugees who have fled the devastation and humanitarian crisis of the protracted civil war in South Sudan. In contrast to long-established refugee settlements elsewhere in the country, the inhabitants of <a href="https://www.theguardian.com/world/2018/may/19/inside-world-largest-refugee-camp-uganda-south-sudan-civil-war">Bidi Bidi</a> are newcomers: all of them have arrived since the 2016 “<a href="https://reliefweb.int/report/south-sudan/south-sudan-finding-way-forward-after-july-2016-crisis">July Crisis</a>” in South Sudan.

Because of the long-term stability, favorable policy and social environment, and freedom of movement in Uganda, the majority of refugees in more established camps are either already engaging in small businesses or would like to start one (a recent World Bank study cited that 72 percent of refugees are operating some sort of micro or agri-business.) But at Bidi Bidi, the relationships and arrangements among people that create an active economy have not had time to develop, and economic activity remains low. These refugees arrived with literally just the clothes on their back and the few assets they could carry, and are to a greater extent than most refugees in Uganda, still struggling to establish themselves and supplement the limited support NGOs and the UN can provide.

However, there is a potential game changer: mobile phones and mobile money are widely available, and they hold enormous potential for generating economic activity. <a href="https://grameenfoundation.org/where-we-work/sub-saharan-africa">Grameen Foundation</a> is working with <a href="https://www.gsma.com/r/mobileeconomy/sub-saharan-africa/">GSMA</a> (the association of mobile network operators) to develop ways to increase financial inclusion among the refugees. In my visit to Bidi Bidi to consider how mobile money could help kick start the camp economy activity, I found many possibilities.

The challenge is to make it easier for people to make payments. Right now, many people receive transfers from abroad and from relief agencies via mobile money. In order to use this money for purchases, they either need to find an agent who can cash it out or a merchant who accepts mobile payments. Both are in extremely short supply in Bidi Bidi. Currently when refugees receive transfers from abroad, or from relief agencies, it can take up to a week to find an agent with liquidity. The camp has only 17 agents for over 200,000 people. To reach the ideal penetration ratio of 1,000 to 1 it would need ten times as many agents.

Our work has shown that a focus on female agents will pay off, especially because a majority of the refugees are in women-headed families. Increasing the number of agents cannot be done all at once, however. Currently, agents report an average of 20-30 transactions per day, which does not suggest an overwhelming demand. The pace of recruitment of new agents would need to track the development of the payments and transfer ecosystem within the camps.
<blockquote>A focus on female agents will pay off, especially because a majority of the refugees are in women-headed families.</blockquote>
Equally important is acceptance of mobile money payments by local merchants, which will allow refugees to use mobile money to purchase food and essential goods. Currently, merchants in the camps accept only cash. When refugees cannot turn their relief and transfer payments into purchases, they face severe delays in access to food and essentials. Many merchants believe that accepting mobile money is expensive, but new products are on offer that reduce fees significantly.

Another supporting element for creating an active payments ecosystem is to attract a "super agent," such as a microfinance institution (MFI) or bank that can help agents and merchants balance their liquidity, an essential function. One possibility is <a href="https://rufimfi.com/">RUFI</a>, a unique MFI founded by South Sudanese refugees in 2009 and working on both sides of the South Sudan-Uganda border, and the only microfinance institution serving refugees in Bidi Bidi. RUFI is also an agent for Centenary Bank, offering savings and other services. Currently RUFI’s nearest office is over 30 kilometers away, a significant distance barrier for refugees. By locating in Bidi Bidi and becoming a super agent for mobile money, RUFI could not only help manage agent liquidity, it could also get to know agents and merchants that could become credit clients, and move its own credit and savings transactions to digital form. This would position it well to develop a loan product to help <a href="https://reliefweb.int/report/uganda/refugee-entrepreneurs-boost-host-communities">female entrepreneurs</a> finance the capital needed to become agents.
<blockquote>A super agent can help agents and merchants balance their liquidity and get to know potential clients.</blockquote>
Reports by <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=2ahUKEwiJh6D2mPjiAhXqqFkKHRNtDvAQFjAAegQIAxAC&amp;url=https%3A%2F%2Fwww.uncdf.org%2Fdownload%2Ffile%2F127%2F6633%2Fuganda-refugee-remittances-assessment-report0620v3pdf&amp;usg=AOvVaw1uX4vhWZodJZ-OcUtUJAML">UNCDF</a>, DCA, and Platform for Inclusive Finance indicate that informal savings groups are active in Bidi Bidi settlement, though estimates range widely regarding how many adults participate (from 11 to 49 percent, depending on the report). Working with savings groups could be an effective way to increase digital financial literacy among refugees, increasing their comfort with digital payments. One of the appeals of digital money is its security, and savings groups may be looking for ways to secure their pooled resources, given security issues within the settlement. Encouraging savings groups and their members to use mobile money would help develop the market for mobile money which in turn is needed to support an agent network.

With steps like these, the economy can slowly begin to rev up, providing benefits to all the residents of Bidi Bidi.

A Ugandan Refugee Camp Hosts Potential for Financial Inclusion

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Lizzy Bolze

ABF Fellows will convene in South Africa to close out the ninth cohort. 

Event

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<div class="sc-bwzfXH ejJzIl"><article class="jsx-1739195141 text-block__article">Africa Board Fellowship (ABF) program participants convene in Cape Town, South Africa, to close out the program’s 9th cohort.

The ABF seminars are an interactive combination of guided discussion and peer-to-peer exchange on governance best practices and risk-management strategies, with an emphasis on fellows sharing knowledge and experience.

World-class experts and leaders in microfinance and financial inclusion will facilitate and engage participants in active dialogues. The aim of the Africa Board Fellowship program is to connect board members and CEOs through peer learning and exchange to strengthen the governance of financial institutions serving low-income clients in sub-Saharan Africa.

Research has shown that the single biggest success factor in MFIs across the world is good governance. Program activities, structure, and content have been carefully designed to create an open atmosphere that allows for frank discussion among peers. Fellows identify their objectives for the program and then work with a program advisor on achieving those goals. Additionally, Fellows have access throughout the program to a participant-led virtual collaboration space with tools, resources, content, and access to subject-matter experts. At the conclusion of the program, Fellows stay connected as alumni, providing a network of leaders confronting similar challenges.

<a href="https://www.centerforfinancialinclusion.org/about/what-we-do/africa-board-fellowship-program/">Learn more</a> about the program.

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Africa Board Fellowship Closing Seminar – Cohort 9

Financial Inclusion: For What?

About FIW

<p>Now in its 5th year, Financial Inclusion Week is an opportunity to strengthen the diverse community of players involved in building a more inclusive financial ecosystem.</p>
<p>The objectives of Financial Inclusion Week are:</p>
<ul>
<li>To bring the entire financial inclusion community together to explore issues of financial inclusion beyond access</li>
<li>To create leadership opportunities among diverse stakeholders</li>
<li>To create dialogue and community</li>
<li>To foster partnership and coordination within the financial industry</li>
</ul>


Get Involved

<h2>Why should we participate?</h2>
<p>Achieving financial inclusion is within our reach, but only if we work together to address the biggest gaps. When people come together to consider this question, they emerge with new insights, energy and focus. By serving as a FIW partner, you are playing a vital role as a leader in financial inclusion and helping to build a strong community, while focusing on the work of your organization.</p>
<h2>How do we participate?</h2>
<p>Financial Inclusion Week is easy to get involved with. Typically, organizations hold virtual or in-person events, write blogs or publish reports, engage their social media community—or all of the above. We also provide resources to help you <a href="http://financialinclusionweek.org/partner-toolkit">plan your participation in FIW</a>.</p>
<p>CFI will be coordinating and hosting activities during FIW and we invite the entire community to participate. We&#8217;ll publish and help to promote partners&#8217; activities as well. Keep an eye on the schedule on at <a href="http://financialinclusionweek.org/">financialinclusionweek.org</a> and<a href="http://eepurl.com/dDxzwE" target="_blank" rel="noopener"> sign up</a> to receive updates from the FIW team.</p>


This year, we are taking a step back as a community to revisit the fundamental purpose of our work, and ask ourselves the question: What is financial inclusion for?

This year, we are taking a step back as a community to revisit the fundamental purpose of our work, and ask ourselves "Financial Inclusion: For What?"

<h1>Financial Inclusion: For What?</h1>
This year, we are taking a step back as a community to revisit the fundamental purpose of our work.

As some organizations pursue financial inclusion as their ultimate goal, others are driving toward financial health or the <a href="https://sustainabledevelopment.un.org/?menu=1300">UN Sustainable Development Goals</a>. Meanwhile, financial institutions and fintechs are aiming to profitably serve low-income markets.

In the face of these trends, we can’t help but ask: <strong>Financial Inclusion: For What</strong><b>?
</b>
<h3>Financial Inclusion: For What? is a call to action for our community <b>to reexamine our goals and renew efforts to achieve them</b>. During Financial Inclusion Week this year, October 21-25, 2019, we invite you to convene around this question to r<b>eexamine, redefine, and align our goals</b>.</h3>
<h2>Guiding Questions</h2>
<ul>
 	<li>What is the ultimate goal we are trying to achieve? Financial inclusion? Sustainable Development Goals? Financial health? Or something else?</li>
 	<li>To what extent are our goals complementary or contradictory?</li>
 	<li>How do our efforts across the industry complement or counteract each other?</li>
 	<li>Do these goals align with what we aim to achieve as an industry?</li>
 	<li>How should we measure our success?</li>
</ul>

Financial Inclusion Week 2019

Upcoming Events

Ezra Mannix

Learn More

Isabelle Barrès

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

News

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>.

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

Alexandra Rizzi

Rwandans trust mobile money services but are concerned about fraud, survey finds. 

The <a href="https://www.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign/">Smart Campaign</a>'s senior director discussed the motivation behind the survey and forthcoming report with <a href="https://www.newtimes.co.rw/"><em>The New Times</em></a>, a leading Rwandan news provider.

“We want all stakeholders to understand the actual experiences and concerns of the clients they are serving, protecting or advocating for, because there hasn't been a comprehensive survey underpinning the conduct of this digital financial service before,” <a href="https://content.centerforfinancialinclusion.org/people/alexandra-rizzi/">Rizzi</a> said.

Fraud was a "major problem" for about 40 percent of respondents (with 10 percent falling victim themselves), and while nearly 90 percent trust mobile money services, that trust extends to specific services, namely person-to-person (P2P) transfers. There are approximately 11 million mobile money users in Rwanda.

The report will be available for download on this site in the coming weeks. The results were discussed at a workshop of regulators in the Rwandan capital Kigali in March and will be discussed at the <a href="https://sptf.info/annual-meetings/2019-summit-inclusive-digital-future">Inclusive Digital Future Summit</a> in Nairobi in June 2019.

Read the<a href="https://www.newtimes.co.rw/business/mobile-money-services-enjoy-public-confidence-fraud-remains-threat-survey-reveals"> full article</a> and learn more about the <a href="http://smartcampaign.org/tools-a-resources/1075">Client Voices Project</a>.

&nbsp;

&nbsp;

Smart Campaign's Alex Rizzi Interviewed About Client Voices Project Survey in Rwanda

Tune In 

Rhyne discusses tech and touch, national identities and more in the latest episode of Institute of International Finance's podcast. 

This <a href="https://soundcloud.com/user-273615244/frt-episode-28-digital-customer-journey">episode</a> of the "FRT" podcast focuses on how digital customer journeys are enabling financial institutions to reach underserved segments in a sustainable manner. IIF’s Conan French host Rhyne and Amin Khairy to discuss the upcoming CFI-IIF paper “Charting the Customer Journey in the Digital Age.”

Rhyne discusses the persistent challenges for digital inclusion and the importance of having a “tech-touch” balance at certain stages of the customer journey.

They also discuss the potential gain in operational efficiencies for financial institutions and the positive impact digitization has on unbanked customers and provide real-life examples of digital customer journeys in various stages: pre-onboarding, onboarding and continued use.

"We're finding that the countries that are making it easy to onboard are those with a good national ID program," Rhyne said. "Having a very clear and simple to use national ID that's easily connected electronically is probably the most important thing."

Rhyne also notes that understanding the unique financial lives of lower income segments is crucial to digitization and different from transitioning banked populations from analog to digital.

Browse more <a href="https://www.iif.com/Innovation/FRT-Podcast">FRT podcast episodes</a>.

&nbsp;

IIF Podcast Features Elisabeth Rhyne Discussing the Digital Customer Journey

The CFI Managing Director discusses differences between banking in developed and developing countries.

In the March 14 <a href="https://www.raconteur.net/finance/financial-inclusion-banked">piece</a>, Rhyne’s insights are part of a broad survey of the global financial inclusion landscape -- from barriers to financial inclusion in the developing world, to its benefits and the tools that are helping to integrate marginalized populations into the “financial mainstream.”
<p style="text-align: left;">“In the developing world there is an issue of absolute low incomes,” Rhyne said in the feature, which appeared in the <a href="https://www.raconteur.net/future-money-2019"><em>Future of Money</em></a>, a 20-page insert published in <a href="http://www.thetimes.co.uk">The Times (UK)</a> in association with <a href="https://europe.money2020.com/">Money 20/20</a>. “In regards to how much in deposits people would be providing, how large a credit they might want, these are below the threshold of feasibility for banks using traditional branch-based, teller-based models. So you couldn’t put a branch out in a rural area and expect it to be profitable.”</p>
Rhyne uses the example of hyperinflation in Latin America to illustrate why potential customers don't have bank accounts, and concludes the article by noting that digital payments “are going to be essential” over the next decade.

<a href="https://www.raconteur.net/">Raconteur</a> is a publisher of “special-interest content and research” whose special reports are inserted into the printed version of The Times (UK). Read the full article <a href="https://www.raconteur.net/finance/financial-inclusion-banked">here</a>.

Raconteur Features Elisabeth Rhyne in “Challenges in Banking the Unbanked”

#YouDeserveToKnow

How can you avoid becoming a victim of bank or mobile fraud?

Raising public awareness of fraud and transparency in mobile and traditional banking in the West African nation is the main goal of the 13-week programming. 

Raising awareness of fraud and transparency in mobile and traditional banking in the West African nation is the main goal of the 13-week programming. 

Extensive coverage of the "You Deserve to Know" (#YouDeserveToKnow) campaign in the national Ghanian media features quotes from <a href="https://www.centerforfinancialinclusion.org/bio/alexandra-rizzi">Alex Rizzi</a>, Director of the Smart Campaign.

"This series aims to equip clients with the knowledge they deserve to know to make the best financial decisions for themselves,” Rizzi stated in a <a href="https://www.pulse.com.gh/lifestyle/events/consumer-protection-global-consumer-advocate-launches-you-deserve-to-know-campaign/72tlsjv">Pulse</a> article. Coverage of the campaign also appeared in <a href="https://www.graphic.com.gh/news/general-news/financial-literacy-campaign-launched.html">Graphic Online</a> and <a href="https://citinewsroom.com/2019/02/26/global-consumer-advocate-launches-youdeservetoknow-campaign/">Citi Newsroom</a>.

The campaign focuses on improving the financial enabling environment by educating the public in two topic areas, transparency and fraud.

Listeners in Ghana can tune in to <a href="https://www.facebook.com/adom106.3/">Adom 106.3 FM</a> on Thursdays, 5:30 pm local time, to hear the programs. The episodes include drama and expert interviews on the topics. <a href="https://radio.modernghana.com/station/adom1063fm">Live streaming</a> of Adom 106.3 FM is also available.

The "You Deserve to Know" campaign is in collaboration with <a href="http://www.fiforumafrica.org/">Financial Inclusion Forum Africa</a>.

This Smart Campaign video below provides an introduction.

Smart Campaign's "You Deserve to Know" Radio Campaign Featured in Ghanaian Media

CFI in the News

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