Accelerating Financial Inclusion with New Data

New types of data and new data tools present an unprecedented opportunity for financial service providers to better understand and serve clients, especially credit-seeking “thin-file” clients who are otherwise excluded from the formal financial sector.

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AUTHORS

Ethan Loufield, Tess Johnson, Dennis Ferenzy

Topics

Legacy and new financial services providers have a lot to gain from new data

The traditional boundaries separating players in adjacent industries are blurring, and the future market for financial services is up for grabs.

There are many internal and external challenges that providers must address for the promise of new data to be fully realized. From getting the right culture and technical talent in place to engaging with regulators and partners on data sharing and management, there are numerous obstacles to negotiate in capitalizing on the explosion of new data to reach underserved and unserved markets with new commercially viable solutions.

This report is intended to help mainstream financial institutions accelerate their efforts to confront these challenges and future-proof themselves for what the data revolution has in store, but may be useful to other financial service providers as well. However, this report is not an attempt to provide a “how-to” guide for navigating the various stages of the data value chain—there are too many contingencies to prescribe a “one-size-fits-all” solution. Instead, it is an effort to shed light on the potential of data to improve financial services for the underserved.

“While underserved markets may not be as lucrative as more developed markets today, they represent a great opportunity for mainstream financial institutions—they are unsaturated and likely to represent a much larger share of growth in the years ahead.”

– Islam Zekry, Chief Data Officer, Commercial International Bank (Egypt) S.A.E.

This report is part of a two-year initiative, Mainstreaming Financial Inclusion: Best Practices, to help advance efforts of financial institutions to reach customers at the base of the economic pyramid. This report was completed in partnership with the Institute of International Finance and made possible with generous financial support from MetLife Foundation.

Tess Johnson

Former Research Associate

Tess worked to advance CFI’s research agenda on topics ranging from financial health and financial capability to alternative data and emergency cash transfer program design. Tess joined CFI in September 2016, initially supporting project management of the CFI Research Fellows Program, the HBS-Accion Program on Strategic Leadership in Inclusive Finance, and other research efforts. She oversaw project management of the MSME financial health workstream in Indonesia and India as part of CFI’s partnership with Accion. Tess holds a master’s degree in international relations and international economics from the School of Advanced International Studies (SAIS) at Johns Hopkins University, and a bachelor’s degree in political science and human rights from the University of Connecticut.

Ethan Loufield

Former Research Director

Ethan joined CFI in 2017 after spending the first 15 years of his career in a range of finance roles in the government, financial, and nonprofit sectors.

At CFI, Ethan was responsible for the successful implementation of Inclusive Fintech 50 – an initiative that recognizes promising early-stage fintechs driving financial inclusion around the globe – including program design and execution, and delivery of incentives and knowledge products. Prior to that, he was Director of Strategy and Operations, providing overall support to CFI’s programmatic, operational, and communications activities.

Ethan started his career with the Peace Corps before moving into the financial services arena, first in equipment finance with General Electric, and then as a relationship manager with Wells Fargo Business Credit, where he managed a portfolio of over two dozen clients representing nearly $100 million in annual funding volume. He also served for several years as the CFO of a nonprofit independent school before entering the fintech space with RevolutionCredit (now known as Scorenomics), an Accion Venture Lab portfolio company specializing in the use of behavioral data and analytics in consumer credit.

Ethan holds a bachelor’s degree from the University of Rhode Island, an MBA in finance from Indiana University, and a certificate in digital money from the Digital Frontiers Institute and The Fletcher School at Tufts University. He is proficient in French.