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A recent <a href="https://blog.mondato.com/is-covid-the-big-bang-of-digital-payments/" target="_blank" rel="noopener noreferrer">headline</a> asked, “Is COVID the ‘Big Bang’ of Digital Payments?” With the release of GSMA’s <a href="https://www.gsma.com/sotir/" target="_blank" rel="noopener noreferrer">State of the Industry Report on Mobile Money 2021</a>, it’s safe to answer that question in the absolute affirmative, certainly as it pertains to mobile money.

With over 1.2 billion registered accounts across 96 countries, mobile money providers became an integral part of the national COVID-19 response in many markets, offering a safe, socially distanced channel to disburse pandemic relief payments to the public quickly, securely, and efficiently.

The growth in mobile money last year was remarkable: 136 million accounts were added in 2020 alone, a 13 percent growth rate, and of the 1.2 billion accounts total, over 300 million are monthly active users, up 17 percent. To put this in perspective, it took the industry a decade to reach 100 million active users; in under 5 years, this figure tripled. Transactions were valued at $767 billion last year -- up 22 percent -- with over $2 billion being processed every day. December 2020 alone saw more than $70 billion in transactions. (Compare these figures to the IMF’s <a href="https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD" target="_blank" rel="noopener noreferrer">provisional estimates of 2020 GDP growth</a>, showing a drop of 4.4 percent worldwide and a drop of 3.3 percent in emerging economies.)

What’s particularly important to note is that mobile money transactions have firmly moved well beyond their origins in peer-to-peer (P2P) transfers and bill payments. Services such as salary disbursements, social transfer payments, savings, credit, insurance, and international remittances are now widely available across the mobile money ecosystem. (In 2020, over $1 billion per month in international remittances was processed, an increase of 65 percent from the previous year.)
<blockquote class="pullquote--right">Mobile money transactions have firmly moved well beyond their origins in peer-to-peer (P2P) transfers and bill payments.</blockquote>
Besides being a good news story for the mobile money industry, this is important for another reason. The 2020 pandemic allowed the industry to showcase two of its most important strengths: its strong understanding of hyper-local markets, and its nimble ability to establish strong local partnerships with both government and humanitarian organizations. It’s not unreasonable to say that many governments would not have achieved their COVID support goals without the partnership of mobile money providers. And the benefit was two way: the mobile money industry registered its fastest growth in countries where the governments provided the most pandemic relief.

As CFI noted in its recent <a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">policy report on social payments during COVID</a>, governments worldwide turned to supplemental cash transfers as a key policy instrument to offset the loss of income of their citizens during the pandemic. Key challenges in disbursing these payments arose around the fact that many needy recipients, especially low-income households, recently unemployed workers, and small enterprises, were not listed in existing government databases and did not have bank accounts. As a result, governments needed to find ways to quickly identify eligible recipients for the payments, simplify the customer due diligence requirements to onboard them, and employ all possible channels for disbursing the funds -- and do all this while maintaining social distance.

Mobile money providers proved to be critical players in this effort. Not only could they disburse funds, but they were able to use SIM registration information for identification requirements, their location data was able to help pinpoint users in particularly needy areas, and their 5.2 million worldwide agents could support users in their local communities. They were also able to quickly ramp up mobile application development for COVID apps and establish partnerships with governments and financial service providers to identify and sign up recipients.

Financial regulators played an important role in enabling these partnerships by introducing a lot of flexibility around the normal rules for mobile money provision, according to the CFI report. Besides waiving the transaction fees and value limits for mobile money payments, they allowed for greater flexibility around KYC and customer onboarding, making it easier to quickly sign up customers. In many markets, they included mobile money service providers and their agents in the list of essential services, which was critical to keeping them open.
<h2>Assessing Progress</h2>
Going forward, it’ll be important for policymakers and regulators to assess how well all these measures worked, not just to be ready for the next emergency, but to determine what measures can stay in place to support consumers going forward. Some countries -- Ghana, for example -- are already considering keeping the higher transaction limits, especially for SMEs. Others are looking to keep the lower KYC requirements for very basic low-value accounts. By the same token, regulators need to assess how necessary it was to waive all user fees for an extended period; financial service providers, including mobile money providers, can only continue to support governments if they remain viable businesses. Regulators might also consider how to support any liquidity needs that mobile money providers may have in emergencies.

Overall, the COVID pandemic of 2020 has demonstrated the critical need for universal access to financial services. Financial inclusion has aroused growing interest among most governments over the last decade or so. But it has often been overlooked when discussing priorities such as national economic growth, health, education, and trade, even though it often has a direct bearing on those issues. Last year has shown us clearly that reaching consumers in times of need, through digital financial services, is a critical tool in addressing all manner of issues, both emergency and otherwise.
<blockquote class="pullquote--left">Mobile money is no longer an afterthought in financial services, but a key element of a comprehensive financial ecosystem.</blockquote>
Last year also clearly demonstrated that mobile money is no longer an afterthought in financial services, but a key element of a comprehensive financial ecosystem. Many low-income users knew this already, and now policymakers and regulators do, too.

Yes, COVID is the Big Bang of Digital Payments

Recently, I went searching for “chin-chin,” one of my favorite local Nigerian snacks, which was out of stock in the grocery store where I regularly shop. I went instead to a small kiosk in my neighborhood and was pleased to find it still in stock there. I noticed how this kiosk seemed about the same since I last patronized it six years ago, with no apparent evidence of expansion. When I shared my observation with the vendor, his response was “country too hard.” This got me thinking of the challenges that microenterprises continuously face, especially as they relate to accessing investment funds to grow their businesses.

Like many developing countries, Nigeria has a <a href="https://www.cbn.gov.ng/Out/2012/publications/reports/dfd/CBN-Summary Report of-Financial Inclusion in Nigeria-final.pdf" target="_blank" rel="noopener noreferrer">national financial inclusion strategy</a> (NFIS) to guide market and ecosystem actors on how to improve the lot of microenterprises such as my neighborhood kiosk. The strategy document spells out specific priority measures to be adopted in a bid to reduce credit risks and transaction costs associated with serving the most financially excluded members of society. Some of these measures include initiatives to support the expansion and reach of digital financial services, increasing agent banking networks, and promoting more channels for cashless payments.
<h2>Flaws in the National Financial Inclusion Strategy</h2>
The pace of financial inclusion remains sluggish, however. The country’s strategy has been less successful than anticipated due to several factors, including overly long intervals in assessing progress/impact of the policies adopted, use of limited progress indicators, lack of flexibility, and limited capacity for making quick adjustments to adjust to a fast-changing financial ecosystem.

Since the national strategy took effect in 2012, there has been some progress. The number of citizens with access to bank accounts and credit <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Key-Findings-11_01_19.pdf" target="_blank" rel="noopener noreferrer">increased slightly</a>. But access to non-bank services has barely changed: <a href="http://sustainabledfs.lbs.edu.ng/wp-content/uploads/2021/01/SOMR 2020_compressed.pdf" target="_blank" rel="noopener noreferrer">women and rural households</a> -- and <a href="https://devbankng.com/cms/uploads/FINANCIAL INCLUSION IN A DEVELOPING COUNTRY.pdf" target="_blank" rel="noopener noreferrer">individuals located in the northwest region</a> -- are still largely excluded and face access barriers.

Moreover, the chances of meeting the national financial inclusion target of ensuring 95 percent of the country’s adult population have access to formal and/or informal financial services by 2024 are low. The current <a href="https://www.cbn.gov.ng/Out/2020/CCD/2019 Annual Report of the National Financial Inclusion Strategy Implementation.pdf" target="_blank" rel="noopener noreferrer">official figures reported by the central bank</a> show an inclusion rate of 63.2 percent, making the 2024 target less feasible at this rate. The COVID-19 pandemic has also caused some previously scheduled financial inclusion initiatives, like the recapitalization exercise for microfinance banks and insurance companies, to be delayed and has put a lot of <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/nigeria/" target="_blank" rel="noopener noreferrer">financial and economic strain on Nigerian households and small firms</a>.
<blockquote class="pullquote--right">The COVID-19 pandemic has delayed financial inclusion initiatives and strained Nigerian households and small firms.</blockquote>
Weaknesses in the NFIS reduce its effectiveness, as elaborated on in this <a href="https://www.mfw4a.org/sites/default/files/resources/a_critical_review_of_nigerias_financial_inclusion_strategy.pdf" target="_blank" rel="noopener noreferrer">review</a>. These issues tend to impair the effectiveness of interventions targeted at reducing barriers to financial inclusion. A number of these gaps -- which may be relevant to countries in similar situations -- are summed up below.
<ul>
 	<li>The NFIS was only reviewed and revised for the first time after six years. This timeline suggests that the strategy is not flexible enough, does not encourage real-time learning and adjustments, and restricts the possibility of adapting the plan quickly to suit existing needs and challenges. For instance, the initial strategy listed the use of point-of-sale (POS) terminals as a priority tool for ensuring wider and more efficient service delivery. However, given the constant advancements in technology, this particular focus plan very quickly became outdated and less efficient but was only revisited after the six-year review.</li>
 	<li>The metrics for measuring progress are limited to evaluating just access to finance. However, there are equally important issues that need to be considered in assessing the true inclusion rate. These include affordability, quality, and suitability of available financial products, or appropriate skills to use and maximize these services. While the biannual <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Questionnaire.pdf" target="_blank" rel="noopener noreferrer">access-to-finance surveys</a> explore some of these areas on usage, affordability, and quality dimensions, not enough focus is placed on the findings. To buttress the importance of these issues, insights from the <a href="https://nibss-plc.com.ng/" target="_blank" rel="noopener noreferrer">Nigeria Inter-Bank Settlement System</a> indicate that about 30 percent of bank accounts are inactive. It would therefore be useful to consider if and why inactive bank accounts are increasing, or if inactive users are growing faster than the number of new users. This is so that the inclusion rates reported are more reflective of realities.</li>
 	<li>The definition of financial inclusion per the NFIS suggests a bias towards adult individuals. As such, performance monitoring is limited to household surveys and does not provide sufficient information on improvement or lack of improvement relevant to enterprises. Since progress indicators are not directly targeted at enterprises, they do not reveal crucial details of the level of financial exclusion suffered by vulnerable groups (like informal microbusinesses) within this segment of the population. It is therefore difficult to determine which specific policy reforms are needed for this group.</li>
 	<li>In implementing the NFIS, interventions introduced do not fully nor effectively take into consideration the fact that socio-economic developmental problems are entwined. Consequently, financial inclusion programs have not been properly integrated with other development initiatives such as the social protection relief programs used to reduce the impact of COVID-19 on poor households and businesses. The country’s weak institutional landscape creates further problems in this regard. An example is the disbursement of a popular welfare scheme which was done via cash rather than digital platforms because a significant proportion of vulnerable groups still do not have access to digital platforms. Policymakers and market actors need to ensure that more people across the country have access to digital technologies.</li>
 	<li>There have been multiple instances of financial regulations being introduced and subsequently withdrawn or revised, giving the impression that the policy reforms are not properly designed or coordinated. Some of these reforms are also poorly sequenced. Keeping track of the various regulatory changes can be tasking and confusing for customers and service providers.</li>
 	<li>Given that the NFIS does not have adequate legislative backing as it is not yet public policy, it makes operationalizing and enforcing the strategy tedious, thus affecting impact.</li>
</ul>
<h2>Recommendations</h2>
The plan for achieving greater financial inclusion at any national level needs to make room for adapting to the evolving financial landscape. One way of achieving this is to incorporate a comprehensive approach in monitoring and evaluating financial inclusion intervention programs.

In Nigeria’s case, more frequent progress monitoring is necessary to identify initiatives that are working well and others that may need improvement. For example, it would be interesting to monitor if the use of agent banking has significantly helped reach more people in remote locations, or if granting more licenses to new entrants in the fintech space has made the prices of financial products more competitive.
<blockquote class="pullquote--left">More frequent progress monitoring is necessary to identify initiatives that are working well and others that need improvement.</blockquote>
Also, there is a need to expand indicators being measured to include not just individuals/households, but micro, small and medium enterprises (MSMEs). While this does not negate the financial sector development approach adopted in many African markets which has resulted in significant progress, more diverse studies could also evaluate how expensive or cheap financial services are, if the banked population is using available services, and if available products are suitable to individual and business needs. Such analysis can reveal the causes behind observed trends, and how this varies across demographics, to guide appropriate drafting of policies that can improve financial inclusion.

Impact evaluation can then be used to check if and how improved financial inclusion has affected the desired outcomes highlighted in the NFIS, which include reducing poverty, closing the income inequality gap, and boosting faster economic growth. This would inform better targeting of scarce resources, and afford policymakers and implementers insightful lessons for improved interventions.

Better structured linkages with the nation’s broader welfare assistance programs and a digitalization drive can improve the chances of successful financial inclusion outcomes. One avenue for integration is to leverage the social register of poor households and find ways of including this group of low-income earners in the formal financial system. Technologically driven financial service solutions should also be encouraged, meaning the NFIS team would have to work more closely with stakeholders in the country’s digital space such as the <a href="https://www.ncc.gov.ng/" target="_blank" rel="noopener noreferrer">Nigerian Communications Commission</a> and the <a href="https://www.commtech.gov.ng/" target="_blank" rel="noopener noreferrer">Ministry of Communications and Digital Economy</a>, to push for regulations and interventions that will enhance customers’ access to the internet, encourage greater investment in digital infrastructure and more responsible use of data to increase customers’ capacity and trust.
<blockquote class="pullquote--right">Better structured linkages with welfare assistance programs and a digitalization drive can improve chances of successful financial inclusion outcomes.</blockquote>
Beyond addressing the perceived shortcomings in the implementation of the NFIS, it is important for the financial ecosystem to <a href="https://www.thisdaylive.com/index.php/2019/12/13/experts-identify-new-ways-to-deepen-financial-inclusion/" target="_blank" rel="noopener noreferrer">collectively work together</a> to tackle the major barrier of <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Key-Findings-11_01_19.pdf" target="_blank" rel="noopener noreferrer">high transaction costs and affordability concerns</a> in serving low-income segments in mostly rural and remote regions. This would involve, among other things, providing a conducive environment for financial service providers to see the value in serving excluded groups.

If these policy reforms get buy-in from all stakeholders, and implementation is properly coordinated to increase policy effectiveness, Nigeria will be better equipped to meet its NFIS goals.

How Is Nigeria’s National Financial Inclusion Strategy Going?

Headlines late last year breathlessly chronicled the <a href="https://www.theguardian.com/business/2021/jan/23/the-strange-case-of-alibabas-jack-ma-and-his-three-month-vanishing-act" target="_blank" rel="noopener noreferrer">whereabouts</a> of former Alibaba CEO Jack Ma and tensions between Ma and the Chinese government. The missing billionaire, the last-minute <a href="https://www.nytimes.com/2020/11/06/technology/china-ant-group-ipo.html" target="_blank" rel="noopener noreferrer">cancellation of a history-making IPO</a>, and the <a href="https://entrepreneurshandbook.co/the-speech-that-cost-jack-ma-37-billion-dollars-5ad42393c9ba" target="_blank" rel="noopener noreferrer">speech</a> that apparently started this tailspin of events captured the attention of the world. But beyond the headlines, this story is part of a larger signal that China is sending to big tech: put on your helmets, because we are getting off the sidelines.
<blockquote class="pullquote--left">China to big tech: put on your helmets, because we are getting off the sidelines.</blockquote>
In the last four months, China has published a slew of regulations (some still in draft form) aimed at big tech and their outsized role in the economy. This includes the draft <a href="https://www.natlawreview.com/article/china-releases-draft-personal-information-protection-law" target="_blank" rel="noopener noreferrer">Personal Information Protection Law</a> (PIPL), new rules including capital requirements and caps for online lenders, as well as draft anti-trust rules for digital platforms. And, dramatically, China called off Ant Group’s globally anticipated IPO in November, in December launched an anti-trust probe into Ant’s ecommerce parent Alibaba, and in February 2021 told Ant to restructure itself into a financial holding company.

The scale of big tech’s reach into China’s financial sector is worth reiterating. A billion <a href="https://www.cgap.org/research/publication/china-digital-payments-revolution" target="_blank" rel="noopener noreferrer">Chinese consumers</a> use Alipay, owned by Ant, to pay for everything from groceries (<a href="https://progressivegrocer.com/major-asian-supermarket-chain-adopts-alipay-mobile-wallet" target="_blank" rel="noopener noreferrer">even in the U.S.</a>) and utilities, to school tuition and traffic tickets. Alipay, and its competitor WeChat Pay (owned by TenCent), have deftly created business models that leverage increasing use of smartphones, allow for easy funding of digital wallets through linked bank accounts, and coax users into their digital ecosystem through low transaction fees and an ever-increasing array of services. Cross-selling through this ecosystem can be lucrative. For instance, Alibaba’s product Yu’E Bao rapidly became the largest money market fund in the world for a time.

More recently, Ant has received attention for facilitating hundreds of millions of online loans to consumers, many of whom could not qualify for bank-issued credit cards. Despite the mammoth amount of outstanding debt, Ant has taken on limited risk and acted as more of a facilitator than a lender. For instance, at the end of June 2020, Ant had approximately $267 billion in outstanding consumer debt, but just 2 percent of that amount was funded by Ant.

Whose portfolios are on the hook? Ant has partnered with more than 100 commercial lenders and regional banks, collecting fees on interest income from them, and utilized colossal troves of transactional Alipay data to facilitate underwriting. This frenzy of unsecured lending has raised concerns around the concentration of risk that sits with lenders and not facilitating platforms.
<blockquote class="blockquote">Ant has utilized colossal troves of transactional Alipay data to facilitate underwriting.</blockquote>
<h2>New Rules of the Road</h2>
New regulation from China’s Banking and Insurance Regulatory Commission clamps down on both sides of the online lending partnerships. For the lenders, regional banks are no longer permitted to lend outside their geographies, and there will be new caps on how much of a bank’s capital and portfolio can be lent online. And for the platforms, starting in 2022, they will have to fund <a href="https://www.reuters.com/article/us-internet-loans-china-banks/china-regulator-finalizes-guidelines-on-banks-internet-loan-businesses-idUSKBN2AK0F2" target="_blank" rel="noopener noreferrer">at least 30 percent</a> of every loan they make in concert with banks. These measures may take some needed steam out of the ballooning online lending market.

Digital platforms are also the subject of new draft <a href="https://www.reuters.com/article/us-china-internet-anti-monopoly/china-issues-new-anti-monopoly-rules-targeting-its-tech-giants-idUSKBN2A70DT" target="_blank" rel="noopener noreferrer">anti-monopoly rules</a> by the State Administration for Market Regulation, which targets practices such as the use of data and algorithms to offer different prices to different consumers, as well as self-dealing through elevating their in-house products compared to competitors who are selling on their platform. As they take comments on proposed revisions, antitrust authorities have increased the number of investigations and in recent months fined Alibaba, Tencent Holdings as well as smaller platforms like Pinduoduo and Meituan.

The PIPL, when approved, will be the country’s first comprehensive data protection regime applicable to all data processors, including big tech. The draft PIPL contains <a href="https://www.dataguidance.com/opinion/china-draft-pipl-and-gdpr-comparative-perspective" target="_blank" rel="noopener noreferrer">some similarities to the European GDPR</a>, including provisions for the legal basis for processing data and enumerating data rights for consumers such as the right to rectify data mistakes. PIPL diverges from GDPR in terms of a larger focus on data localization, however.

Taken in aggregate, the package of emerging regulations demonstrates resolve among Chinese authorities to get tougher in the face of the enormous market power of big tech, which during the pandemic only embedded itself further into daily life.

However, beyond the heavyweight bouts between big tech and political authorities and implications for the companies, it is important to monitor how consumers are impacted by the new rules. Hopefully, consumers will benefit from more responsible online lending practices, fewer scams and predatory pricing, and more communication around the use of their data. As one Chinese internet regulator stated, consumers should not be “<a href="https://www.wsj.com/articles/chinas-regulators-prepare-to-roll-out-new-antimonopoly-rules-11605013205" target="_blank" rel="noopener noreferrer">prisoners to algorithms</a>.” We’ll be closely watching the market to understand how fintechs and consumers are responding and to understand what lessons other markets might draw from the Chinese approach to checking the power of big tech.

In the meantime,  read our recent publication, <a href="https://centerforfinancialinclusion.org/the-stories-algorithms-tell-bias-and-financial-inclusion-at-the-data-margins/" target="_blank" rel="noopener noreferrer"><em>The Stories Algorithms Tell: Bias and Financial Inclusion at the Data Margins</em></a>, about how FSPs are using algorithmic data to make credit decisions, how those affect low-income consumers globally, and what regulators can and should do.

Regulatory Headwinds on the Horizon for Chinese Fintechs: Where Do Consumers Fit In?

Report

Across all industries, predictive, data-driven algorithms -- mathematical recipes ranging from the simple to the complex -- are being used to tell stories about individuals and can drive high-stakes decisions: who receives a loan, what sentencing a judge will recommend, what therapeutics a doctor will provide.

In the financial services industry, the exploding data ecosystem has created billions of new stories. At the Center for Financial Inclusion (CFI), we are most interested in the ones they try to tell (or don’t tell) about low-income consumers.

This publication has two main objectives:
<ul>
 	<li>to ground some universal challenges on the use of algorithms, automated decisions, alternative data, and bias in the context of inclusive financial services</li>
 	<li>to present the current state of play among inclusive finance actors from desk research and interviews with a sample of fintechs, regulators, and other experts.</li>
</ul>
Our insights are aimed primarily at financial inclusion stakeholders who can influence the trajectory of the inclusive finance industry, with specific recommendations for regulators, investors, and donors. But anyone with an interest in algorithmic decision making or financial inclusion will find this publication thought provoking and useful.

The full publication is divided into the following sections:
<ul>
 	<li>The <strong>introduction</strong> explores algorithms and bias in inclusive finance, presents a framework for understanding algorithmic bias, and delves into what we want to know about algorithms, bias, and financial inclusion.</li>
 	<li>Section 1 is about <strong>data trails in the digital economy</strong>.</li>
 	<li>Section 2 digs into the <strong>risks of bias and emerging tools</strong> through the three categories: inputs, code, and context.</li>
 	<li>Section 3 lays out <strong>recommendations for inclusive finance stakeholders</strong> to advance evidence, solutions, and incentives for responsible algorithms.</li>
</ul>

The Stories Algorithms Tell: Bias and Financial Inclusion at the Data Margins

As we have <a href="https://centerforfinancialinclusion.org/revisiting-building-financial-capability-with-a-gender-lens/" target="_blank" rel="noopener noreferrer">discussed previously</a>, building women’s financial capability means incorporating their households and communities into the process. Men and women are both bound by and to their relationships with household members, community expectations, and broader societal norms and laws. Women’s care responsibilities, limited access to markets and education, and often limited access to and use of mobile technology make these relationships particularly relevant. Mass market financial education is not useful – <a href="https://openknowledge.worldbank.org/handle/10986/26068" target="_blank" rel="noopener noreferrer">nor does it have behavioral impacts</a> – for building men’s and women’s financial health.

Our soon-to-be-published research into approaches to building women’s financial capability will yield excellent insights into how programs and organizations are grappling with how to reach women, understand their needs, and provide actionable, relevant information. Women MSME entrepreneurs in Brazil, female agents in the Philippines, and garment factory workers in Bangladesh all have different needs and entry points for capability building.

Women are not homogenous. We must always keep this in mind. But we have documented some similar needs that inform ideal learning habits and delivery channels. We elaborate on those here.
<h2>Build Digital Skills</h2>
Because digital technology is now a permanent fixture in the financial inclusion landscape, digital capability is a prerequisite for financial capability and no longer an optional add-on. With digital technology – specifically mobile phones – as a primary entry point to the financial ecosystem, all customers must develop the skills and confidence to use a phone to access financial services, and this presents an additional hurdle for women. Women are often not a high priority for digital financial services, whose designs and delivery channels may not account for their specific needs. Indeed, digital services – and digital technology itself – are largely <a href="https://www.centerforfinancialinclusion.org/the-case-for-a-gender-intelligent-approach-an-opportunity-for-inclusive-fintechs" target="_blank" rel="noopener noreferrer">gender blind</a>, which exacerbates, not ameliorates, inequalities in access and usage. Beyond expanding access to and use of DFS, improving women’s digital capability can also serve as a force multiplier for advancing women’s economic empowerment. For example, a woman with a high level of digital capability can navigate ecommerce platforms, access health information, and learn new skills.
<blockquote class="pullquote--right">Improving women’s digital capability can serve as a force multiplier for advancing women’s economic empowerment.</blockquote>
Building low-income <a href="https://www.pciglobal.org/wp-content/uploads/2020/09/PCI_Digitizing_Savings_Groups_Report_Tz_Sept_2020.pdf" target="_blank" rel="noopener noreferrer">women’s digital comfort and skills</a> to use any financial tool is critical to the success of the tool. As part of Grameen Foundation’s <a href="https://grameenfoundation.org/stories/blog/lessons-learned-in-designing-online-education-to-empower-women" target="_blank" rel="noopener noreferrer">agent training program in the Philippines</a>, agents received digital skill building in person to access the digitally designed agent-training curriculum, such as training videos through QR codes and an e-learning platform. Similarly, Women’s World Banking, in partnership with DBBL, a bank in Bangladesh, sought to <a href="https://www.womensworldbanking.org/insights-and-impact/building-digital-capacity-for-women-in-bangladesh/" target="_blank" rel="noopener noreferrer">increase female factory workers' digital capability</a>. Though they received their income via mobile money, female factory workers cashed out after each payment. DBBL account owners received in-person training that focused on a key skill: P2P transfers (such as remittances). The training included teaching women that they did not have to cash out and then send money via an agent – they could just send money directly from their mobile wallet. Women’s World Banking also found that timely text messages – received right after salary payments were made, for example – ensured women practiced and built on this training.
<h2>Identify Trusted Peers</h2>
Often, female clients <a href="https://nextbillion.net/mobile-digital-financial-service-women-india/" target="_blank" rel="noopener noreferrer">don’t see themselves as DFS customers</a>. They assume their <a href="https://www.agrilinks.org/post/assessing-gender-gap-access-digital-financial-services-burkina-faso" target="_blank" rel="noopener noreferrer">transactions are too small and the costs are too high</a>. This stems from lower levels of trust and hesitation to ask questions. Women learn well, however, from role models and gain confidence when they hear stories of other women.
<blockquote class="pullquote--left">Women learn well from role models and gain confidence when they hear stories of other women.</blockquote>
Some providers are seeking to use trusted peers and agents to build confidence and trust. Banco Itaú’s <a href="https://imulherempreendedora.com.br/" target="_blank" rel="noopener noreferrer">Mulher Empreendedora program</a> was built in response to insights indicating women MSME entrepreneurs often have low self-esteem and confidence, besides lacking financial knowledge. The program addressed this by creating a mentorship program that introduced female role models to the entrepreneurs and provided an online platform where bank clients and non-clients could connect with other women entrepreneurs.

Similar to agent networks, peer-to-peer channels can address customer financial capability, particularly for customer segments with low trust, low literacy, and low confidence in using financial products or technology. In-person training works well when the recipient <a href="https://www.sciencedirect.com/science/article/abs/pii/S030438781831277X" target="_blank" rel="noopener noreferrer">chooses their trainer</a> and when the trainer is well-equipped to provide information, as with the case of Grameen Foundation’s <a href="https://www.prnewswire.com/news-releases/in-midst-of-rural-poverty-nearly-1-3-million-gain-access-to-financial-services-through-grameen-foundation-womens-networks-300845966.html" target="_blank" rel="noopener noreferrer">Mitras in India</a>. Providers found that peer educators were considered less intimidating by women needing additional support since they could speak in the local language and were most likely familiar with the constraints or challenges that women clients faced. In addition, peer educators were viewed as more trustworthy than bank or organizational staff.

<a href="https://www.mobilizingmyanmar.org/about-us" target="_blank" rel="noopener noreferrer">Mobilizing Myanmar</a> offers digital literacy training to female-led MSMEs by leveraging women’s community networks to improve their digital financial capability. Critical to the program is establishing trust with female trainees who are innumerate, digitally illiterate, and have low levels of self-confidence. Female entrepreneurs are trained to securely register for digital wallets, manage G2P payments, receive digital payments via QR codes for their businesses, and use smartphones to make and sell products.
<h2>Segment and Be Flexible</h2>
Unfortunately, most providers identified in our research sought to reach bank or MFI clients without segmenting by type or need. Client segmentation is important, particularly for measuring the impact and success of a program. And while back-end data analysis of the number of deposits or withdrawals can illuminate financial activity, in-person research can allow for a fuller picture.

A few organizations, such as Grameen Foundation and the <a href="https://bomaproject.org/" target="_blank" rel="noopener noreferrer">BOMA Project</a>, conducted qualitative research on impact, which led to modifications in approach and type of information delivered to clients. The BOMA Project found that clients needed the help of a trusted peer to engage with IVR calls, particularly because some women found the phone touchpad confusing. Before starting training, Mobilizing Myanmar’s female community leaders conducted informal assessments of digital skills, allowing them to tailor their training as appropriate.

Flexibility also emerged as a key theme across the landscape in the form of iterative, test-and-learn approaches adopted by providers to adapt to women’s contexts and as a way of accommodating women’s time constraints by offering continuous learning opportunities through touchpoints like recorded or online video content, IVR, SMS, chatbot, mobile application, and social media forum groups.

What more can be done? Join us on our learning journey to find out: stay tuned for CFI’s detailed landscaping publication that expands on this post. Also, listen in on a discussion that my colleagues from Women’s World Banking and I will have on <a href="https://us02web.zoom.us/webinar/register/8116161826973/WN_qdddFkcRTiqpQrl_VnsPwA" target="_blank" rel="noopener noreferrer">April 28 at 8 am EDT.</a>

What Does It Take for a Woman to Become Financially Capable?

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