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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

Report

Today there are close to 700 million mobile money accounts registered worldwide — a number that, if it were a population, would rank as the world’s third-largest country. East Africa continues to lead in digital financial innovations as well as account usage, with two-thirds of the combined adult populations of Kenya, Rwanda, Tanzania, and Uganda actively using mobile money. With the proliferation of mobile financial services, particularly among underserved populations, it is vital that users be treated fairly and with dignity. In the momentum to define responsible digital finance and recognize providers of high-quality financial services, the industry must not forget the consumer.
<h1>Client Voices: Why We Listened</h1>
<a href="/about/what-we-do/the-smart-campaign/">The Smart Campaign</a>, a global initiative to create an environment in which financial services are delivered safely and responsibly to low-income clients, has long recognized that client perspectives are often underrepresented in consumer protection discussions. With the Client Voices Project, the Campaign questions whether the industry’s assumptions about what constitutes problematic treatment rightly reflect what clients themselves worry about.

The dual objectives of the project are to solicit input from low-income clients about what they consider good and bad treatment in their interactions with financial service providers and to assess the prevalence of consumer protection problems among these clients, using quantitative surveys. The project is designed to act as a catalyst for financial service providers, regulators, industry associations, consumer advocacy groups, and others to improve client protection in ways that are grounded in client feedback.
<h1>Major Findings</h1>
Based on a survey of over 1,200 people in three districts in Rwanda, this report delves into the experiences of individuals who use digital financial services (DFS), the main client protection issues they are concerned about, and the impact and prevalence of negative experiences. We find that mobile money enjoys a high degree of satisfaction and trust from clients in Rwanda, even though 40 percent of clients report being targeted by fraudulent schemes, which have become increasingly sophisticated.
<blockquote>Customers report wising up to scams and fraud, but with a continuous influx of new mobile money users and fraudsters who innovate quickly, the threat is real and constant. Fraud represents the greatest potential to damage customer trust and engagement with mobile money in Rwanda.</blockquote>
However, there are many ways that DFS operations and practices can be improved to better protect clients and strengthen trust. Client recourse mechanisms, for example, represent an important area for improvement: many clients shared that they feel helpless and unsure about what to do after realizing they have been duped. Additionally, for business models that rely more on the mobile interface than on human interaction, clients increasingly rely on agents for information and guidance. This presents an opportunity to provide better service, as well as a risk for poor client treatment.

We hope that providers, industry associations, support organizations, regulators, consumer protection advocates, and clients can benefit from these findings to create a stronger, more inclusive client protection ecosystem. We offer specific recommendations for many of these stakeholders.

Client Voices: Rwandans Speak on Digital Financial Services

<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

<a href="https://libra.org/en-US/">Libra</a>, a new digital currency backed by blockchain technology and introduced today by Facebook, has the potential to reach any consumer with a digital connection. It’s exciting news for the 3 billion people worldwide who are currently unserved or underserved by the world’s financial sector. In addition to leveraging connections between people already on the world’s largest social network, the platform will be leveraged by many innovators -- starting with an impressive <a href="https://mashable.com/article/facebook-libra/">array of founding members</a> -- enabling people across the globe to transact and access new products securely. While this represents a huge opportunity, there’s also a responsibility to ensure that access to the platform and new financial service customers’ data and funds be safeguarded.

The value proposition of a global payment infrastructure has been recognized before, with many innovators moving into this space to launch solutions tailored to the underserved. Yet, the potential scale of Libra, through familiar and popular platforms such as WhatsApp and those of other founding companies, is a potential game changer. Libra has the potential to add a streamlined payment feature in millions of people’s phones – without even requiring that they download a new app.

At the <a href="http://smartcampaign.org/">Smart Campaign</a>, we’re enthusiastic about the potential for partnerships and innovations through Libra, which will be governed by the independent, non-profit Libra Association. Vulnerable unbanked and underbanked populations still face challenges to access high-quality and trustworthy products. Libra will allow a wide range of innovators to develop creative solutions, backed by secure technology.

Ensuring the privacy and security of client data is at the core of building lasting trust in a digital world. Providers can strengthen their privacy and security practices by having:
<ul>
 	<li>Sound data collection and storage policies</li>
 	<li>Clear guidelines about when and with whom to share data</li>
 	<li>Informed consumers who have meaningful choices in regard to the handling of their data</li>
 	<li>Systems to detect and respond to fraud</li>
</ul>
Those are a few of the safeguards that the Smart Campaign promotes with providers and is helping providers to implement. Together, we can ensure that the products and services that are developed to use the Libra platform create trust and value for both providers and customers.

The <a href="https://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">Client Protection Principles</a>, which form the cornerstone of the Smart Campaign’s work, provide a framework to anticipate and evaluate the consumer risks introduced by blockchain innovations. We look forward to working with innovators in the Libra community, as we have with our <a href="https://www.smartcampaign.org/about/fintech-protects-community-of-practice">Fintech Protects Community of Practice</a>. Similar to our work with Fintech Protects, we hope to promote greater awareness and consensus among Libra innovators on consumer risks in digital financial services and how to mitigate them.
<blockquote>We hope to promote greater awareness and consensus among Libra innovators on consumer risks in digital financial services and how to mitigate them.</blockquote>
There will be adoption challenges for any cryptocurrency among low-income consumers. Over a decade of learning about the needs of this customer segment has shown us that appropriate product design requires a feedback loop between consumers and those developing the products. We know that payments can be an on ramp to access, but that <a href="https://www.centerforfinancialinclusion.org/financial-inclusion-hype-vs-reality-deconstructing-the-2017-findex-results/">does not guarantee consumers will make meaningful use</a> of other core financial services, such as credit, savings, or insurance. Thinking through the last mile use cases for Libra, including cash out points and merchant transactions, will be key, as will anticipating the risks that can damage consumer trust. Our goal is to ensure that new financial products aren’t just exciting new innovations, but that they actually deliver quality, appropriate, fair and trusted services.

Libra: With Opportunity Comes Responsibility to Safeguard

I was a 19-year-old college student when I first encountered Alex Counts, at the Global Microcredit Summit in New York City. Having just finished my first microfinance job, at Banco Solidario in Ecuador, I was understandably -- maybe overwhelmingly -- inspired, energetic, and hopeful. I wanted to build a career in microfinance, and I wanted to tell everyone about it.

Several years later, as I introduced him for <a href="https://grameenfoundation.org/">Grameen Foundation</a>’s Annual Microfinance Awards Dinner, hosted by my graduate school microfinance club, it would have been the easiest thing in the world for a legend like Alex to condescend to me, put me in my place, or tell me to talk less and listen more. But he treated me like an equal, and more important, an ally in pursuing a shared vision of a more equitable world. Even after more than three decades in the field, he hadn’t lost his passion or compassion. He wanted, more than anything, to encourage my enthusiasm, and share whatever insights might help me on my way.

That attitude permeates <a href="https://www.centerforfinancialinclusion.org/bio/alex-counts">Alex Counts</a>’ latest book, <a href="https://www.amazon.com/dp/1733914102?ref_=pe_3052080_397514860">Changing the World Without Losing Your Mind: Leadership Lessons from Three Decades of Social Entrepreneurship</a>. The book’s most noticeable trait is a desire to teach and encourage in the face of slow, difficult progress. The book, a 300-page combination of memoir, historical reference, and instruction manual for social impact work, skips from year to year and country to country, recounting anecdotes from the early days of the financial inclusion industry, and drawing out so many lessons that it’s hard to keep track.

These lessons, described with breathless passion and often illustrated with vivid examples, form the book’s backbone, dispensing wisdom on topics like effective fundraising, and the power of good storytelling to motivate and instruct others. He also spends considerable time acknowledging the mentors who helped him on his own journey, and relays the still-relevant ideas they developed decades ago. This theme of leveraging existing resources, in fact, shows up frequently in the book.
<blockquote>Even after more than three decades in the field, Alex hadn’t lost his passion or compassion.</blockquote>
“Addressing the chronic underutilization of existing solutions and resources became a theme of my life. I came to appreciate how Muhammad Yunus, Sam Daley-Harris, and other mentors of mine focused at least as much on activating overlooked systems, idle assets, and forgotten people as they did on innovation," Counts writes. "After all, aren’t the very poor people served by microfinance themselves underutilized resources that can be made productive if provided with economic opportunity in creative and respectful ways?”

One lesson that resonates for anyone who’s led a project team is the importance of staying aware of your own shortcomings, and being honest about them to your team. Some of the book’s most enjoyable moments come when Alex shares his vulnerability as a leader. In one story, he receives a lesson in humility from his lifelong mentor, Dr. Mohammad Yunus, during a respectful but stern feedback discussion in his early years in Bangladesh. In another, he acknowledges behaving like an “arrogant brat” during his time working for Sam Daley-Harris at RESULTS.

For those of us who’ve worked in the social impact field for a few years or more, Alex’s enthusiasm rekindles our own optimism and energy like a strong cup of coffee on a cold morning. It reconfirms our reasons for entering the field in the first place. As Alex puts it:

Book Review: “Changing the World Without Losing Your Mind: Leadership Lessons from Three Decades of Social Entrepreneurship”

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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. 

Alexandra Rizzi

Mobile Money in Rwanda At-A-Glance

<p>Most people in Rwanda are satisfied with mobile money services, and with the agents and user interfaces that provide it. However, there are many ways that DFS operations and practices can be improved to better protect clients and strengthen trust.</p>


This report was prepared by Laterite, Ltd., in close collaboration with the Smart Campaign, with support from Mastercard Foundation. 

The authors of this report are Emily Farbrace, Loes van der Velde, Medha Sethia, and Alexandra Rizzi, with support from Mike O’Doherty. Data collection was supported by Jean-Baptiste Muhoza, Jean-Claude Rukondo, Fabiola Niwenshuti, and Ezron Mucyo. Data analysis was performed by Emily Farbrace, Loes van der Velde,
Medha Sethia, and Patrick Hitayezu.

The authors would like to thank the Smart Campaign and the National Advisory Council that was assembled for this project for their guidance and support for this research. In addition, the authors thank all of the respondents who shared their experience with us.

Acknowledgments

Based on a survey of over 1,200 people in three districts in Rwanda, this Smart Campaign report delves into the experiences of individuals who use digital financial services, the main client protection issues they are concerned about, and the impact and prevalence of negative experiences.

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. 

Isabelle Barrès

Together, we can ensure the products and services using the Facebook-backed platform create trust and value.

Alexandra Fiorillo

<p>Lives do improve, we’re reminded. Solutions do exist, all over the place, and it’s our job to identify, understand and scale them.</p>
<p>If there’s a shortcoming to the book, it’s that it tries to do too much, offering so many nuggets of wisdom and interesting anecdotes that you wish for a few more pages to get into the details, and a more navigable structure. Many of the lessons are embedded in stories, making it hard to scan when looking for practical advice, though there are several lists of “Favorite Tips,” which help succinctly organize advice for the reader by thematic categories. Their titles should help explain their deeply introspective, almost meditative nature: “Seven Favorite Tips to Help You Retain Your Beginner’s Mind,” “Four Favorite Tips to Help You Practice Learning Acceptance,” and “Nine Favorite Tips to Help You Practice Living Generously.”</p>
<p>Readers unfamiliar with some of the people who show up in the book may feel the need to do some internet searches, as the book focuses on specific conversations and actions by a handful of personalities, including Alex himself. Conversely, anyone who knows the financial inclusion space well will be thrilled by the opportunity for a front row seat as history is being made.</p>
<p>Overall, Changing the World Without Losing Your Mind is a great read for those working in the development sector, especially those who are feeling frustrated, jaded, or in need of a bit of guidance and renewed enthusiasm. If after three decades in the social impact world, Alex has maintained his passion, then there might be hope for us all.</p>
<p><em>EDITOR&#8217;S NOTE: Alex Counts is a member of the CFI <a href="https://content.centerforfinancialinclusion.org/about/advisory-council/">Advisory Council</a>.</em></p>


Alex Counts' combination “memoir, historical reference, and instruction manual” for social impact work offers actionable wisdom and a “front row seat” to financial inclusion’s formative years.

Alex Counts combination “memoir, historical reference, and instruction manual” for social impact work offers actionable wisdom and a “front row seat” for financial inclusion’s formative years.

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