“How much money do people typically imagine they should have when saving for emergency needs? Is that different from what they need for the children’s education? What kinds of conversations are field staff having?

These and similar questions are quite familiar to financial institutions trying to mobilize long-term savings from low-income clients through their field staff. In this blog post, we share the story of how mobile application usage data allowed <a href="http://www.sajidafoundation.org/">SAJIDA Foundation</a>, an <a href="https://optixproject.org/">OPTIX</a> partner from Bangladesh to gain insights into member-staff conversations without actually being there: a kind of virtual “fly on the wall”. They gained an unprecedented look into how financial planning really unfolds as they sought to tailor a term-deposit product to people’s needs.

In October 2017, <a href="https://nextbillion.net/cross-sell-done-well-how-one-finance-app-found-a-balance-between-digital-and-human-touch/">we introduced the Financial Advisory Services (FAS) mobile app</a> designed to allow field officers at SAJIDA Foundation to identify members (as SAJIDA calls its clients) with longer-term savings potential, structure conversations around life goals, and simulate scenarios to arrive at appropriate amounts and terms for the term-deposit savings account.

Built into the FAS app is the capability to collect detailed usage data, including when and where the app was used, what actions were undertaken, and what information was entered to simulate scenarios. Any interaction on the device, such as the click of a button, filling in a text field, or submitting a form, is recorded. More than 20 officers used the FAS in 2017 and undertook 11,793 actions on the app. By threading together consecutive actions, we can approximately reconstruct actual conversations.
<h3>FAS app frames conversations as intended…and then some</h3>
When starting a conversation, field officers mention most of the savings goals the FAS offers (Figure 1). Users were able to choose from a list of eight specific goals and one “other.” These goals are chosen based on qualitative research with members and staff, and appear to be a fairly accurate representation of member savings goals. “Emergency Needs” is the most common, featuring in 31 percent of the conversations. The icon “For Children” comes second, at 25 percent. “Livestock” features in only 1 percent of the conversations, leading us to question its permanence on the goal screen.

An App, a Conversation and a New Account: A Novel Approach to Term Deposits in Dhaka

Bangladesh

Customer Centricity

Data Analytics

Saving

Blog Post

Clay houses with tin roofs. The occasional moo of cows. Everything gave an impression of a world disconnected from modern technology in the village of Juranpur, Bangladesh.

BRAC’s credit officer Ismat Ara was about to start her day. She was surrounded by a group of women who came to pay their monthly installments and deposit savings. This setting, known at BRAC as a Village Organization (VO), has been central to microfinance since it began in Bangladesh in the early 1970s.

The group sat on a hand stitched bamboo mat under the shade of a mango tree in a client’s courtyard. As they exchanged polite greetings, Ismat Ara took out a smart tablet from her bag and began the collection process. A gap between technology and rural communities was bridged.

This deliberate change follows over 40 years of time-consuming manual installment and deposit collection by BRAC’s credit officers.

At the start of each month, credit officers went to their assigned VOs with their monthly collection sheet that contained installment balance and savings information of clients. On average, it took 5 to 7 minutes to manually insert data of each client, equaling to almost two hours spent on a VO consisting of 20-25 members just on collections. It usually took 4-5 minutes for accounts to enter the data for each client from the sheet. This process put immense pressure on accounts of branches nationwide that serves approximately 5.7 million borrowers.

Apart from the loss of time, there were five critical issues associated with this manual process. There were mistakes in calculation, torn pages or damage due to rain, and data duplication. A paper-based operating system at every layer of the field management not only cost monetarily, it also cost time, so BRAC looked to technology.

After months of development and field testing, software was developed in 2014, piloted systematically and officially launched in 2017, with additional features recommended from the pilot. Around 18,000 credit officers were provided classroom trainings on the interface along with branch and area managers. As with most new technologies, however, there was a learning curve.

“It took me about 4 months to be completely fluent with the tablet”, said Ismat Ara. “When I started, I doubled checked each input but still confused one member’s transaction to another. For the first few months, I used the collection sheet at the VO and then inserted the numbers into the tablet at the office and there were times when I posted one or two zeroes more than the original payment because I was not accustomed to the touch screen,” Ara said. “But I watched the instructional video in my tablet when I forgot anything.”

Completing the entire collection in a VO now takes about a 30-35 minutes for Ismat compared to 1.5-2 hours. She seamlessly scrolls through her tablet for clients’ names. She does not need a calculator anymore and each client’s ending balance acts as a password in order to insert her current installment, reducing the chance of mistakes. At the end of the day, the data in the tablet is synced with the branch accountants and everything is automatically updated, leaving no duplication.

The branch manager’s tablet has a few more add-ons. For example, Ismat’s manager Hossain Ali can see the activity of all four of his credit officers and all the VOs they are assigned to. He can also see each client’s transaction behavior and generate reports. Now he has to carry only one device when he travels to the field instead of a large file. The amount of errors have reduced drastically, while data management and informed decision-making has improved significantly. Whereas previously he stored large pile of papers to find past information, he can now do it with the click of a button, without double checking the numbers.

There are still areas to improve. A dashboard for branch and area managers is already under development. It will allow them to generate overview reports for an area, create realistic targets for loan disbursement and realization, measure achievements and generate collection summaries.

Operational efficiency also benefits clients. Now, they spend less time on a VO and return to work quickly. The facility is immensely convenient for clients with formal jobs living in urban and semi-urban areas. Clients can also see their total installment and outstanding loan amount without traveling to the branch. One of the greatest benefits of the smart tablet, however, will be for clients taking repeat loans. They would be able to see their savings and investment pattern from previous years. Their transaction records will also help staff to calculate credit scores and advise on loan amounts.

Collections using smart devices are not new in the global microfinance industry. The key to success for BRAC operating in a massive scale is the integration between major support units such as HR, monitoring, accounts, research and ICT. Similarly, the application must be user-friendly and client-centric.

For BRAC, the shift to tablets is a way of ensuring client centricity and building foundations to a more data driven decision making process. For the microfinance sector of Bangladesh, it is a positive precedent that digitization in microfinance is no longer an aspiration, but a practical prospect.

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BRAC’s Tablet Journey: Revolutionizing Microfinance Operations in Bangladesh

Microfinance Institutions

&gt; Posted by the Microfinance CEO Working Group

[caption id="attachment_23928" align="alignright" width="305"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/08/2016-by-the-numbers.png"><img class="wp-image-23928" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/08/2016-by-the-numbers.png?w=490" alt="" width="305" height="390" /></a> (click to enlarge)[/caption]

What’s been happening with the Microfinance CEO Working Group (MCWG)? We’re glad you asked. Fresh-off-the-press is a <a href="http://bit.ly/MCWG2016">new annual report</a> from the MCWG, detailing the Working Group’s key accomplishments and activities of the past year. Consumer protection is among the standout areas for the MCWG for 2016. Over the course of the year, 14 local partners belonging to the MCWG network achieved <a href="http://smartcampaign.org/certification">Smart Certification</a>, including BRAC Bangladesh, the first microfinance provider in the country and the largest in the world to reach the consumer protection milestone. In total, 21.9 million clients are served by 39 MCWG network Smart Certified institutions.

The MCWG is comprised of the leaders of 10 global microfinance organizations: Accion; Aga Khan Agency for Microfinance; BRAC; CARE; FINCA; Grameen Foundation; Opportunity International; Pro Mujer; VisionFund International; and Women’s World Banking. The newest member, added in 2016, is the Aga Khan Agency for Microfinance and its General Manager Jesse Fripp. The MCWG also harnesses the expertise of more than 40 senior staffers across the member organizations, who meet regularly across seven Peer Groups focused on specific areas of microfinance, from digital financial services, to social performance, to communications, taxation, and others. Members and local partners work with more than 89 million clients in 87 countries, providing them with financial services as well as other support to help them succeed and lift their families out of poverty.

The MCWG provides a forum for members to advocate on behalf of the microfinance sector, develop common industry standards, and share best practices in an effort to help organizations improve their services and expand their reach. The Working Group seeks to expand financial inclusion by leveraging longstanding expertise in the delivery of microfinance services and collaborating with those best positioned to scale quality financial services.

On consumer protection, a priority for the group, the MCWG advocates to the industry for the development and adoption of best consumer practices, and it also leads by example, encouraging the financial institutions in its network to take up these standards themselves. Along with the Smart Campaign and Smart Certification, the MCWG supports the Social Performance Task Force (SPTF). The results of the group’s testing of SPTF’s social performance management standards were incorporated into CERISE’s Social Performance Indicators Tool (SPI4), which is one of the most widely used assessment tools for double bottom line microfinance institutions. Over the past three years, 74 local partner institutions have conducted a SPI4.

The MCWG works with central banks to strengthen client protection regulations. The MCWG, in collaboration with Accion, New Perimeter (law firm DLA Piper’s global pro bono initiative), and the Smart Campaign, developed the <a href="https://issuu.com/microfinanceceoworkinggroup/docs/model_legislation_-_english">Model Legal Framework for Financial Consumer Protection</a> (MLF). In 2016, the MLF team particiapted in 12 events across seven countries, training more than 270 financial inclusion stakeholders, including more than 100 regulators and bank supervisors, on the MLF and the Smart Campaign’s underlying Client Protection Principles. Many of these regulators are using the MLF as a reference or even incorporating some of its suggestions directly as they develop their consumer protection regulations.

In March of 2016, the MCWG joined several industry voices to discourage interest rate caps being considered by the Central Bank of Nigera (CBN). It endorsed the creation of client protection regulations and provided suggestions on how transparency and responsible lending measures could help achieve some of the objectives of interest rate caps without the reduction of service to small borrowers that interest rate caps often cause. These efforts ultimately contributed to the CBN’s decision not to impose interest rate caps and instead work on a body of consumer protection regulations.

These are just some of the ways that the MCWG is working to strengthen the financial inclsuion industry and ensure the consumer is treated fairly.

The MCWG's annual report also spotlights how the network is harnessing fintech and innovation. For example, in Bangladesh, BRAC's app-based cash collection system has provided 8,500 tablets to credit officers, enabling them to do cash collection in the field. This paperless process will save time and money - an estimated $1 million per year - and allow credit officers to serve clients better by having information readily available.

For more, read the MCWG’s annual report, <a href="http://bit.ly/MCWG2016">here</a>.

Have you read?

<a href="https://cfi-blog.org/2014/05/19/new-microfinance-ceo-working-group-papers-examine-causes-and-potential-remedies-for-over-indebtedness/" target="_blank" rel="noopener">New Microfinance CEO Working Group Papers Examine Causes and Potential Remedies for Over-Indebtedness</a>

<a href="https://cfi-blog.org/2015/07/07/model-law-for-best-practice-in-financial-consumer-protection-an-important-driver-for-universal-financial-access/">'Model Law for Best Practice in Financial Consumer Protection': An Important Driver for Universal Financial Access</a>

<a href="https://cfi-blog.org/2017/06/05/the-smart-campaign-promotes-stronger-client-protection-and-sector-collaboration-in-uganda/">The Smart Campaign Promotes Stronger Client Protection and Sector Collaboration in Uganda</a>

The Microfinance CEO Working Group Reports Out: Consumer Protection by the Millions and Other Updates

Partnership for Responsible Financial Inclusion

The Smart Campaign

Agent Banking

Consumer Protection

Smart Certification

Social Performance

&gt; Posted by Tanvir Rahman Dhaly and Panuel Rozario Prince, BRAC

The market for microinsurance in Bangladesh has been growing rapidly over the last 10 years, with over 25 million subscribers. Yet it is still met with skepticism among many poor microfinance clients. As of this January, BRAC, in partnership with <a href="http://www.guardianlife.com.bd/">Guardian Life Insurance Company</a>, joined the market making its Credit Shield Insurance product available nationwide to a further 5 million of its clients across the country.

Its first microinsurance product, <a href="https://cfi-blog.org/2016/01/06/credit-shield-insurance-piloting-microinsurance-products-in-bangladesh/#more-20342">BRAC initially started piloting Credit Shield Insurance in November 2014</a>. After years of testing, we finally have a solution that is simple, accessible, affordable and, unlike most other microinsurance products on the market, voluntary for our clients and their families, while being sustainable for the institution.

Clients benefit in three ways. First, Credit Shield Insurance, which is available to anyone that has a loan with BRAC, covers the outstanding loan balance in full in the event of death of a client or her/his insured family member. Second, the nominee (the client or the surviving family member) receives an instant cash benefit to cover hospital and funeral expenses. Third, clients’ savings with BRAC are reimbursed with full benefits to the family. And all these benefits come at a nominal, one time (per loan) premium.

While Credit Shield Insurance is now a success for BRAC, getting here hasn’t been easy. Below we reflect on three key takeaways from our experience getting microinsurance right in Bangladesh.
<h3>1) Keep learning as you scale</h3>
While piloting is vital, the learning doesn’t end there. Often the most important lessons are experienced when taking a product out of pilot phase, to scale.

As we prepared to scale, we discovered the need to alter a few product features. This revision was necessary for two critical reasons. First, in a few cases there was a deviation between product features and the actual needs of the client’s household at the time of death. Second, although the business model was found cost-effective in the short run, it was not appropriate for large-scale expansion in the long run.

We learned that our clients really need to free up cash immediately after the death of a family member to cover hospital and funeral expenses. Often families that use cash available to them (for example, from micro-loans) will later look to repay any outstanding loans either by taking high interest loans from informal lenders or by selling assets. We therefore doubled the amount of funeral benefit to BDT 10,000 (USD 125) for our lower-income group loan clients, and quadrupled the benefit to BDT 20,000 (USD 250) for our individual, small enterprise loan clients.

Though we increased the immediate cash benefit, we wanted to keep the previous premium rate as low as possible. We had determined that clients could afford to pay 0.7 percent as a one-time premium for dual coverage (covering the client and another household earner), which is approximately BDT 210 (USD 2.60) for the average loan size of BDT 30,000 (USD 375).

To manage the offering at this price we decided to drop the feature of refunding paid loan installments to balance. This feature was also less critical for our clients who most valued access to immediate cash, a loan waiver, and fast settlement of claims.

[caption id="attachment_23421" align="alignright" width="329"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/04/table-1.png"><img class="wp-image-23421" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/04/table-1.png" alt="" width="329" height="215" /></a> Features of Credit Shield Microinsurance Pilot &amp; Scaled Credit Shield Microinsurance. (click to enlarge)[/caption]

Even with enrollment being voluntary, we experienced an average of 60 percent uptake during the piloting phase. However, uptake needed to be 80 percent in order to be sustainable. Additionally, as there is no assessment of health during enrollment, clients with ill health may get enrolled, potentially causing negative impacts through <a href="https://www.irmi.com/online/insurance-glossary/terms/a/adverse-selection.aspx">adverse selection</a>.

For example, during our pilot we discovered 28 percent of deaths occurred within 30 days of enrollment. In most cases, these insured clients or spouses had pre-existing life threatening diseases like kidney failure, cancer or fatal heart diseases which they did not disclose. Offering to cover the entire loan amount (by waiving the remaining outstanding loan balance and refunding all paid installments) may have encouraged greater moral hazard among clients whereby they would enroll because of and without reporting a pre-existing illness – adding costs that were too high. Considering these ground realities, the revised features are now more practical, lower-cost and sustainable for expansion.
<h3>2) Invest in building clients’ understanding</h3>
Given the novelty of microinsurance within the Bangladesh microfinance market many clients still failed to see the value of the product. To address this, we invested considerable time into on-boarding our clients through three phases.

At the field level, our team explained Credit Shield Insurance through group meetings and one-to-one communication for SME clients. Frontline workers used storytelling to help clients visualize the threats of not having microinsurance, using real life examples from members of the group or local community.

At the branch level, our <a href="https://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">Customer Service Assistant</a> (CSA) and branch managers conducted separate sessions on the benefits of Credit Shield Insurance, terms and conditions, and common misconceptions surrounding microinsurance, often related to concerns of fraud. At both the field and branch levels, use of pictorial materials such as banners, pamphlets and posters was also instrumental in raising awareness of the product.

Finally, we also communicated with clients via phone. BRAC’s call center has a team dedicated to providing additional information to clients that are not enrolled.
<h3>3) Prioritize convenience and usability</h3>
Since the pilot, we have reduced the claim processing time from 10 to just three days, transforming a manual claim management system to an automated system. Now the claim documents are directly sent from the local branch to the insurance provider through an app, saving at least seven days compared to sending physical documents through often unreliable local courier systems. Additionally, the practice of funeral benefit disbursement on the date of death is helping clients meet their immediate emergencies. By making the product work easily and efficiently for clients we are shifting the preconceived negative mindset towards insurance and gradually building a culture of trust and transparency.
<h3>What’s next?</h3>
Moving forward BRAC hopes to offer some add-ons and provisions to address critical issues, such as permanent disability and accident coverage, alongside our current Credit Shield policy.

Over time we hope to create fertile ground within the market for additional, sophisticated, long-term microinsurance solutions like health, crop, and property insurance. But a precondition for a thriving microinsurance market is fostering an insurance culture first - just like how MFIs once established a strong credit and savings culture. To work towards this, we are planning a national awareness campaign in partnership with government institutions.

Microinsurance, including Credit Shield Insurance, will not take off over night. But if there is just one thing we have learned it is that the effort is worth it. As an increasing number of clients choose to opt in we are steadily contributing to the increased protection and resilience of millions of households in Bangladesh.

Tanvir Rahman Dhaly is Head of Business Development, Microfinance, at BRAC and Panuel Rozario Prince is Deputy Manager, Microfinance, at BRAC.

Image credit: <a href="https://www.flickr.com/photos/worldbank/29688867023/in/album-72157603951157081/">World Bank</a>

Have you read?

<a href="https://cfi-blog.org/2016/01/06/credit-shield-insurance-piloting-microinsurance-products-in-bangladesh/">Credit Shield Insurance - Piloting Microinsurance in Bangladesh</a>

<a href="https://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

<a href="https://cfi-blog.org/2014/08/29/the-formula-for-mobile-microinsurance-success-in-senegal-and-pakistan/">The Forumula for Mobile Microinsurance Success in Senegal and Pakistan</a>

&nbsp;

Making Microinsurance Work in Bangladesh: Three Takeaways

Insurance

&gt; Posted by Isabel Whisson, Deputy Manager, Microfinance Programme and Ultra Poor Graduation Initiative, and Onindita Islam, Management Professional Staff, Microfinance Programme

<img class="aligncenter wp-image-22503" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/12/mg_1506.jpg" width="615" height="410" />This year BRAC in Bangladesh became the largest microfinance institution, in terms of number of clients, to be <a href="http://smartcampaign.org/certification">Smart Certified</a>, signifying to our country market and to the industry writ large that we treat our clients with adequate care.

As a non-profit dedicated to poverty reduction, client welfare has been central to BRAC’s mission since its inception in 1972. In Bangladesh in general, almost all microfinance institutions are non-profits, and so microfinance has always been seen as a tool for alleviating poverty in the country.

Why, then, did BRAC feel the need for Smart Certification? BRAC has always been a vocal advocate of financial services as a key tool to empower the poor. But in making this promise we wanted to be absolutely certain that we were doing everything we could for our own products to live up to this standard. Furthermore by ensuring that we are putting the client protection principles that we have long endorsed into practice, BRAC would guard against any risks in advance to both clients and the institution’s bottom lines.

Any preconceptions we at BRAC may have had about our ability to sail through the certification process, which required complying with each of Smart’s 93 indicators, were swiftly thrown out the window once the process began. According to our pre-assessment, BRAC’s microfinance program was doing fairly well, but quite a few changes needed to be made in order to be Smart Certified.

One thing was clear from the outset: As a 40-year-old organization with over 2,000 branches nationwide, rapidly rolling out new client protection measures was not going to be easy. The bigger and older you are, the more ingrained your systems and processes. BRAC has staff and clients that have been part of the organization’s fabric for decades. As we reflect on our two-year process toward Smart Certification, here are three challenges we encountered and overcame:

Challenge: Getting staff buy-in

Among BRAC’s 18,000 microfinance staff, there were naturally some sceptics who felt we were making things unnecessarily complicated. The sheer size of staff to encourage and on-board was a barrier to swift progress because we had to make sure that all staff, from operations, accounting, administration, and ICT to central management were involved, supportive, and understood the revised procedures. This was both a lateral process, across our branches, and vertical, down various lines of management.

Solution: Ensure training and reinforcement for all involved

Orientation sessions were held at different layers of the central and field-level management structures for weeks to make sure that all staff were on-board with the same information at the same time. The sessions, led by professional trainers and BRAC’s centralized clients team, were attended by operations staff and all necessary support units. Supervisors of respective regions were in charge to execute the programs in their region which helped the staff to take ownership of the new tasks and responsibilities. The trainings were then followed with discussions at monthly and quarterly operational management meetings, which gave staff the opportunity to share experiences, learning, and any issues they were facing. In this regard, scale proved beneficial, as we were able to draw on the experiences of thousands of staff to troubleshoot any issues quickly. In the end, the complexity of instituting changes across our operations also added significant value to the program as it quickly developed the skills of field-level management staff at instituting new measures at different levels.

Challenge: Client hesitance 

A few of the new procedures were confusing and at times, frustrating for established clients. This was the case, for example, when instituting a more rigorous system for cash flow analysis to be conducted during loan appraisal. We revised BRAC’s original loan appraisal system and asked staff to collect additional information from clients. Some, however, were either reluctant or struggled to provide details of their income and expenses. Some were even offended, thinking their commitment to repayment was being doubted, while others felt that their privacy was being compromised.

<img class="aligncenter wp-image-22505" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/12/sumon-yusuf_microfinance_brac-31.jpg" width="615" height="410" />Solution: Engage clients as part of the change process 

BRAC tried to be consistent in how it communicated with clients about the changes. In anticipation of some resistance, BRAC field staff oriented clients in advance, explaining the rationale behind various new measures including the additional information needed for cash flow analysis to ensure that loans would not put clients in jeopardy of debt stress. In so doing, field staff were able to spend more time having casual discussions with clients that collected more accurate information about their household income and expenses which in turn deepened customer relationships. Once they were brought in to BRAC’s reasoning, most clients understood the need to give BRAC more information. Several even came to appreciate the additional demands as it compelled them to think more carefully about how they were managing their income and expenditures. In other cases clients’ reactions were positive from the outset, in part because client protection measures were developed through iterative processes that took their specific needs and desires into account. For example, they appreciated being provided with loan contracts, and felt reassured about being given direct access to branch managers or customer service call centres in case they faced problems or had a complaint. Overall it meant clients could feel comfortable knowing that their institution did have their best interests at heart.

Challenge: Implementing multiple changes across a diverse portfolio

When it came to implementation of the revised processes and added services, the sheer size and variation within BRAC’s portfolio of products was a key challenge. BRAC operates over 2,000 branches in all 64 districts of Bangladesh, and delivers a range of products, including microloans, savings, and microinsurance, with different product features according to different segment groups. The changes to operations would therefore affect each product and each customer’s experience differently. They needed to be tested for effectiveness before being scaled nationally.

Solution: Pilot first, then tweak

To deal with the complexities of implementing several new processes together, BRAC set up a separate project called Sheba (‘service’) that implemented changes in three phases. We piloted each process, collecting feedback from clients and staff as we went along. Later we piloted the improved versions in selected areas and once deemed both effective and compliant with the Smart Campaign’s standard, we scaled up. For example, there was a lot of experimentation with the content and delivery of BRAC’s financial education modules, which are taught before disbursement or during longer formal trainings for clients in need of more comprehensive support. After piloting, BRAC incorporated more gender-sensitive components into the teaching content and materials. BRAC also experimented between having customer service assistants deliver financial education training at the offices, and in clients’ communities near their homes.

One of the most important tools in BRAC’s arsenal throughout the process was the commitment and support of the Smart Campaign and the rating agency Micro Finanza Rating. Having worked with multiples institutions worldwide, both had a rich bank of knowledge and examples that provided useful guidance for improving each of the Smart Campaign standards.

Achieving Smart Certification, no matter your size, may seem like an insurmountable task. It is not. By demonstrating the value of your work to clients, engaging your own committed staff, instituting changes gradually, and using the support networks available to you, you may be surprised to find that you can tick off those 93 indicators faster than you thought.

Finally, it is worth it. Smart Certification is not an end in itself. It means having confidence as an institution that your financial and social bottom lines are strong. And it means clients having confidence in your institution to put their financial needs first. That’s an unbeatable combination if you ask us.

Image credits: BRAC

Have you read?

<a href="https://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">Customer Service at BRAC: Empowering Women Through Empowered Women</a>

<a href="https://cfi-blog.org/2016/10/20/her-hands-trembled-when-she-borrowed-her-first-64-now-shes-giving-advice-to-brac/">'Her Hands Trembled' When She Borrowed Her First $64; Now She's Giving Advice to BRAC</a>

<a href="https://cfi-blog.org/2014/07/11/brac-microfinance-director-shameran-abed-on-client-protection-balancing-credit-and-savings-and-the-evolving-financial-inclusion-landscape/" target="_blank">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

Client-Centricity at Scale: The BRAC Smart Certification Journey

&gt; Posted by the Smart Campaign

The Center for Financial Inclusion at Accion announced today a $4.4 million, three-year partnership with The MasterCard Foundation to tackle the challenges facing consumer finance in an increasingly digital world. As a reader of this blog, you’re almost certainly familiar with the work of the Smart Campaign. The Smart Campaign is a global campaign committed to embedding <a href="http://smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">client protection practices</a> into the institutional culture and operations of the financial inclusion sector. Since 2009, we’ve worked globally to create an environment in which financial services are delivered safely and responsibly to low-income clients. The partnership marks a shift in strategy for the Smart Campaign, as well as a deepening of its footprint in Sub-Saharan Africa.

To date, the Smart Campaign’s flagship certification program has certified over <a href="http://smartcampaign.org/certification">68 financial institutions</a>, serving 35 million clients worldwide. Recent certifications include Opportunity International Colombia, ENLACE in El Salvador, and BRAC Bangladesh, part of the world’s largest anti-poverty organization.

Under the partnership, the Smart Certification program will continue. But with support from The MasterCard Foundation, the Smart Campaign will increase its focus on convening a broader range of players in the financial services field—including regulators, industry associations and financial technology firms—to take on client protection issues emerging from new technologies, to elevate the voice of the clients they serve and to effect change at the national level.

“It’s important to certify the practices of individual financial institutions, but we will not create wholesale, sustainable change until we galvanize the support of all the partners involved in serving low-income people, including regulators and new, technology-based service providers. We must also make a concerted effort to champion the client’s perspective,” said Isabelle Barrès, Director of the Smart Campaign.

In much of Sub-Saharan Africa, client protection is urgently needed and sorely lacking. Predatory providers, abusive practices, weak regulations and inappropriate products can create lasting and sometimes devastating harm. For example, our <a href="https://cfi-blog.org/2015/10/22/what-do-clients-care-about-results-from-benin/">Client Voices research in Benin</a> found that 13 percent of all the Beninois clients consulted for the project reported experiencing a client protection problem. Among the 16 percent of clients who reported ever having been late with a repayment, nearly one in three experienced problematic treatment.

While the Smart Campaign will continue to be a global effort, this partnership will focus work in five Sub-Saharan African countries: Benin, Ghana, Nigeria, Rwanda and Uganda. “With more than 45 million people in these five countries using financial services – often for the first time – the imperative to fully and sustainably protect clients is clear. With generous support from The MasterCard Foundation, the Smart Campaign can help ensure more people are offered high quality financial services,” said Isabelle Barrès.

At the same time, digital financial services are sweeping the continent, raising brand new client protection issues. Here on the blog we recently <a href="https://cfi-blog.org/2016/09/22/digital-credit-in-africa-are-nano-loans-safe-for-consumers/">spotlighted</a> the increasing prevalence of digital credit on the continent, namely nano loans, and outlined the related client protection concerns of “pushy” sales and marketing, the growing pains of early-stage algorithms, and the potential for discrimination in big data.

The Smart Campaign’s work aligns directly with The MasterCard Foundation’s focus on responsible, client-centric financial services. In fact this isn’t the first time The MasterCard Foundation and the Smart Campaign have partnered in support of advancing client care in financial services. “Our approach is to build and leverage partnerships across the financial inclusion sector to ensure clients’ needs are met responsibly,” said Ann Miles, Director of Financial Inclusion and Youth Livelihoods at the Foundation. “The Smart Campaign’s ability to reach out directly to clients to build awareness of their rights and understand their feedback is at the very heart of this partnership. The Smart Campaign will carry out activities designed to raise clients’ voices and inform them about their rights and responsibilities as consumers.”

For more about The MasterCard Foundation, <a href="http://www.mastercardfdn.org/">click here</a>. And for more about the Smart Campaign, <a href="http://www.smartcampaign.org/">click here</a>.

Image credit: Accion

Editor's Note: Formerly, we erroneously referred to Opportunity International Cambodia, instead of Opportunity International Colombia. Opportunity International does not operate in Cambodia. 

Have you read?

<a href="https://cfi-blog.org/2016/10/25/building-trust-and-growing-digital-financial-services-a-look-at-jumo/">Building Trust and Growing Digital Financial Services: A Look at JUMO</a>

<a href="https://cfi-blog.org/2016/10/07/financial-inclusion-of-refugees-al-majmoua-in-lebanon/">Financial Inclusion of Refugees: Al Majmoua in Lebanon</a>

<a href="https://cfi-blog.org/2016/10/06/changes-afoot-for-ugandas-tier-iv-financial-institutions/">Changes Afoot for Uganda's Tier IV Financial Institutions</a>

The Smart Campaign and The MasterCard Foundation Team-Up to Tackle the Next Wave of Consumer Protection Challenges in Financial Services

Benin

Rwanda

Uganda

Digital Financial Services

Policy, Regulation and Government Initiatives

[caption id="attachment_22204" align="alignright" width="350"]<a href="https://wvi.webex.com/wvi-en/lsr.php?RCID=f74ff90a0c83430a957d5d0c61343f1e"><img class="wp-image-22204" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/10-20-pic-1.png" alt="10-20-pic-1" width="350" height="226" /></a> Screenshot from VisionFund International's webinar (click to watch)[/caption]

This post is part of <a href="http://www.fi2020week.org/">Financial Inclusion Week</a>, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

On day three of <a href="http://www.fi2020week.org/">Financial Inclusion Week 2016</a> we were excited to see conversations happen around the world, including in Rwanda, Bangladesh, and Australia. We offer a rundown of these events and the vibrant online conversation below.

The week is nearing a close but there are still plenty of upcoming events and ways to get involved. Be sure to share your thoughts on Twitter with #FinclusionWeek, join tomorrow’s <a href="https://attendee.gotowebinar.com/register/2365627132751821825">webinar</a> with Innovations for Poverty Action, or <a href="https://docs.google.com/forms/d/e/1FAIpQLSf_eMIVRD4fRSSM86Xxde9p_sMObC3pppZ9dlFJpYqn3pEnQg/viewform">submit</a> a client quote and photo to our collection of <a href="http://www.fi2020week.org/page/">client insights</a>.

What’s Happening

VisionFund International hosted a webinar (two webinars, in fact, to accommodate for different timezones) focused on the future of digital financial services. The webinar centered on how VisionFund is using technology to lend to smallholder farmers at the right level, and at the right time. During the webinar, Tom Allen and Justin McAuley, Director of Change and Programs and Director of Global Digital Architecture at VisionFund, highlighted a new application they developed which uses available geographic and market data to better extend their products to smallholder farmers and manage risk. You can watch the full webinar <a href="https://wvi.webex.com/wvi-en/lsr.php?RCID=f74ff90a0c83430a957d5d0c61343f1e">here</a>.


[caption id="attachment_22206" align="aligncenter" width="616"]<img class="wp-image-22206" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/10-20-pic-2.jpg" width="616" height="410" /> "Currently there is no national definition of 'financial inclusion' and 'digital financial services' in Bangladesh but we are now actively working to promote banking services for all” – Md. Ashraful Alam, Deputy General Manager, Financial Inclusion Department, Bangladesh Bank[/caption]

In Bangladesh, USAID’s mSTAR project implemented by FHI360 hosted an interactive workshop entitled “Increasing the Uptake of Formal Financial Services through a Client-Centric Approach.” More than 35 representatives from the Central Bank, donor organizations, development organizations, digital financial services providers, banks, and insurance companies participated in the event. The workshop began with a session focused on assessing the current status of financial inclusion in Bangladesh. Participants then moved on to discuss scenarios reflecting existing barriers to accessing formal financial services in the market, including both social and economic obstacles. Finally, participants worked together to explore actions that could be taken by all stakeholders to extend full access. You can read more about this event in <a href="http://print.thefinancialexpress-bd.com/2016/10/20/154516">The Financial Express</a> (a prominent Bangladeshi news outlet).

<img class="alignright wp-image-22209" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/10-20-pic-5.png" width="300" height="323" />In Kigali, Rwanda, the Smart Campaign hosted a workshop focused on responsible mobile credit. During the workshop, participants assessed the most pressing consumer risks in mobile credit, with a specific focus on the risks presented by nano-loans. Participants advised that while these burgeoning nano-loans are small, they should not be disbursed carelessly and effective ways to protect clients on a regulatory and provider level should be explored.

Online Conversation

Orb Media held an open Twitter conversation yesterday featuring panelists from Grameen Foundation, Bankable Frontier Associates, Orb Media, and CFI. The conversation focused on a number of questions regarding the world's 2 billion unbanked individuals, the risks and opportunities associated with extending digital financial products to these populations, and the biggest challenges to advancing financial inclusion. Panelists focused on the need for the right tools at the right time for clients, proper regulatory instruments, and provider engagement as a means to empower clients and to lessen industry-level risks such as overindebtedness. You can read the conversation here on <a href="https://twitter.com/OrbTweet">Orb Media’s Twitter profile.</a>

BRAC - <a href="https://www.youtube.com/watch?v=i3TtTHCLDrk">Keeping Clients First Through Digital Microfinance</a>

BRAC shared a new video demonstrating how digitization has helped them keep their clients first in their microfinance work. The video illustrates the benefits of digital and how it's integrated with their services and operations - including through their Smart Collection app, which helps field officers process savings and installments via tablet-based Android devices.

UK Financial Inclusion Commission - <a href="https://www.neyber.co.uk/blog/guest-blog-financial-inclusion-does-it-matter-for-employers?utm_content=buffer18628&amp;utm_medium=social&amp;utm_source=twitter.com&amp;utm_campaign=buffer">Financial Inclusion: Does It Matter for Employers?</a>

A blog post from the UK Financial Inclusion Commission spotlights how financial stress can greatly affect workplace productivity, and the unique position that employers are in to help mitigate or eliminate this, including by improving access to affordable credit like payroll loans.

For more, including the week’s full event list and a curated #FinclusionWeek social media feed, visit the <a href="http://www.fi2020week.org/">Financial Inclusion Week website</a>.

Financial Inclusion Week Round-Up – Day 3

Australia

Financial Inclusion 2020

Credit

Mobile Banking

Nano Loans

&gt; Posted by Center Staff

[caption id="attachment_22153" align="alignright" width="340"]<img class="wp-image-22153" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/fif.jpg" width="340" height="191" /> Financial Inclusion Forum UK event yesterday at the European Bank of Reconstruction and Development (EBRD)[/caption]

This post is part of <a href="http://www.fi2020week.org/">Financial Inclusion Week</a>, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

We are one day into <a href="http://www.fi2020week.org/">Financial Inclusion Week 2016</a> and are so excited to already see stakeholders from across the globe coming together to discuss the week’s theme of keeping clients first in a digital world. As our global financial ecosystem undergoes a digital revolution, we are presented with great opportunities and great challenges to extending financial services in a responsible manner. At CFI, we believe that access to financial services is not enough. We define financial inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services provided at affordable prices, in a convenient manner, with respect and dignity. Additionally, financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”

Keeping clients first in a digital world requires looking beyond access to the essentials of quality services and client treatment. Financial technology has the potential to improve access, as well as the potential to improve convenience, lower prices, and build financial capability. However, fintech also has the potential to take away some of the respect and dignity present in an in-person banking transaction, and it can present new risks. We hope that this week you will explore the best ways to ensure that this digital revolution is not compromising clients, but instead further protecting them against risks and empowering them through new channels.

What’s Happening

Financial Inclusion Forum UK: Last night in London, over 200 stakeholders gathered at the European Bank of Reconstruction and Development (EBRD) for a conversation focused on “The Progress and Future of Financial Inclusion.” The three-hour event, organized by the Financial Inclusion Forum UK, consisted of a keynote and two panel discussions. The first panel discussion, featuring representatives from CDC, VisionFund, and EBRD, and moderated by Yasmina McCarty of GSMA, assessed current progress in financial inclusion. The second panel looked to the future with panelists from Financial Services for All, DoPay, Leapfrog Labs, and the Centre for the Study of Financial Innovation.

Demand-driven product design stood out in discussions as a key method to keeping clients first in a digital world. Vaughan Lindsay of LeapFrog Investments advised that communications with customers and customer-centric products are key to the value of financial technology. Brad van Leeuwen of DoPay echoed this by stating that digital solutions should be designed around the customer, rather than pushed onto them.

The Cherie Blair Foundation for Women: To mark Financial Inclusion Week, the Cherie Blair Foundation for Women is challenging you to test your financial literacy skills. The Foundation published a short e-learning video from their bespoke financial literacy training curriculum, developed as part of their Road to Women’s Business Growth project in Nigeria. The initiative supported 500 women entrepreneurs in boosting their financial literacy skills and enhancing their access to capital. <a href="http://www.cherieblairfoundation.org/2016/10/17/test-your-financial-literacy-skills/">Watch the video</a>, and take the quiz. And challenge others to join you!

<a href="http://www.cherieblairfoundation.org/2016/10/17/test-your-financial-literacy-skills/"><img class="aligncenter wp-image-22154" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/cherie-blair-foundation-video.png" alt="cherie-blair-foundation-video" width="615" height="347" /></a>The Online Conversation

Many partners are sharing their thoughts on keeping clients first in a digital world on their blogs. Throughout the week, we will capture and share these blog posts for you to enjoy.

MicroSave – <a href="https://www.linkedin.com/pulse/financial-inclusion-efforts-across-globe-going-right-microsave?trk=pulse_spock-articles">Are Financial Inclusion Efforts Across the Globe Going in the Right Direction?</a>
In this post, MicroSave takes a step back to reflect on the gap between how we often approach financial inclusion efforts and how customers manage their financial lives. The post challenges the common notion that lack of access is the biggest challenge to advancing financial inclusion. It suggests that the appropriateness of services and understanding the context of people’s mental models and behavioral biases is key to advancing financial inclusion. What are your thoughts? <a href="https://www.linkedin.com/pulse/financial-inclusion-efforts-across-globe-going-right-microsave?trk=pulse_spock-articles">Join the conversation on LinkedIn</a> and share how behavioral sciences can support financial inclusion.

U.S. Chamber of Commerce Foundation – <a href="https://www.uschamberfoundation.org/blog/post/us-chamber-foundation-celebrates-financial-inclusion-week">U.S. Chamber Foundation Celebrates Financial Inclusion Week</a>
In the first of their series of Financial Inclusion Week posts, the U.S. Chamber of Commerce Foundation highlights the importance of the private sector to accelerating inclusion of underserved populations in the financial system, both domestically and internationally. Throughout the week, they will highlight the efforts of member companies, including Capital One, JPMorgan Chase, MetLife, and SABMiller. Stay tuned for more.

mSTAR – <a href="https://mstarproject.wordpress.com/2016/10/06/josh-woodard-talks-what-to-expect-at-financial-inclusion-week-2016/">How Digital Financial Services Are Transforming Bangladesh USAID’s mSTAR project, Implemented by FHI360</a>
In this podcast, mSTAR’s Regional ICT and Digital Finance Advisor Josh Woodard gives a preview of what will be discussed at the upcoming Financial Inclusion Week conversation focused on digital finance in Bangladesh.

The UK Financial Inclusion Commission – <a href="http://www.financialinclusioncommission.org.uk/news/20">Sir Sherard Cowper-Coles Reflects on Financial Inclusion Globally and Why the UK Government Needs to Make It a Priority</a>
In the first of the UK Financial Inclusion Commission’s daily Financial Inclusion Week blog posts, Sir Sherard Cowper-Coles reflects on the rise of financial inclusion to the agendas of both domestic and international bodies. Cowper-Coles highlights the formation of a new unified money advice body in the UK, which will cover pensions, debt, and all other aspects of financial advice. However, he urges the British government to go one step further in making financial inclusion a national public policy priority embedded across every relevant government department.

For more, including the week’s full event list and a curated #FinclusionWeek social media feed, visit the <a href="http://www.fi2020week.org/">Financial Inclusion Week website</a>.

Financial Inclusion Week Round-Up – Day 1

&gt; Posted by Isabel Whisson and Maria A. May, BRAC

<img class="aligncenter wp-image-21102" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/04/27-just-try-not-to-see-me-now.jpg" alt="" width="615" />Destructive and devastating, disasters threaten to rob communities of resources, households of livelihoods, and families of loved ones. Difficult to anticipate and inherently costly, is there hope of fostering resilience against them?

Certainly. This year at BRAC’s <a href="http://innovation.brac.net/fif2016/">Frugal Innovation Forum</a>, an annual congregation of development innovators, the conversation centered on "<a href="http://blog.brac.net/2016/04/resilience-the-secret-super-power-of-south-asia/">scaling resilience</a>". In responding to crises as diverse as Nepal’s earthquake, to Typhoon Haiyan, to the collapse of Rana Plaza, a common theme for solutions promoting resilience was to create systems in advance that enable immediate response and recovery.

Having access to financial services is key. According to Michael Kellogg of VisionFund International, “People know what they need following a disaster and are extraordinarily adaptable in identifying ways to meet those needs. Equipping them with money soon after the disaster enhances their capacity to quickly rebuild livelihoods and the economic recovery of the local market.”

The question resounds: What is the best way to make cash immediately available as soon as a disaster strikes? By enabling transactions to be made instantly and remotely, digital financial services can provide a <a href="https://hbr.org/2016/04/mobile-phones-promise-to-bring-banking-to-the-worlds-poorest">critical lifeline</a> in different ways.

They make it possible to:

Move money quickly

When floods flushed away crops and seedbeds in northwestern Bangladesh last year, BRAC used bKash, BRAC Bank’s mobile money company, to <a href="http://blog.brac.net/2016/03/no-lines-no-relief-camp-4-lessons-on-using-mobile-money-for-post-flood-relief/">quickly issue relief</a> to clients affected. Many had their livelihoods threatened, and the cash helped them make the immediate investments needed to get back on their feet. Recipients contrasted their earlier experiences of waiting in line for hours to receive cash (often in the rain) with cashing out at their convenience at a nearby shop.

Move money to the people who need it most

An advantage of this approach is that institutions can directly reach those most in need. For organizations distributing cash after disasters, there are many security risks for staff carrying money long distances and difficulties in ensuring that targeted populations know where to seek out relief.

Mobile money transfers also make it easier to monitor whether resources are going where they ought to be. Parul Agarwal of IFMR-LEAD is conducting <a href="http://ifmrlead.org/a-field-experiment-on-mobile-cash-transfers-to-vulnerable-populations-in-bangladesh/">research</a> comparing cash-based transfers with mobile money transfers to households affected by flooding in northwest Bangladesh. She explains, “Cash-based relief programs are not as efficient because they are highly exposed to leakages, theft and loss. Discussions with sample households indicated that any transfers that reach the community are allocated randomly to few households with no proper targeting and reviewing of eligibility.”

Move money from many sources

One of the best ways to foster resilience is to help families to help themselves. Remittances sent between relatives can act as a key form of insurance for families without sufficient savings, as has been seen in <a href="http://www.ssrc.org/publications/view/do-remittances-act-like-insurance-evidence-from-a-natural-disaster-in-jamaica-working-paper/">Jamaica</a> and <a href="http://lib.icimod.org/record/26977/files/c_attachment_767_6005.pdf">Nepal</a>. Mobile money enables support to be sent instantly to relatives in need. Many BRAC clients share stories of using mobile money when someone has an emergency and needs to mobilize resources quickly. Often they ask neighbors and friends with money in their mobile wallets to send it directly to a relative in need, and pay them back in cash over the next few days.

Move money on demand

Freedom from Hunger’s "<a href="http://www.cgap.org/blog/building-resilient-households-burkina-faso">resilience diaries</a>" of the poor in Burkina Faso found savings was the most commonly used coping mechanism in the event of illness, loss of assets, or family members. Yet, even saving with a formal cash-based institution remains a challenge for the millions of households globally without access to savings accounts, opting instead to save insecurely in pots or with neighbors. Mobile money-based savings enables households to quickly access finance without having to rely on branches.

Preparing for the unexpected

The promise of using digital financial services is not to understate the benefits of cash: it is reliable and user-friendly. Indeed some organisations, such as <a href="http://vflink.it/disasterresmicro">VisionFund International</a> have had great success using cash-based recovery loans.

The challenges of using digital financial services after a disaster should be recognized too. There is much work to be done in order to foster the eco-systems needed to support effective digital financial networks. For one, if clients are to receive finance instantly, ideally they will have already opened accounts: post-disaster mobile wallet registration can add burden and delay. In addition, financial institutions using mobile money should consider the size of the agent network. Mercy Corps, which provided <a href="http://www.theguardian.com/global-development-professionals-network/2015/jun/23/the-cash-after-the-storm-building-resilience-to-future-disasters">e-transfers to victims of Typhoon Haiyan</a>, faced difficulties from a limited agent presence in affected areas where clients were trying to cash out.

Digital financial services can help to considerably increase resilience to shocks and disasters in a way that is convenient and sustainable, if the appropriate systems are put in place ahead of time. With the risk of disasters always lurking, now is the moment to learn from the successful models available, and invest.

Image credit: BRAC

Have you read?

<a href="https://cfi-blog.org/2016/01/28/responding-to-tragedy-asa-philippines-and-typhoon-haiyan/">Responding to Tragedy: ASA Philippines and Typhoon Haiyan</a>

<a href="https://cfi-blog.org/2014/07/11/brac-microfinance-director-shameran-abed-on-client-protection-balancing-credit-and-savings-and-the-evolving-financial-inclusion-landscape/" target="_blank">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

<a href="https://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">Customer Service at BRAC: Empowering Women Through Empowered Women</a>

Expecting the Unexpected: Why Digital Financial Services Can Be a Post-Disaster Lifeline

&gt; Posted by Misha Dave and Jeffrey Riecke, Disability Inclusion Program Manager and Communications Specialist, CFI

Financial inclusion for persons with disabilities (PWD) is a hugely under-addressed area in the quest to bank the unbanked. Estimates indicate that less than one percent of microfinance clients globally are PWD, despite roughly 15 percent of the global population having some sort of disability, and four-fifths of these individuals living in developing countries. The Center’s <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/pwd">Financial Inclusion for PWD program</a>, launched in 2010, has developed steadily since its inception. Here on the CFI blog you might’ve seen us spotlight our <a href="http://cfi-blog.org/2014/01/13/a-how-to-guide-to-realizing-disability-inclusion-at-mfis-is-now-available/">Framework for Disability Inclusion</a>, our <a href="http://cfi-blog.org/2014/05/28/attitudes-toward-persons-with-disabilities-in-indian-microfinance-institutions/">report on attitudes related to disability inclusion among Indian MFIs</a>, or our <a href="http://cfi-blog.org/2014/09/04/13000-pwd-and-counting-receive-financial-access-in-india/">disability inclusion partnerships with MFIs</a>.

The program has been busy over the past year. Let’s take a look at a few highlights.

India Partnerships: The Center’s PWD program provides trainings and resources to sensitize and equip MFIs to service PWD clients. The program recently forged new partnerships with two MFIs in India, Grameen Koota and Micrograam, bringing the total number of partnerships with institutions in the country to five. The other three partner institutions in India are Equitas, ESAF, and Annapurna. Across these three original partners, more than 30,000 lower-income disabled persons, including 2,000 visually impaired individuals (a severely excluded disability segment), have been included.

India Trainings: The program has trained over 160 field staff in six regions/states in India: Tamil Nadu, Kerala, Odisha, Karnataka, West Bengal, and Jharkhand. Recent inclusion programming and trainings were conducted at Micrograam’s three sub-partners in West Bengal, Jharkhand, and Tamil Nadu. And disability awareness surveys and sensitization trainings were completed with all branch managers of Grameen Koota in Karnataka.

Expansion in India: The India PWD program recently secured funding to expand its core program to three new partners in new regions. The India program is working to develop strong business case materials, collect data and client stories, revamp the core trainings, provide more practical tools for MFIs, and disseminate disability inclusion best practices.

Fundacion Paraguaya: CFI continues to work closely with Fundacion Paraguaya on a two-year expansion of the institution’s disability program to serve more PWD based on the Center’s Framework for Disability Inclusion.

Mental Health: The CFI is also working with Fundacion Paraguaya on the development of a mental health indicator for inclusion in the institution’s Poverty Stoplight tool, which helps assess the quality of life and poverty level of clients. Joshua Goldstein spoke at the 8th Pan-African Psychotrauma Conference, where he <a href="http://cfi-blog.org/2015/08/31/four-interventions-to-help-victims-of-trauma-find-hope-and-dignity/">discussed</a> the potential for victims of trauma becoming microfinance clients.

The Ecuadorian Government continues to receive advisory support from the Center on how to integrate disability best practices in the country’s financial sector.

Nigeria: Accion Microfinance Bank in Nigeria launched the People Living with Disabilities (PLWD) product to provide loans for PWD under the auspices of the Central Bank of Nigeria. The Center’s PWD program provided technical assistance on the initiative. The Center also met with the Vice President of Nigeria on advancing disability inclusion in the financial sector, and provides ongoing support to the Central Bank on how to create disability-inclusive institutions.

BRAC Bangladesh, which the Center provides disability inclusion assistance to, has achieved a client base of 7,000 PWD.

The Framework for Disability Inclusion was recently revamped to increase usability.

The New Client Protection Standards, currently being finalized by the Smart Campaign, include new language on protecting persons with disabilities from discrimination.

This is only a snapshot of the program’s happenings. Stay tuned to this blog for more updates.

For more information on the CFI’s Financial Inclusion for PWD program, <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/pwd/">click here</a>.

Have you read?

<a href="http://cfi-blog.org/2015/03/23/disability-inclusion-in-ecuador-and-around-the-world-an-interview-with-larry-reed/">Disability Inclusion, in Ecuador and Around the World: An Interview with Larry Reed</a>

<a href="http://cfi-blog.org/2015/08/31/four-interventions-to-help-victims-of-trauma-find-hope-and-dignity/">Four Interventions to Help Victims of Trauma Find Hope and Dignity</a>

<a href="http://cfi-blog.org/2014/01/13/a-how-to-guide-to-realizing-disability-inclusion-at-mfis-is-now-available/">A How-To Guide to Realizing Disability Inclusion at MFIs Is Now Available</a>

Disability Inclusion Progress - in India, Ecuador, Nigeria, and Elsewhere

Accion Microfinance Bank

Ecuador

Peru

Financial Inclusion Strategy

Persons With Disabilities

Hema Bansal

Senior Director, South and Southeast Asia, Smart Campaign

Apis Partners

Ashirul Amin

Elisabeth Rhyne

Jeffrey Riecke

Kai Hsu

Leora Klapper

Misha Dave

Sonja Kelly

Tahjib Shamsuddin

Afghanistan

Azerbaijan

Bolivia

Brazil

Cambodia

Chile

China

Colombia

Congo, Dem. Rep.

Dominican Republic

East Asia and Pacific

Egypt, Arab Rep.

Ghana

Guatemala

Guyana

Haiti

India

Indonesia

Kenya

Latin America and The Caribbean

Libya

Madagascar

Malaysia

Mexico

Morocco

Nigeria

Pakistan

Paraguay

Philippines

South Africa

South Asia

Sri Lanka

Sudan

Tanzania

Thailand

Tunisia

United States

Yemen, Rep.

Zambia

Aging and Older Adults

Banks

Financial Capability

Financial Service Providers

Fintechs

Housing Finance

Impact Investing

Microfinance

Over-indebtedness

P2P Lending

Payments

Risk Management

Trends

Women

Youth

Isabel Whisson

Diana Taylor

Alvina Zafar

&gt; Posted by Alvina Zafar, Deputy Manager, Microfinance, BRAC, and Monirul Hoque, Management Professional, Microfinance, BRAC

<img class="alignright wp-image-20371" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/img_2233.jpg" alt="" width="341" height="227" />“I can’t thank BRAC enough for standing beside me when I needed help the most,” Rahela, 24, a microfinance borrower and recipient of BRAC’s credit shield insurance, tells us. She borrowed US$385 in January 2015 to invest in a small clothing business. Recalling her experience, she reveals “My husband was not interested initially in having a joint insurance policy, but when the <a href="http://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">customer service assistant</a> explained it in detail, we decided that we should pay the small premium.”

Just a few months later, Rahela’s husband suffered a fatal cardiac arrest, leaving her to care for and support their child on her own. Her first step was to claim the insurance that they had wisely bought. Within two weeks, Rahela received the claim, of US$135, alongside an additional US$64 benefit provided as standard to cover funeral costs. She chose not to withdraw any of her savings of US$63.

In Bangladesh many people with low incomes are reluctant to take insurance products, like Rahela’s husband, due in large part to the lack of transparency in, and lack of understanding of many insurance products. There are no standards for how much insurers can charge and often the premium rates contain hidden charges. Project features can be rigid, making some features mandatory for the user, which reflect their typical supply side origins (i.e. convenient for providers but not necessarily for clients). Moreover, there are cases where clients complain about not receiving promised services, breaking the clients’ trust and generating healthy skepticism towards any promises of future benefits that have to be paid for in advance.

Most successful microinsurance schemes in Bangladesh, therefore, are involuntary – being provided alongside other services, such as telecommunications. In light of the seemingly low demand for microinsurance in the country, then, BRAC’s pilot experiment with credit shield insurance has been uniquely successful.


Why did we bother?

BRAC has been experimenting with several new microfinance products that prioritize usefulness for our clients, but finding a workable model for life insurance made particular financial sense due to relatively high client mortality rates. BRAC’s microfinance program in Bangladesh currently operates 2,067 branches and data indicates that, in the past four years, there has been 63,000 client or client family member deaths, working out to about seven deaths per branch per year.

How does credit shield insurance work? 

BRAC’s existing microfinance clients can opt in for credit shield insurance when applying for their loan by making a one-time premium payment set at 0.3 percent of the loan for individual coverage or 0.7 percent to cover a couple. If the insured passes away (suicide not covered!) while they have a loan with BRAC, the household will not have to pay any of the outstanding loan amount. Furthermore, they will get back the principal amount of the loan that they had already paid back, in addition to the US$64 "death benefit" to help cover the costs of a funeral, and their savings are not affected. Meanwhile the third-party insurance company pays the equivalent loan outstanding amount to BRAC to cover its losses.

The client informs and submits supporting documentation to BRAC, which is sent for processing by the insurance company, which then takes around six to seven working days. The client receives the claim money from their local branch office.

<img class="aligncenter wp-image-20347" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/figure-1-brac.png" alt="" width="596" height="283" /><img class="aligncenter wp-image-20348" style="margin-top:5px" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/figure-2-brac.png" alt="" width="594" height="283" />

How did we get clients to be comfortable with us? 

Cautious that this might be a tricky product to sell, BRAC prioritized ensuring that clients understood the products clearly, and that they would be simple and straightforward to use.

BRAC’s first challenge was to build clients’ awareness of how insurance works and to correct preconceived attitudes towards it. We took two approaches – distribution of promotional materials and leaflets they could take with them, and explaining in person. In the end, investing in BRAC’s human relationships was the most effective in earning clients’ confidence. Customer service assistants located at the branch explained the product to new clients, while field officers discussed the policy during installment collection meetings.

BRAC’s second challenge was in making the product user-friendly and the claim settlement process as smooth as possible for the clients and insurance company. To make the product simple to understand and use, BRAC sought to avoid instituting a long list of complicated terms and conditions – after all, this segment is largely illiterate and has limited experience interacting with large institutions. When it came to the claims application process, although BRAC managers were well trained in administering the claims process, we found that in many cases clients found it difficult to get a death certificate from a doctor. Mediating with the insurance company to make the processes easier for our clients, BRAC negotiated for them to be able to submit a certificate issued from the local government office instead. BRAC is also working on reducing the amount of time claim settlement takes.

<img class="aligncenter wp-image-20349" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/figure-3-brac.png" alt="" width="614" height="219" />Between November 2014 and November 2015, 69,000 BRAC clients have opted for coverage, and BRAC and its partners have successfully settled more than 113 out of 131 claims within two weeks of their being made. While the product is working well for clients, BRAC is still testing how to deliver the product most operationally efficiently. Having started the pilot by working with an intermediary, in June 2015 BRAC entered an additional partnership model whereby BRAC itself interacts directly between clients and the insurance company. Both come with their own advantages, but BRAC is yet to see which one prevails (stay tuned!).

<img class="alignright wp-image-20350" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/figure-4-brac.png" alt="" width="301" height="200" />Credit shield insurance has been a double win for BRAC – by improving the risk tolerance of clients at an affordable cost so that they may borrow and use microfinance more actively; and by improving BRAC’s financial sustainability by minimizing losses from loan defaults. BRAC hopes to expand insurance availability to all its "microfinance for women" clients, positioning it as an integral part of the financial services package offered by BRAC.

Today Rahela is doing well too. She took out another loan in October 2015 (this time US$513) and has savings of US$97 – modest amounts, yet a clear sign that she not only survived the shock but with support from the credit shield insurance was able to continue to grow her business and savings.

Image credit: BRAC

Have you read?

<a href="http://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

<a href="http://cfi-blog.org/2014/08/29/the-formula-for-mobile-microinsurance-success-in-senegal-and-pakistan/">The Forumula for Mobile Microinsurance Success in Senegal and Pakistan</a>

<a href="http://cfi-blog.org/2014/03/05/balancing-client-value-and-the-business-case-in-kenyan-health-microinsurance/">Balancing Client Value and the Business Case in Kenyan Health Microinsurance</a>

Credit Shield Insurance – Piloting Microinsurance Products in Bangladesh

It’s important to recognize the work of others, but so easy to let the days slide by silently – until a major transition occurs.

Last week there was such a transition, in the form of a gala to recognize the achievements of Alex Counts, founder and for 18 years, CEO of Grameen Foundation. So I decided to mark the occasion with these thoughts.

The story of the organization’s founding is a simple one, reflecting the naiveté and boldness of youth. As a recent college graduate, Alex moved to Bangladesh to apprentice at the Grameen Bank. On returning home to the U.S. seven years later, in 1997, and with $6,000 provided by Muhammad Yunus, he started the Foundation to carry Grameen Bank’s work for the very poor into countries around the world. He didn’t know what he didn’t know, as is the case for most entrepreneurs, social and otherwise. Grameen Foundation operated on a shoestring in those early days.

Over the next 18 years, Alex built an organization that today works in Asia, Africa and Latin America with a multimillion dollar budget and a high-powered board of directors (just a little self-promotion – I’m honored to be a member). Grameen Foundation has assisted some of the best and most mission-driven microfinance institutions in the world – Fonkoze, Grameen Koota, Cashpor, CARD Bank and many more – to raise money, improve their operations and try new things, with a constant eye on serving the very poor and the least-included, especially women. The Foundation was an early entrant into what is now the Fintech space, with the MIFOS initiative and the Grameen Technology Center, and it has become an important innovator in the use of mobile phones as a tool in support of the financial, agricultural and health needs of the poor.

But that’s not why I’m writing this post. I wanted to recognize Alex from a more personal point of view.

Those of you who have worked in or around microfinance for a decade – or two – or three – will remember that it was long divided into two camps: a poverty camp and a commercialization camp. If you think of the way Republicans and Democrats manage the U.S. Congress these days, you’ll get the general idea. Too much passion went into rivalry that would have been better spent moving forward. Standing on the commercialization side, I nevertheless wished to see microfinance come together under a big tent. Apparently Alex, firmly in the poverty camp, thought the same, but it was Alex who reached across the aisle. He systematically sought conversations with leaders at Accion, persisting in the face of initial wariness. He was smart enough to realize that reaching out did not undermine his pro-poor principles – it allowed him to advance them in more places.

When Alex joined the Center for Financial Inclusion’s Advisory Council at its creation in 2009, it was a public statement that the two sides had much to gain by coming together, and that 100% alignment on outlook and objectives was not a prerequisite for learning from and working with others. Since then, Alex has been a dedicated contributor to the Advisory Council. He never holds back his views, on anything from major strategic directions to the quality of the pre-read materials. I appreciate all his input.

More recently, Alex has worked harder than anyone else in microfinance to reconcile the field with the assault launched on it several years ago by the “randomistas” of the Jamal Poverty Action Lab (JPAL) and Innovations for Poverty Action (IPA) who subjected microfinance to randomized studies and found it less impactful than previously hoped. Alex has repeatedly – almost obsessively – attempted to understand and process the results, to caution the academics against over-hyping the negative, and most important, to take up the challenge the academics are offering: that randomized studies could help test and improve product innovations. With his encouragement, Grameen Foundation has worked with IPA and others on randomized studies. It is characteristic of Alex’s approach to life that he debates Dean Karlan of IPA publicly, even while asking Dean to formally serve as an advisor to the Foundation, as a member of its program committee.

The next chapter for Grameen Foundation will be headed by the incoming CEO, Steve Hollingworth, who is an excellent choice to lead it in new directions while upholding the organization’s mission.

The next chapter for Alex? You have to ask him. It will be exciting to find out.

So, at this moment of transition, I invite you, Readers, to grab the nearest coffee cup (or in Alex’ case, tea with a slice of lemon from the plastic bag in his pocket) and raise a toast to Alex Counts and his 19 years at Grameen Foundation. As they say in England, Well Done!

Have you read?

<a href="http://cfi-blog.org/2015/06/09/considerations-for-the-pursuit-of-financial-inclusion/">Considerations for the Pursuit of Financial Inclusion – Beyond Account Access</a>

<a href="http://cfi-blog.org/2015/10/21/part-of-a-toolbox-angus-deaton-urges-reconsideration-of-the-role-of-rcts/">Part of a Toolbox: Angus Deaton Urges Reconsideration of the Role of RCTs</a>

<a href="http://cfi-blog.org/2015/03/03/what-impact-investors-could-learn-from-microfinance/">What Impact Investors Could Learn from Microfinance</a>

A Toast to Alex Counts

&gt; Posted by Larry Reed, Director, the Microcredit Summit Campaign, and Jesse Marsden, Research and Operations Manager, the Microcredit Summit Campaign

<a href="https://www.flickr.com/photos/106853342@N04/10666354605/"><img class="alignright wp-image-19542" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/10666354605_d44199b1de_z.jpg" alt="" width="315" height="210" /></a>

In collaboration with the CFI’s process to develop the <a href="http://www.fi2020progressreport.org/">Financial Inclusion 2020 Progress Report</a>, the Microcredit Summit Campaign recently conducted interviews with microfinance leaders* around the world committed to reaching the most excluded. In this post, we share some of the insights from these conversations about how to ensure that the most invisible clients are financially included, directly drawn from the experiences of those who are doing it.

To set the stage, Luis Fernando Sanabria, General Manager of Fundación Paraguaya, made this central point: "Our clients need to be the protagonists of their own development stories. Our products should be the tools they use to meet their needs and empower their aspirations." With that reminder of the purpose of financial inclusion, we begin the discussion by asking who are the most excluded.

In each country, people living in extreme poverty (below US$1.25 a day) make up the largest segment of those excluded from the financial system. We spoke with leaders from organizations that make intentional efforts to reach this large excluded market: Fundación Paraguaya; Pro Mujer; Fonkoze; Plan Paraguay; Equitas; Grama Vidiyal; and TMSS. These organizations not only address poverty, but also a host of other dimensions that lead to exclusion, including literacy, race, gender, physical disabilities, and age. Less frequently-discussed reasons for exclusion include sexual orientation, language barriers (especially among indigenous populations), and mental or emotional health issues. In India and Bangladesh, for example, those interviewed noted that the lack of personal identification often drove exclusion, especially among women, persons with disabilities, and the socially excluded, such as transgender individuals.

In order to reach the most excluded, you have to know who they are. “Often the poorest families are invisible in their own communities,” said Steve Werlin of Fonkoze in Haiti. “When we do the wealth rankings in a community, they aren’t even mentioned.” Fonkoze takes steps to make sure that all households get included in their surveys so that the community can see who they have left out. Creating this visibility is essential. On a wider scale, in government statistics on economic activity, data on people over 65 is simply discarded or never collected.

Everyone, and every client, is unique. One of the messages of the FI2020 Progress Report is that the base of the pyramid (BoP) is not a monolithic bloc. Arjun Muralidharan of Grama Vidiyal in India noted that “You need to have a particular and unique strategy to seek out and serve these groups. This begins with deciding who you are going after. Different populations have very different problems.”

Two key elements for including the most excluded populations are building trust and overcoming prejudice. Not only do the financially excluded need to become confident in their services providers’ ability to responsibly manage their money, but they often have to become comfortable participating in a society that has regularly closed its doors to them. “Working with disenfranchised groups is hard. We need to provide extra training and services to help overcome their self-exclusion,” said Muralidharan. Grama Vidiyal provides health services and legal rights training to members of the Dalit group (formerly known as untouchables) before including them in savings and lending groups. On the other side of the equation are financial services staff attitudes. “In order to include people with disabilities, we need to train our staff first, to get them to overcome their prejudice,” said John Alex of Equitas in India. Equitas provides disability awareness training for its staff and clients and encourages them to find people with disabilities in their communities to include in the institution’s borrowing groups. Equitas also adapted its training and application systems to be accessible for people who are blind, deaf, mute, or face other physical limitations.

Excluded groups may have financial needs that do not fit the typical cash flows of other clients. TMSS asked rural farmers in northern Bangladesh what programs the farmers felt would be best to introduce. This client-first approach led to new programs that combined loans and savings in sync with the growing season. TMSS also changed its policies and products to meet the needs of an aging population - eliminating its age limit for borrowers. The institution also provides savings services for these clients and training for the next generation of family members to make sure they will be cared for as they age.

Those excluded from financial services often face many other types of exclusion as well, leaving them with a range of constraints that they need to address:
<ul>
 	<li>Both Fonkoze and Plan Paraguay employ the <a href="http://tup.brac.net/">Ultra Poor Graduation Model</a> developed by BRAC that provides a combination of cash transfers, training, savings, an asset, mentoring, and access to credit.</li>
 	<li>Equitas works with homeless people and provides housing and financial capacity training before providing loans.</li>
 	<li>TMSS provides health services, financial capability training, and vocational training.</li>
</ul>
These organizations often partner with the government and others to make sure their clients have access to the range of services they need. Fundación Paraguaya uses its <a href="http://www.fundacionparaguaya.org.py/?page_id=490">Poverty Stoplight</a> monitoring system to assess its clients on a checklist of 50 items related to poverty, health, education, and employment. It uses this data to bring in government services for common areas of need. Equitas partners with local hospitals, and Grama Vidiyal works with the government health insurance system to provide for the health needs of clients.

Achieving financial inclusion requires consistent energy to attain, maintain, and measure progress. Fundación Paraguaya uses its Stoplight system to enable clients to define and measure their own achievements over time, and provides incentives to its staff based on these clients’ achievements. Equitas provides incentives to its account officers for including persons with disabilities and measures the progress of its clients along consumption and health indicators. Plan Paraguay and Fonkoze measure the success of their Ultra Poor Graduation programs based on the numbers of clients who “graduate,” having met a comprehensive set of indicators related to food security, income security, asset ownership, school enrollment, housing quality, etc. and having reached a level at which they can use unsubsidized financial services.

Financial inclusion has always been about going where others wouldn’t go, addressing the needs of people who were excluded because it was too hard to serve them, or too risky, or too unsustainable. The people we spoke with represent the many financial pioneers who use innovation to expand the boundaries of inclusion, reaching those assumed to be impossible to reach.

For more on addressing client needs, check out the interactive <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a>.

Persons interviewed for this post: Luis Fernando Sanabria, Fundación Paraguaya; Carmen Velasco, co-founder of Pro Mujer; Steve Werlin, Fonkoze, Haiti; Mariella Greco, Plan Paraguay; John Alex, Equitas, India; Arjun Muralidharan, Grama Vidiyal, India; Munnawar Reza, TMSS, Bangladesh.

Image credit: <a href="https://www.flickr.com/photos/106853342@N04/10666354605/">Department of Foreign Affairs and Trade</a>; Anowara Begoum (pictured) lives in Kazipara village in Bangladesh, and is a participant in BRAC's Special Targeting Ultra Poor Program.

Have you read?

<a href="http://cfi-blog.org/2015/09/28/fi2020-progress-report-launches-in-three-days/">FI2020 Progress Report Launches in Three Days!</a>

<a href="http://cfi-blog.org/2015/07/21/the-supply-centricity-of-customer-centricity/">The Supply-Centricity of Customer-Centricity</a>

<a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/">The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part One</a>

Addressing the Financial Needs of the Most Excluded

&gt; Posted by Grace P. Sengupta, Assistant Manager, BRAC Social Innovation Lab, and Maria A. May, Senior Program Manager, BRAC Social Innovation Lab and BRAC Microfinance Research and Development Unit

Bangladesh is a fast-growing mobile money market. With <a href="http://www.bkash.com/">bKash</a>, the <a href="http://www.impatientoptimists.org/Posts/2014/06/Mobile-Money-in-Bangladesh-Shifting-from-Scale-to-Innovation">second-largest</a> mobile money provider in the world, <a href="http://futurestartup.com/2015/06/24/mobile-banking-bkash-and-future-of-mobile-financial-services/">industry growth</a> in the country has reached impressive heights. Between January 2013 and February of this year, the number of mobile money clients in Bangladesh increased five-fold to 25 million users, with the number of monthly transactions increasing from 10 million to 77 million.

Yet many have found that much of the mobile money usage in Bangladesh is still over the counter - that is, many people who use mobile money <a href="http://finclusion.org/wp-content/uploads/2014/04/FII-Bangladesh-Wave-One-Agent-Experience-QuickSights-Report.pdf">rely on an agent</a> to complete their transactions for them. There is strong speculation that the current mobile money interfaces are just too complicated for the average rural, low literacy user.

Last year, BRAC, our Bangladesh-based organization, decided to try going (nearly) cashless in a very rural, very remote branch run by our <a href="http://idp.brac.net/idp-for-char-development-and-settlement">Integrated Development Programme</a> (IDP). Many of the institution’s financial transactions, such as giving staff mobile allowances, paying extension workers, and collecting loan installments (for clients who opted-in), were digitized.

The biggest feat of this effort was driving mobile money adoption among a population hugely underrepresented in the sector. Despite many challenges—no electricity, no agents, seasonal flooding, and much more—we found that after a few months of use, many poor women with very low literacy had mastered bKash. The results even surprised us!

What’s the explanation? It’s clear that our frontline staff deserve a lot of credit for helping users understand mobile money’s potential benefits and patiently teaching them the system. They are trusted by the local community, so people listen to their suggestions. Among their efforts, they ran courtyard sessions on mobile money - even going back to “1, 2, 3” when they realized that some people lacked basic numeracy. And they recruited an agent and helped him get the necessary paperwork set up. Their commitment to success is hard to duplicate, but it can be crucial to the unbanked taking-up digital financial services.

This (nearly) cashless branch was one of seven pilots incorporating mobile money launched by BRAC last year as part of its Innovation Fund for Mobile Money, supported by the Gates Foundation. This year, the program received funding to scale up its activities to another branch that’s even more remote. I went to attend a training for these branch staff, and was struck by five really creative ways that they are drumming up the staff excitement that’s pivotal for mobile money success.

1. It was all about mobile money—including the team names! Twenty-six participants were divided into four groups, named: cash in, cash out, send money, and payments. Not coincidentally, these are the services of bKash. Most of our project staff were not initially clear about how bKash operates. This activity helped them understand the services and on top of that, they learned how they can simplify the menu and best explain the services to clients.

2. The entire mobile money experience was incorporated—from on-the-spot wallet opening to troubleshooting. For an average rural woman, customer care by phone is really complicated. She may not know her national ID number or transaction history or pin code. Usually, our project staff are able to guide the clients through such problems but sometimes it is not possible for them to provide the technical solutions. A local bKash agent arrived at the training and opened new wallets for those that didn’t have them. He explained the technical details to the staff, answering a list of questions which came directly from the field, as well as the problems posed by the project staff.

[caption id="attachment_19328" align="aligncenter" width="784"]<img class="wp-image-19328" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fig-4.png" alt="" width="784" height="189" /> From left to right: a list of problems identified by the participants; a participant asking a question to the bKash agent; the agent addressing the problem of a participant; a participant opening a wallet with the help of the agent.[/caption]

3. It was competitive! There was a race to “send money” the fastest. Participants actually sent money to each other’s phones using their bKash wallets. For some of them, it was their very first experience of sending money through bKash.

[caption id="attachment_19325" align="aligncenter" width="717"]<img class="wp-image-19325" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fig-2.png" alt="" width="717" height="200" /> Ala-Uddin of BRAC Poultry and Livestock and Lakshmi Rani Das of BRAC Health, Nutrition and Population sending money to each other using their bKash accounts.[/caption]

4. Common challenges were simulated through case studies. The four groups were given four case studies on common mobile money problems to gain a bigger appreciation and mastery for what they will be doing. The four explained their case studies to the larger group and provided possible solutions for each problem.

[caption id="attachment_19331" align="aligncenter" width="724"]<img class="wp-image-19331" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fig-5.png" alt="" width="724" height="259" /> Participants discussing their respective cases and presenting them in front of the rest of the group.[/caption]

5. Role playing helped staff see multiple perspectives. To succeed in any financial services project, along with motivating staff, you have to motivate the clients. In this activity, the participants actually practiced how they will motivate the clients so that they feel interested in using bKash. They wrote a script of a short drama and performed it, playing different roles.

[caption id="attachment_19333" align="aligncenter" width="740"]<img class="wp-image-19333" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fig-6.png" alt="Participants presenting their short drama by playing different roles" width="740" height="245" /> Participants presenting their short dramas.[/caption]

[caption id="attachment_19337" align="alignright" width="195"]<img class="wp-image-19337" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/ladies.png" alt="Jasmin Akter and Lovely Begam, BRAC, sharing their thoughts with one of the trainers." width="195" height="219" /> Jasmin Akter and Lovely Begam of BRAC sharing their thoughts with one of the trainers.[/caption]

Some insights from the training day

"I previously thought there must be some cost for providing bills and payments through bKash. But today after the training I realized there are no additional fees for cash-ins." – Md. Sabrin Momtaz, Branch Manager, Selimbazar, Noakhali

"We never believed that apart from making phone calls we could do so much with our phones. Transaction through mobile money is very useful. For example, we can buy air credit using our bKash wallets. We are hopeful that we can motivate the clients to use bKash by referring to our advantages." – Jasmin Akter and Lovely Begam, Facilitators, Health, Nutrition and Population Programme

Grace P. Sengupta is an assistant manager for BRAC's Social Innovation Lab in Dhaka, Bangladesh.

Maria A. May is a senior program manager for BRAC’s Social Innovation Lab and the Microfinance Research and Development Unit in Dhaka, Bangladesh.

Have you read?

<a href="http://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">Customer Service at BRAC: Empowering Women through Empowered Women</a>

<a href="http://cfi-blog.org/2014/07/11/brac-microfinance-director-shameran-abed-on-client-protection-balancing-credit-and-savings-and-the-evolving-financial-inclusion-landscape/">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

<a href="http://cfi-blog.org/2015/07/30/financial-inclusion-of-people-with-disabilities-is-access-the-biggest-barrier/">Financial Inclusion of People with Disabilities - Is Access the Biggest Barrier?</a>

Five Ways to Get Frontline Staff Excited about Mobile Money

Alex Counts

&gt; Posted by Alex Counts, Founder, Grameen Foundation

<img class="alignright wp-image-19178" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/best-1.jpg" alt="" width="300" height="212" />On Sunday, August 23, as I was enjoying some of the final days of summer visiting friends in New Hampshire, I noticed that I had been tagged in <a href="https://twitter.com/deankarlan/status/635455711204409344">a tweet by Dean Karlan</a>, the founder and president of Innovations for Poverty Action.  He provided a link to <a href="http://www.independent.co.uk/news/business/analysis-and-features/nicaragua-teaches-a-lesson-in-the-power-of-micro-loans-10466838.html">an article</a> about FINCA that included extensive quotes from its CEO, Rupert Scofield.  He asked Rupert if he really believed microfinance could reduce terrorism, and asked me what I thought (“whatcha think?” was the precise formulation of his question).  He <a href="https://twitter.com/deankarlan/status/635782117218103296">tweeted again on Monday</a>, asking whether I was “still going to stand by [my] claim that no microcredit leaders make grandiose and overselling impact claims?”

First of all, I have never said that no microcredit leaders have ever exaggerated impact claims.  I believe that those exaggerated claims have been rare and atypical, especially in recent years.  In other words, the tendency for practitioners and advocates to make exaggerated claims not backed up by data has itself been quite exaggerated.

But I don’t think Twitter is the best medium for exploring such topics.  So I was grateful when the Center for Financial Inclusion agreed to publish this response to Dean’s public queries of me, in which I could address some related issues about microfinance advocacy and research.  (This post builds upon some of the observations I made in <a href="http://cfi-blog.org/2012/09/05/alex-counts-on-karlan-and-appels-more-than-good-intentions/">reviewing</a> Dean Karlan and Jacob Appel’s impressive but flawed book, <a href="http://www.amazon.com/More-Than-Good-Intentions-Improving/dp/0452297567">More Than Good Intentions</a>.)

Regarding <a href="http://www.independent.co.uk/news/business/analysis-and-features/nicaragua-teaches-a-lesson-in-the-power-of-micro-loans-10466838.html">the article</a> Dean tweeted about, I am supportive of Rupert’s statements and encourage others to read it and come to their own conclusions.  (Having been the public face of an international humanitarian organization for 18 years, I also realize that journalists sometimes focus on a very small part of what someone says in an interview, often on those things that are potentially the most controversial.)  For the most part, Rupert comments on specific microfinance clients he and the journalist met and on his past experiences and how they shaped his view of microfinance.  It’s impossible to challenge any of those observations and recollections.  They are statements of personal experience and opinion.

At one point he makes the case that microfinance – which research has shown to have <a href="https://www.aeaweb.org/articles.php?doi=10.1257/app.20140287">consistent though modest positive impacts on human well-being</a> and in a few cases, such as <a href="http://darp.lse.ac.uk/frankweb/courses/EC501/pittkhandker.pdf">in Bangladesh</a> and through microsavings in multiple countries, more pronounced positive impacts – is part of a larger movement to address the human suffering and poverty that can, as a byproduct, decrease the attractiveness of ideologies that encourage terrorism.

If Rupert wants to make the leap to say that successfully addressing poverty also addresses terrorism, that is a statement of policy or ideology, rather than one of direct claims about microfinance or any other anti-poverty strategy.  Rupert’s effort to provide nuance – saying specifically that microfinance is not “the only solution” – was wise.  I assume he offered the journalist even more qualifiers and nuance that never made their way into the article.  So I don’t find much to disagree with here, nor do I find anything that is grandiose or overselling, even though I have chosen not to make this microfinance/poverty/terrorism argument in public myself.

But let me take a moment to make a few related points.  Like people in any other field, microfinance practitioners and advocates aggressively market their products.  What else would we do?  Researchers do that about research, automotive companies about cars, universities about the education they provide (and education in general), and so on.

There have been scores of studies of microfinance that have shown positive impact, and we have <a href="http://www.grameenfoundation.org/sites/grameenfoundation.org/files/resources/Measuring-Impact-of-Microfinance_Nathanael_Goldberg.pdf">catalogued</a> and cited them.  When a leading study of microfinance, summarized in <a href="http://darp.lse.ac.uk/frankweb/courses/EC501/pittkhandker.pdf">an article in a peer-reviewed academic journal in 1998</a>, found significant positive impacts on poverty and empowerment in Bangladesh, people like me did not keep quiet about such credible, positive and encouraging findings, as they seemed to confirm earlier, less rigorous research.  Why would we?  [After much effort and the passage of 16 (!) years, two respected academics were able to publish <a href="http://www.tandfonline.com/doi/full/10.1080/00220388.2013.858122#abstract">a peer-reviewed critique of the Bangladesh study</a> in 2014, muddying the issue further and causing most practitioners and advocates to exercise additional caution when citing the original findings from Bangladesh, and also prompting more head scratching about how they should digest and react to disagreements among academics.]

Later studies, on a handful of microfinance institutions among the thousands that exist today, pointed to more muted impact (at least from microcredit), causing nearly all practitioners and advocates to gradually recalibrate their marketing to be consistent with the evolving body of knowledge.  While I am sure that one could find individual quotes from industry leaders including myself that stretched the bounds of what the research said at the time, in general I think we have little to be defensive about if you look beyond anecdotes – isolated statements, often taken out of context – and focus on the typical statements of industry leaders and how they have logically evolved as the research literature itself has evolved.

In fact, Grameen Foundation has tried to <a href="http://www.grameenfoundation.org/press-releases/grameen-foundation-releases-new-report-microfinances-impact">systematically capture the findings of the literature</a> for our supporters and others by commissioning academics every five years to independently summarize, in layman’s terms, what successive waves of studies have concluded.  Our last such effort was described by the thoughtful microfinance skeptic David Roodman in <a href="http://www.cgdev.org/blog/great-grameen-foundation-report-microfinance-impacts">a blog post</a> as “a model of public communication about social science research.”  A third in this series, written like the <a href="http://www.grameenfoundation.org/resource/measuring-impact-microfinance">second one</a> by Professor Kathleen Odell of Dominican University, is due out early this fall.

I think it is arguable that the variation of microfinance practiced in Bangladesh and perhaps a few other countries does have significant positive impact on poverty while microfinance in many other parts of the world, as currently practiced, brings more limited human development benefits.  While the practitioners of RCTs are very rigorous about random assignment at the level of the program participants, their choice of MFIs to study among the thousands in operation today has been anything but scientific.  Rather than attempting to choose a truly representative sample of MFIs for study, their selection has been uncoordinated and opportunistic, and has to date completely avoided the country where microfinance is most intensively practiced.

For this and other reasons, there is real debate even within academia about what can be learned from RCTs, especially what can be applied to other places and similar programs.  For now, I believe humility and curiosity are called for, as well as constructive efforts that help us get beyond “proving” whether microfinance works and refocus on a more constructive topic: leveraging research to further improve this social innovation that is clearly here to stay.

As I mentioned in <a href="http://www.grameenfoundation.org/blog/reflections-latest-studies-microcredit#.Vd0AJPlViko">my comments at a recent World Bank conference on the impact of microcredit</a>, I continue to be puzzled by the tendency of some researchers (including the authors of the <a href="https://www.aeaweb.org/articles.php?doi=10.1257/app.20140287">American Economic Journal summary article</a>) to suggest that the microfinance industry somehow made a collective “promise” to “transform” the lives of the average client in under two years, and then failed to deliver on it – and then put this forward as the most compelling narrative about our sector.  (See, for example, <a href="http://www.poverty-action.org/node/8171">the misleading title of this press release</a>.)

Leaving aside the fact that “transformation” is never rigorously defined, this argument requires one to believe that the most aggressive marketing claims made over the last 30 years were actually typical, and that they were collectively agreed upon by this fragmented, decentralized industry some point in the past and regularly reaffirmed thereafter (rather than being periodically modified based on new research).  In both cases, I find the evidence lacking.

One way of interpreting this dynamic, expressed to me by another industry leader as I prepared this response, is that certain research organizations are “aggressively marketing their work by ‘overclaiming’ [or in other words] exaggerating the claims [made by] microfinance [advocates] initially” in order to heighten interest in their research.

So, in summary, I find Rupert’s statements quoted by the journalist to be descriptive, at times quite nuanced, and accurate, as far as they go.  In one case he expresses his personal belief about the link between poverty reduction and terrorism, one that I don’t believe can be conclusively supported or refuted by the existing evidence, but that intuitively makes sense to many people, including me.

Shaped by Rupert’s vast experience in Central America, where the interviews also took place, I suspect he may have been using the terms “violence” and “terrorism” almost interchangeably in the context of a free-wheeling conversation.  Perhaps everyone can agree that reducing poverty and terrorism/violence are two positive goals where the causal relationship between them is tenuous and uncertain, but hardly implausible.

The bottom line for me is that Rupert’s comments are not part of a discussion of impact evidence.  They are intended to communicate why FINCA – and Rupert – find their work meaningful, and that has a lot to do with the legacy of conflict in Central America.  Most readers of the article would understand this, and interpret the claims in exactly the way they were intended.

Image credit: Accion

Have you read?

<a href="http://cfi-blog.org/2015/03/20/reflections-on-the-latest-studies-on-microcredit/">Reflections on the Latest Studies on Microcredit</a>

<a href="http://cfi-blog.org/2015/06/09/considerations-for-the-pursuit-of-financial-inclusion/">Considerations for the Pursuit of Financial Inclusion - Beyond Account Access</a>

<a href="http://cfi-blog.org/2012/09/05/alex-counts-on-karlan-and-appels-more-than-good-intentions/">Alex Counts on Karlan and Appel's "More Than Good Intentions"</a>

How We Talk About Microfinance: A Reply to Dean Karlan

&gt; Posted by Alvina Zafar, Deputy Manager, Financial Education and Client Protection, BRAC Microfinance

<a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8901" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="326" height="72" /></a>Financial Inclusion 2020 (<a href="http://www.centerforfinancialinclusion.org/fi2020" target="_blank" rel="noopener">FI2020</a>) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

“I am not sure if I can repay more loans, and I don’t want to be overburdened by debt.” That was how Noyon, a small grocery shop owner with a physical disability, replied when <a href="http://www.brac.net/">BRAC</a> asked whether he would like to take a loan to expand his business. This is a common response we hear from clients with disabilities when they’re offered credit products. Many prefer to avoid taking loans unless absolutely necessary. They guard their reputations closely against a society that sees persons with disabilities as less capable, and defaulting on a loan is not a risk they are willing to take. This insight raises an important question with regard to the financial inclusion of persons with disabilities: Is access the biggest barrier?

In 2015, BRAC scaled up its Engaging People with Disabilities project with <a href="http://www.add.org.uk/bangladesh">ADD International</a>, an organization that focuses on campaigning for equal rights and ensuring social justice for people with disabilities. The objective of this partnership is to leverage the access and coverage that ADD International has with people with disabilities in Bangladesh and provide financial services (e.g. savings, loans, insurance, etc.) to interested beneficiaries. As of May of this year, the project has a client base of over 7,000 people with disabilities, with an average loan size of US$ 282 and a repayment rate of 100 percent. Clients are saving on a regular basis, with an average saving account balance of US$ 50. The majority of the clients are entrepreneurs—they own and operate grocery shops, tea stalls, small vending businesses, and the like. One objective of BRAC’s is to empower all clients by building their financial capabilities. A by-product we see in many of our clients from this pursuit is, on top of enhancing their knowledge about financial management, it raises their confidence and self-respect. Since the early days of BRAC's disability inclusion work, we've been grateful to receive technical, advocacy, and other support from CFI.

[caption id="attachment_18846" align="alignright" width="325"]<img class="wp-image-18846" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/pic-of-noyon_1.jpg?w=490" alt="" width="325" height="244" /> Noyon and his grocery shop[/caption]

<a href="http://cfi-blog.org/2014/08/07/financial-inclusion-of-disabled-people-in-bangladesh-the-broken-promises-of-mfis/">Commentary</a> on the lack of financial services available to people with disabilities often cites financial services providers’ reluctance to have them as clients. Furkan, a client with a disability and owner of a small tea stall, expressed his thoughts about BRAC’s initiative:

“It’s a good start since it provides access to financial services with the backing of a well-known organization! I think it is a step towards getting positive attention from society not as a disabled person but rather as a potential client. However organisations need to understand the needs of disabled people because not everyone wants to be an entrepreneur…those who want to support us need to provide options, opportunities, and skills training so that we can choose according to our needs.”

These are real concerns from an organizational or service delivery perspective and need to be addressed to enable more people to benefit from access to financial services. For example, BRAC is hoping to prioritize people with disabilities in its new skills training initiative.

While progress has been made in Bangladesh in terms of extending access, full financial inclusion of people with disabilities requires skills training and financial literacy that enhance their ability to understand financial products and use them most productively. Currently, both financial service providers and persons with disabilities are losing out. BRAC’s preliminary experience demonstrates that financial inclusion for people with disabilities is in reach. There is no reason why this group shouldn’t become a fully integrated and highly-productive part of providers’ clientele.

For more on developing services to best fit client needs, the <a href="http://microfinance.brac.net/research-and-development">research and development</a> unit of the BRAC Microfinance program has developed similar projects to address clients’ needs like credit shield insurance, medical treatment loan, and many more.

Alvina Zafar is a Deputy Manager at Financial Education and Client Protection unit of BRAC’s Microfinance programme in Dhaka, Bangladesh.

Have you read?

<a href="http://cfi-blog.org/2015/03/23/disability-inclusion-in-ecuador-and-around-the-world-an-interview-with-larry-reed/">Disability Inclusion, in Ecuador and Around the World: A Conversation with Larry Reed</a>

<a href="http://cfi-blog.org/2014/09/04/13000-pwd-and-counting-receive-financial-access-in-india/" target="_blank" rel="noopener">13,000 Persons with Disabilities (and Counting) Receive Financial Access in India</a>

<a href="http://cfi-blog.org/2013/10/22/combatting-exclusion-for-persons-with-disabilities-in-india-and-mexico/" target="_blank" rel="noopener">Combatting Exclusion for Persons with Disabilities in India and Mexico</a>

Financial Inclusion of People with Disabilities - Is Access the Biggest Barrier?

I recently attended the annual meeting of the Microfinance Network (MFN), which was hosted by the Alexandria Business Association in Alexandria, Egypt. MFN is a global network of some of the largest and leading microfinance institutions, and its annual meeting has long been known for candid and in-depth sharing of experience among the leaders of these institutions, as this post demonstrates.

Ask a microfinance CEO what’s making his or her life hard these days, and the answer is likely to be politics.

That’s hardly surprising when the speaker is Motaz Tabaa, CEO of the Alexandria Business Association (ABA), one of the largest microfinance institutions (MFIs) in Egypt. On January 28, 2011, when the occupation of Tahrir Square in Cairo held the world’s attention and led to the resignation of then-President Mubarak, it became impossible for ABA to operate. But before the week was over, staff were back on the streets, collecting and disbursing loans, and sleeping at the office to guard the cash that couldn’t be deposited in banks, which remained still closed.

Nearly every MFI in the group had a similar encounter with crisis – consider the political violence (and/or natural disaster) that has touched Uganda, Nigeria, Armenia, Mexico, Haiti, and Bangladesh in recent years. Today, Al Majmoua in Lebanon and Tamweelcom in Jordan are overwhelmed with the attempt to serve the Syrian refugees that have crossed their borders. The CEOs who have experienced such upheaval agreed about the role of MFIs in responding quickly to help clients obtain cash, keep their businesses open, and then rebuild. Given how prevalent political and natural crises are, organizations have developed protocols for responding quickly. Even while we met, Enrique Majos of Compartamos received news of a tornado in Mexico, and sent the Compartamos natural disaster team into action.

There was another kind of political issue worrying many of the MFN member CEOs – political actions directed specifically at the microfinance sector. As they see it, politicians seeking votes from the poor too often see advantages in demonstrating their engagement with or control over microfinance. They over-regulate, compete unfairly through state-subsidized lending, give preference to more mainstream banks, or all of the above.

In Egypt, for example, a new law is being introduced to regulate MFIs. Although the sector has advocated for a regulatory framework for microfinance for a long time, this new law does not appear to recognize microfinance as part of financial inclusion for low income families. It fails to provide a path for MFIs to qualify to take savings, while it pigeonholes microfinance into a restrictive lending range. For example, DBACD, which works in the Nile Delta, has recently introduced a home improvement portfolio. But the new law defines housing as outside the bounds of microfinance, so DBACD will have to drop the product. New regulation is also coming in Jordan, and there are signals that it, too, will be overly restrictive. Similar concerns were shared by representatives from Lebanon and Armenia.

Responses to political risk depend on a reading of the situation and the players involved. In one country it may be important to engage directly (though not publicly) with an antagonistic political figure, but in another case that would backfire. For Sogesol in Haiti, it has been important to cultivate a public image that emphasizes its leadership as a provider of important services for the poor. However, the group warned against counting too much on support from the public. Clients, even relatively satisfied ones, are unlikely to organize energetically to protect an institution.

For Compartamos, the non-political, technocratic approach of Mexican and Peruvian banking regulators has been a bulwark for stable and predictable policy in the face of popularity-seeking actions by various politicians, and so Compartamos seeks to maintain frequent contact and exchanges of views and information with regulators. By contrast, for BRAC in Bangladesh, where the political scene is dominated by two warring political parties, regulators are under a large degree of political control. BRAC’s response, which has served it well for many years, is to stay resolutely unaligned and maintain a low-key public posture.

The members agreed that while global best practices and international experts can be helpful in providing a counterweight to populist proposals, the international card must be played with great discretion so as not to provoke a hardening of the stance of the very people the MFI would most like to influence.

Finally, members agreed that maintaining institutional health is an essential political risk mitigation strategy, including adequate capital cushions, to enable an institution to weather the turns of political fortune sure to come its way.

Have you read?

<a href="http://cfi-blog.org/2013/11/08/the-risk-management-initiative-in-microfinance-rim-mapping-the-road-to-risk-management/">The Risk Management Initiative in Microfinance (RIM): Mapping the Road to Risk Management</a>

<a href="http://cfi-blog.org/2013/04/23/how-can-mfi-boards-be-explicit-about-risk-strategy-and-appetite/">How Can MFI Boards Be Explicit about Risk Strategy and Appetite?</a>

<a href="http://cfi-blog.org/2014/07/11/brac-microfinance-director-shameran-abed-on-client-protection-balancing-credit-and-savings-and-the-evolving-financial-inclusion-landscape/">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

Political Risk Is Keeping Microfinance CEOs Up at Night

Compartamos Banco

&gt; Posted by Leora Klapper, Lead Economist, Development Research Group, the World Bank

[youtube https://www.youtube.com/watch?v=Oy9N-6IBaUA&amp;w=560&amp;h=315]

Eroll Asuncion runs a grocery store on the remote Philippine island of Rapu-Rapu. It’s a three-hour boat ride to the nearest bank. Fortunately, that’s no longer a problem – thanks to the mobile phone revolution and new regulations that make it easier for people to open and use an account.

Eroll’s customers now pay bills and send and receive remittances through a mobile money account they access via mobile phones. Eroll’s SuperStore has become something of a bank for islanders using these mobile accounts, allowing them to send and receive cash at the store.

“My husband sends (me) money twice a month, on the 15th and 30th,” Yolanda, a customer, explains.

Hundreds of millions of others like Yolanda are opening new accounts through their phone or at a bank or similar institution. It’s part of a financial revolution that’s sweeping the developing world. Since 2011, 245 million more people in East Asia and the Pacific have become part of the formal financial system by opening an account.

The World Bank has just released our much-anticipated second edition of the <a href="http://www.worldbank.org/globalfindex">Global Findex</a>, the world’s only comprehensive gauge of global progress on “financial inclusion”—how people save, borrow, make payments, and manage risk. The data give us insight into account ownership around the world, and how people are using – or not using – those accounts.

The Global Findex offers good news. As of 2014, 62 percent of adults around the world had access to a bank account. Put another way, the number of people who are “unbanked” has tumbled to 2.0 billion from 2.5 billion in 2011, when the Global Findex was first released.

The Global Findex offers insights into how we can continue this progress by giving more people access to financial services.

The private sector and governments can play a huge role. Some 400 million people, or 20 percent of the unbanked, currently receive wages as well as government transfers such as social benefits in cash.

During our research for the Global Findex, we visited a factory in Bangladesh that paid wages by pulling a giant, cash-filled truck up to the factory and distributing the cash to  workers. If wages from private companies were delivered electronically through an account, 280 million more people would have automatic access to accounts.

Similarly, 160 million people would gain a bank account if all government transfers now paid in cash were moved to electronic payments.

Other opportunities abound. Currently, about 270 million adults send and receive money in cash. An additional 100 million send money via over-the-counter transactions such as through Western Union.

Creating products that facilitate transfers between individuals without the insecurity of cash would connect these people to the formal financial system. Such electronic payments would be especially valuable in Sub-Saharan Africa, where 22 percent of people send or receive funds to family or friends living within the country (what we call "domestic remittances") in cash. Another 12 percent send or receive funds over-the-counter using a money transfer operator like Western Union—which must be withdrawn as cash and held in some other way. Sending domestic remittances through an account offers recipients a safe place to store money for day-to-day purchase or save for longer-term goals.

Of course, just providing access to accounts will not spur everyone to send and receive money through them. Financial service providers must respond to consumer needs. In developing economies, 355 million people with an account continue to send and receive domestic remittances through cash or over-the-counter transactions – even though many of them could use their accounts for this purpose. Existing accounts can be adjusted to lower the cost and increase the convenience of sending and receiving money.

In low- and middle-income economies, more than 1.3 billion account holders continue to pay their utility bills in cash, and more than 500 million account holders pay their children’s school fees in cash. Moving these payments to accounts would both increase convenience for customers and increase account use.

The data point to great opportunities for the financial inclusion community to increase both access and use of financial services. With these steps, the world can significantly accelerate progress toward financial inclusion.

Leora Klapper is a Lead Economist in the Finance and Private Sector Research Team of the Development Research Group at the World Bank. The Global Findex was developed by the Finance and Private Sector Development Team of the Development Research Group at the World Bank, collected by Gallup World Poll, and funded by the Bill and Melinda Gates Foundation.

Have you read?

<a href="http://cfi-blog.org/2015/04/22/financial-inclusion-by-2020-it-depends/">Financial Inclusion by 2020? It Depends</a>

<a href="http://cfi-blog.org/2012/11/16/measuring-financial-inclusion-the-basic-set-solution/">Measuring Financial Inclusion: The 'Basic Set' Solution</a>

<a href="http://cfi-blog.org/2012/12/14/announcing-the-launch-of-the-global-financial-inclusion-global-findex-microdata/">Announcing the Launch of the Global Financial Inclusion (Global Findex) Microdata</a>

Global Findex Offers Next Steps for How to Give People Bank Accounts