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The <a href="/about/what-we-do/hbs-accion-program-on-strategic-leadership-in-inclusive-finance">HBS-Accion Program on Strategic Leadership in Inclusive Finance</a> is the first executive education program of its kind to provide high-level management and leadership training to those shaping the microfinance industry, including CEOs of leading microfinance institutions and executives of mainstream banks entering the microfinance market.
<div class="sc-htpNat hKaJAO"><article class="text-block__article sc-TOsTZ dUoRvJ">We are proud to offer the upcoming HBS-Accion Program on Strategic Leadership in Inclusive Finance on the following schedule:
<h2>Dates</h2>
<strong>Sunday, March 29, 2020 – Friday, April 3, 2020</strong>

Participants should plan to arrive at Harvard Business School on Sunday, March 29, 2020 in time for programmatic activities that will commence at 3:30pm. The program will conclude on Friday, April 3, 2020 at the end of the business day.
<h2>Deadlines</h2>
<a href="/about/what-we-do/hbs-accion-program-on-strategic-leadership-in-inclusive-finance/hbs-accion-program-application">Applications</a> will be accepted on a rolling basis through <strong>Tuesday,  January 21, 2020</strong>. Applicants will be notified of their acceptance in February.
<h2>Fees</h2>
The program costs <strong>$8,850 USD</strong> including tuition, fees, housing and meals. Attendees will need to pay in full to be considered accepted into the program. Airfare is the responsibility of the attendee.
<h2>Scholarships</h2>
The <a href="https://www.citigroup.com/citi/foundation/">Citi Foundation</a> provides a limited number of partial scholarships to participants who otherwise cannot attend because of the cost. Please note that we are unable to offer scholarships to all applicants who apply. If you would like to apply for a scholarship, please indicate so in the application.
<h2>Questions</h2>
For additional questions, contact the Admissions Committee at <a href="mailto:hbsaccion@accion.org">hbsaccion@accion.org</a>.

</article></div>

HBS-Accion Program on Strategic Leadership in Inclusive Finance 2020

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On the outskirts of Bismarck, North Dakota, is the Missouri River Correctional Center, locally known as “the Farm.” While unassuming from the outside, this small, minimum-security state prison is making huge strides to rehabilitate inmates and better prepare them to reenter society. From <a href="https://billingsgazette.com/news/state-and-regional/montana/puppies-help-inmates-do-time/article_fd2df909-b50d-505d-92e4-9de98f0ed0aa.html">training service dogs</a> to <a href="https://bismarcktribune.com/news/state-and-regional/focus-on-reform-north-dakota-uses-education-work-to-prepare/article_2d8fc7a3-0f28-5222-a1b9-f7b3b22a9be4.html">cleaning the local zoo</a> to <a href="https://www.kfyrtv.com/content/news/GABR-at-the-MRCC-508526311.html">participating in charity events</a>, the efforts seem to be working: North Dakota’s three-year recidivism rate is between 35 and 40 percent, compared to a national average of 68 percent.

The prison reform efforts in North Dakota are being led by Leann Bertsch, Director of the North Dakota Department of Corrections and Rehabilitation (DOCR). Bertsch began implementing extensive reform efforts following a 2015 trip to Norway to learn about the country’s incarceration system, which is often credited as being the most humane in the world. The biennial <a href="https://docr.nd.gov/sites/www/files/documents/Biennial Report Archive/Biannual Report 2015-2017.pdf">DOCR report</a> following the Norway visit listed several new program offerings across all five of North Dakota’s state prisons – including financial literacy training.

As we've <a href="https://www.centerforfinancialinclusion.org/are-financial-service-providers-gouging-inmates-in-the-u-s-prison-system">written</a> about in the past, financial services are critical for the nearly <a href="https://www.statista.com/statistics/203718/number-of-prisoners-in-the-us/">1.5 million inmates</a> in U.S. prisons to be able to make phone calls, send emails, and purchase toiletries and clothes. Financial literacy already a meager <a href="https://gflec.org/wp-content/uploads/2015/11/Finlit_paper_16_F2_singles.pdf">57 percent</a> in the United States. This figure is much lower among inmates, who often come from low-income backgrounds and experience financial stressors early on in life. The income levels of inmates prior to incarceration are, on average, <a href="https://www.prisonpolicy.org/reports/income.html">41 percent lower</a> than those who have never been incarcerated. A <a href="https://arktimes.com/news/arkansas-reporter/2014/06/19/new-ualr-survey-finds-a-lack-of-basic-financial-literacy-among-inmates">2014 study</a> found that incarcerated people were less likely to have ever had a checking account or credit card, and more than twice as likely to take out payday loans and three times as likely to pawn an item than their nonincarcerated counterparts. Basic understanding of how to manage personal finances and efficiently allocate earnings are <a href="https://www.sciencedaily.com/releases/2014/06/140618163924.htm">crucial components</a> of ensuring offenders do not turn back to crime in desperation.
<blockquote>Financial literacy is already a meager 57 percent in the United States. This figure is much lower among inmates.</blockquote>
In a <a href="https://files.eric.ed.gov/fulltext/EJ1043227.pdf">2013 study</a>, inmates cited several barriers to financial services that contribute to their financial illiteracy. These included high overdraft fees, checking account minimum balance requirements, and a general mistrust of banks, especially by those who have obtained their income illegally. Financial literacy educators often suggest avoiding commercial banks in favor of <a href="https://www.marketwatch.com/story/this-woman-teaches-personal-finance-to-prison-inmates-2018-07-29">joining a credit union</a>, and participating in <a href="https://www.cuinsight.com/empowering-inmates-through-financial-education-in-jails.html">Financial Reality Fairs</a> to game out real life financial scenarios.

While North Dakota has one of the lowest incarceration rates in the country, it isn't alone in its efforts to help inmates successfully reenter society. Two years ago in Pennsylvania, a consortium of state agencies began hosting Financial Reality Fairs to help reentrants learn basic banking and money management. In February 2017, the <a href="https://www.wandtv.com/news/life-after-prison-kewanee-life-skills-re-entry-center/article_9bdbda4e-19d7-527a-82c4-e8a6f66b5339.html">Kewanee Life Skills Re-Entry Center</a> opened in Illinois to help inmates reduce their susceptibility to recidivism through three phases of required programing – one of which is financial literacy.

Financial literacy programs focus on knowledge acquisition and skill development with the goal of helping inmates understand best practices in money management, like how to save money, build credit, and budget. Many may question the use of taxpayer dollars to fund training and education programs for those found guilty of a crime. However, the cost of keeping those people incarcerated is in fact much more expensive. Inmates who receive education are less likely to return to prison, and a <a href="https://www.rand.org/news/press/2013/08/22.html">RAND Corporation study</a> estimated that for every $1 invested in a prison education program, incarceration costs three years post-release were reduced by $4 to $5.

There’s lots of talk about reforming our prison system. As the founder of <a href="https://r3score.com/">R3 Score</a>, Teresa Hodge is one of the leaders in this fight. R3 Score helps individuals with criminal records find their footing through a three-pronged approach: financial literacy, inclusive entrepreneurship, and community engagement. The company’s fintech analysis tool aggregates data to de-risk people with criminal histories. This data is then turned into a score for decision makers – like potential employers – to improve access to opportunities for qualified individuals.

With nearly <a href="https://www.bop.gov/about/statistics/statistics_inmate_age.jsp">90 percent</a> of inmates of working age and <a href="https://www.prisonfellowship.org/resources/training-resources/family/ministry-basics/faqs-about-children-of-prisoners/#children_with_parent_in_prison">1 in 28 American children</a> with a parent behind bars, it is economically and socially critical that we support rehabilitation efforts to help offenders successfully reintegrate. While financial literacy alone may not be the leading cause of reduced recidivism rates, it can equip offenders with essential knowledge to support themselves upon release.

Financial Literacy for Convicted Felons: A Way to Lower Recidivism?

Let’s face it: corporate governance isn’t exactly a topic that gets most people’s pulses racing, especially if those people are the founders or executives of innovative social enterprises working on the next big disruptions. Given the recent high-profile corporate governance debacles at social impact-oriented companies like <a href="https://www.forbes.com/sites/michaelperegrine/2019/09/25/wework-and-the-value-of-effective-governance-part-ii/#7aced8d011ea">WeWork</a>, however, it’s clear what can happen if board leadership practices are not honed and refined from an early stage.

While the explosive growth of innovative, early-stage startups serving underserved consumers in the developing world – along with advances in data science and artificial intelligence – holds tremendous promise, founders don’t exactly time to pore over the corporate governance strategies they will need for success.

But executive leadership is crucial for helping these firms go from an idea, to proof of concept, to a tangible, lasting benefits underserved customers. By having a dedicated board of directors that has the right experience, network, expectations and is fit for purpose overall, these growth-stage companies not only can scale their business models, but also put in place governance structures that evolve as an innovative company matures – not to mention help them become more appealing impact investments.

<a href="https://www.centerforfinancialinclusion.org/corporate-governance-for-early-stage-innovative-companies-a-practical-resource-guide">Corporate Governance for Early-Stage Innovative Companies: A Practical Resource Guide</a>, compiled by CFI and <a href="https://www.fmo.nl/">FMO</a> (the Dutch development bank), is a guide that’s both practical and aspirational, featuring resources and testimonials gleaned from consultative interviews from company founders, investors, academics and others who have been closely involved with growth-stage innovative startups. This resource includes insights and testimonials from peer professionals in the social investment sector: investors, investees and board members.

At a few thousand words long, the report isn’t meant to be exhaustive or encompass all situations and companies, but it raises key topics and points users to further resources, such as a <a href="https://www.centerforfinancialinclusion.org/corporate-governance-for-early-stage-innovative-companies-a-practical-resource-guide#annex-3">best board practices slide presentation</a> from Accion’s Venture Lab and our “cheat sheet” <a href="https://www.centerforfinancialinclusion.org/corporate-governance-for-early-stage-innovative-companies-a-practical-resource-guide#annex-1">Maturity Matrix</a>.

This resource is a field guide that a potential board member or a COO can read on a lunch break, something board members can have a printed copy of in their board packs.

This resource’s intended main audience is both board members and founders/executives of innovative companies, but it’s also of interest to financial community professionals, academics, students and anyone with a general interest in financial inclusion or impact investing.

For detailed explanations on the principles, don’t forget to check out the <a href="https://www.centerforfinancialinclusion.org/corporate-governance-for-early-stage-innovative-companies-a-practical-resource-guide">report</a>. What would you add or change?

Board Governance for Innovative Companies: 9 Principles for Success

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 in the 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 researchers and the 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

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

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Rachel Morpeth

One way to lower the US incarceration rate could be to give inmates financial knowledge they need to get by upon reentry. 

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CFI and FMO publish a new resource on board governance for innovative companies serving base-of-pyramid clients. The report is based on advice from peer professionals.

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