Danielle Piskadlo

Mark Napier

Lizzy Bolze

Gloria Grandolini

Mozambique

Nigeria

Sub-Saharan Africa

Zambia

Congo, Dem. Rep.

Uganda

Nepal

Kenya

South Sudan

Morocco

Challenges and Crises

Enabling Environment

Financial Service Providers

Governance

Microfinance

Microfinance Institutions

Policy, Regulation and Government Initiatives

Risk Management

Agent Banking

Interest Rates

Consumer Protection

Financial Capability

Financial Technology

Blog Post

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

<img class=" wp-image-25789 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/30784872334_b499dfc281_m.jpg" alt="30784872334_b499dfc281_m" width="88" height="109" />The following is part of a <a href="https://cfi-blog.org/tag/abf-blog-series/">blog series</a> spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> program.

In recent years, some African countries have experienced slower economic growth and less stability in their currencies. This deterioration in macroeconomic conditions has presented challenges for financial service providers (FSPs) seeking to serve the base of the pyramid and improve financial inclusion. Some ways macroeconomic conditions impact FSPs include:
<ul>
 	<li>Higher operational expenses (e.g., imported IT equipment and software; office leases and technical services invoiced in foreign currency)</li>
 	<li>Increase in non-performing loans as small businesses have had fewer growth opportunities</li>
 	<li>Higher cost of funds (both deposits and debt)</li>
 	<li>Reduced access to debt from international and local providers</li>
 	<li>Decrease in revenue or tighter margins</li>
</ul>
We're talking to <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> (ABF) alumni to share their experiences dealing with deteriorating macroeconomic conditions.

ABF alumnus Deji Fisho, Board Member of Fortis Microfinance Bank in Nigeria, provides insights into the implications for FSPs on the 2016 decision by the Central Bank of Nigeria to allow the exchange rate for the Naira to be market driven.

It affects a microfinance bank’s exposure to dollar loans. When the currency devalues, MFIs have to spend three times more Naira to keep money in dollars. But with the oil market crash, there weren’t even enough dollars coming in for repayments, so people have to go outside the bank to the black market to get dollars. In a currency devaluation situation like this, MFIs won’t have money to lend. The bigger banks borrow from the government and the smaller banks borrow from the bigger banks. So there is no trickle down to MFIs if the larger banks don’t have the cash.

Learn more in <a title="Deji_Fisho_Fortis MF Bank" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/deji_fisho_fortis-mf-bank.pdf">Deji's full interview</a>.

ABF Fellow Nkosilathi Moyo, CEO of VisionFund in Zambia, comments on how currency devaluations impact clients:

Some of our clients are traders, so they buy goods from Democratic Republic of Congo, South Africa and Tanzania. Devaluation meant that our clients had limited foreign currency to meet their business needs, resulting in default.

After the fluctuations, we revised our risk appetite statement to ensure that it is aligned with prevailing market conditions. For instance, the board made a decision that we should not contract any foreign currency denominated loans. Additionally, we reviewed our risk concentration to ensure we do not have too much focus on any one region or industry. For example, we are shifting some of our focus away from traders in the mine areas to smallholder farmers.

Read more in <a title="Nkosilathi _Moyo_VisionFund_Final" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/nkosilathi-_moyo_visionfund_final.pdf">Nkosilathi's full interview</a>.

Regulators can sometimes respond to macroeconomic problems by imposing regulations designed to keep risks out of the financial sector. One response is to impose higher minimum capital requirements or higher reserve requirements. These may sometimes be imposed directly after a collapse of a similar type of financial entity due to a sudden bank run. Such restrictions can be debilitating for financial institutions, especially when they are imposed suddenly. Although meant to protect depositors, this type of regulation can push smaller FSPs out of the market.

In 2017, Mozambique recently faced challenges arising from multiple factors: political tensions and violent clashes, a debt scandal that resulted in the suspension of aid from key donors and endemic corruption. This affected macroeconomic variables, with a significant currency devaluation in 2016 and high inflation (15 percent) in 2017. These tough macroeconomic conditions led regulators to impose a higher minimum capital requirement on financial institutions. ABF Fellow Titos Macie, Socremo Board Chair, discusses the impact of that increase on the institution.

The deteriorating macroeconomic fundamentals, along with the non-performance of two major banks (one liquidated and one placed under the central bank administration), caused the central bank to increase minimum capital requirements. Initially, the central bank had indicated that the new capitalization requirements would be 500 million meticais, an increase from MZM 70 million, so the board made plans to meet that requirement within three years by not paying out shareholder dividends [and using] share premium and retained earnings to capitalize the bank. When the official decree was actually issued by the central bank, the capitalization requirement was much higher: MZM 1.7 billion (US $26 million). Facing this requirement, the board had little room for maneuver. It took a decision to downgrade Socremo from a full commercial banking license to a micro bank license. Socremo can still do almost all financial services, except for forex business.

<a title="Titos_Macie_Socremo" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/titos_macie_socremo.pdf">Titos' full interview</a> includes a discussion of the impact of currency devaluation on its clients. Accion discusses its recent investment in Socremo <a href="http://blogs.accion.org/features/plan-bring-small-businesses-in-mozambique-support/">here</a>.

Titos sums up how many FSPs operating in challenging macroeconomic and regulatory environments feel: We are surviving and looking at a better future.

CFI is currently recruiting fellows for the next cohort of the <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship program</a>. If you or someone you know is a board member or executive at an Africa-based MFI or financial service provider, we recommend considering this opportunity.

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Dialogue With Africa Board Fellows: Navigating Challenging Macroeconomic Environments

&gt; Posted by Mark Napier, Director, FSD Africa

<a href="http://www.fsdafrica.org/knowledge-hub/blog/harbingers-of-doom-bank-failures-in-africa-how-to-interpret-these/"><img class="alignright wp-image-22527" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/12/fsd-africa.png" width="320" height="119" /></a>The following post was <a href="http://www.fsdafrica.org/knowledge-hub/blog/harbingers-of-doom-bank-failures-in-africa-how-to-interpret-these/">originally published</a> on the FSD Africa blog.

Yesterday, Zambia’s central bank announced it had taken over a commercial bank, Intermarket, after the latter failed to come up with the capital it needed to satisfy new minimum capital requirements. Three weeks ago, a Mozambican bank – Nosso Banco – had its licence cancelled, less than two months after another Mozambican bank, Moza Banco, was placed under emergency administration.

At the end of October, the Bank of Tanzania stepped in to replace the management at Twiga Bancorp, a government-owned financial institution which was reported to have negative capital of TSh21 billion. A week before that, just over the border in Uganda, Crane Bank, with its estimated 500,000 customers, was taken over by the central bank, having become “seriously undercapitalised”. In DR Congo, the long-running saga of BIAC, the country’s third-largest bank, continued in 2016, forced to limit cash withdrawals after the termination of a credit line from the central bank. And in Kenya, Chase Bank collapsed in April, barely six months after the failure of Imperial.

How are we to interpret this? It seems that 2016 is the year in which latent fragility in Africa’s banking sectors is being laid bare. After years in which observers have favourably contrasted the relative stability of African banking with the financial sector chaos in Europe and the US, it seems that three critical perils – mismanagement, political interference, and economic woes – are conspiring to transform the landscape of African banking into a decidedly treacherous place for depositors and investors.

We have had remarkably few bank failures in Africa in recent years and yet this sudden uptick in stories like Crane and Chase, against a backdrop of economic challenges in many places, raises the question as to whether there is worse to come.

Mismanagement and/or political interference have been at the root of most bank collapses over the past few decades. Martin Brownbridge’s grimly fascinating <a href="http://onlinelibrary.wiley.com/doi/10.1111/1467-7679.00057/abstract">analysis</a> on this subject from 1998 concluded that “moral hazard, with the adoption of high-risk lending strategies, in some cases involving insider lending” was behind most of the bank collapses in the 1990s. This certainly resonates today. Catastrophic lapses in governance rather than economic malaise are alleged to be behind the recent Kenyan bank failures (although their shareholders and directors vigorously refute this) – but how else can you explain why a small number of banks fail when the sector as a whole has been returning well over 20 percent on its equity for the past several years?

There are some excellent programmes like <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/abf" target="_blank">Accion’s Africa Board Fellowship Program</a>, which aims to strengthen capacity at financial institutions because their promoters understand that weak governance undermines trust in the financial system and is therefore very bad for financial inclusion. But it is one thing to know what you’re supposed to do as a bank board director – quite another to actually do it.

Each bank failure seems to have its own special story – and we derive comfort from this. It is somehow reassuring to think that that might be the case because the prospect of a system-wide failure is so awful.

And each country context has particular features that impinge on the stability of the financial system. There are deep concerns in Kenya, for example, that the recent imposition of interest rate caps is going to result in a very messy period of bank failures and/or consolidation.

But are there common patterns that we should be taking note of? Is there a system-wide issue that we should be facing up to?

To read the second half of this post, head to <a href="http://www.fsdafrica.org/knowledge-hub/blog/harbingers-of-doom-bank-failures-in-africa-how-to-interpret-these/">the FSD Africa blog</a>.

Have you read?

<a href="https://cfi-blog.org/2016/04/25/is-weak-governance-to-blame-for-bank-collapses-in-kenya/">Is Weak Governance to Blame for Bank Collapses in Kenya?</a>

<a href="https://cfi-blog.org/2016/04/07/what-can-we-learn-from-governance-success-stories-in-mena/">What Can We Learn from Governance Success Stories in MENA?</a>

<a href="https://cfi-blog.org/2015/07/23/lessons-learned-from-abfs-convening-of-microfinance-leaders-in-cape-town/">Lessons Learned from ABF's Convening of Microfinance Leaders in Cape Town</a>

Harbingers of Doom? Bank Failures in Africa – How to Interpret These

[caption id="attachment_22232" align="alignright" width="330"]<img class="wp-image-22232" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/10-21-pic-11.jpg" width="330" height="228" /> Financial Sector Deepening Mozambique event[/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.

It's Friday, which means that Financial Inclusion Week 2016 is almost a wrap. We hope you've enjoyed all the festivities and happenings as much as we have. But before you sign off for the weekend and close the book on this year's global week to advance financial inclusion, check out some of the activities from yesterday, day four, as well as the handful of activities that remain. And if you're on Twitter, be sure to join our final #FinclusionWeek discussions on keeping clients first in fintech!

What’s Happening

Financial Sector Deepening Mozambique held an event focused on investment opportunities to boost small and medium-sized enterprises (SMEs) in Mozambique. The conversation was fueled by new research from the organization, and served to launch a new publication, Private Equity Investment Opportunities in Mozambican SMEs – Agribusiness Edition. The event brought together a variety of stakeholders to explore the role that private equity can play in empowering agricultural enterprises in Mozambique. Stay tuned for the release of the report.

In the <a href="http://digitalfrontiersinstitute.org/the-institute/">Digital Frontiers Institute’s</a> (DFI) second webinar for Financial Inclusion Week 2016, DFI’s David Porteus and Mackenzie Wallace, formerly of the Consumer Financial Protection Bureau (<a href="http://www.consumerfinance.gov/">CFPB</a>) and currently policy advisor for digital finance at USAID, discussed the emergence of regtech and its ability to amplify the voice of the consumer, highlighting the work of the CFPB.

[caption id="attachment_22242" align="alignright" width="275"]<img class="wp-image-22242" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/good-good.jpg" width="275" height="367" /> Good Shephard Microfinance training[/caption]

The CFPB was created in 2011 to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace. During its time the CFPB has handled nearly 1 million complaints from consumers using a distinctive product suite, providing individual assistance to consumers (for example, ensuring they receive a response from companies regarding their complaints within 15 days) and to companies. The CFPB’s public complaint database has become a powerful tool for sharing the best practices of financial service providers and providing incentives for companies to respond to consumers and improve their practices -- all while giving consumers the information they need to feel empowered and comfortable in the financial technologies that they use. Additionally, the CFPB has integrated elements of fintech to ensure the consumers' right to privacy. For example, the CFPB employs AI to automatically scrub-out personally identifiable information [PII] in the complaint database) to ensure the consumers’ right to privacy. Regtech is certainly a global movement that can help us to achieve regulatory and other goals and can be replicated in developing and emerging market contexts.

Good Shephard Microfinance in Australia hosted an annual training and networking event for their microfinance workers from across the state of Queensland. The theme for the training this year was “putting the client first”, and the participants, mostly front-line staff, focused on issues of client protection.

IFMR LEAD hosted an internal roundtable assessing how to keep clients first in their own work. The roundtable focused specifically on evidence-based customer-centricity. Participants examined the draw to informal financial services, exploring the lessons that can be learned from moneylenders and informal financiers. Ultimately the discussions focused on how to empower customers, and step beyond simply including them in the formal financial sector.

[caption id="attachment_22244" align="aligncenter" width="615"]<img class="wp-image-22244" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/10-21-pic-31.jpg" width="615" height="402" /> IFMR roundtable[/caption]

In Nepal, Sakchyam Access to Finance Program brought together partner bank staff and their branchless banking agents to discuss how to keep clients at the center of technological initiatives. Participants identified a number of challenges to protecting and empowering clients in their work. These included verifying and keeping clients’ data safe, offering a variety of products and services demanded by clients, effectively training agents and clients to properly understand products, and monitoring agents’ behavior. One key element identified for addressing these challenges is effectively gathering and incorporating client feedback, and therefore an outcome of the roundtable was the decision that client feedback be used to influence the bank agent training program for the 453 branchless banking access points.

Online Conversation

European Microfinance Platform - <a href="http://www.e-mfp.eu/blog/preventing-client-over-indebtedness-cambodia">Preventing Client Overindebtedness in Cambodia</a>
Daniel Rozas, a senior microfinance expert at the European Microfinance Platform, offers context on the Cambodian microfinance market and its current client overindebtedness concerns. He outlines the steps being taken to address these concerns, which include MFIs creating a set of lender guidelines that will provide a self-regulatory framework, and enlisting the Credit Bureau of Cambodia (CBC) to ensure that MFI commitments are independently monitored.

Premasis Mukherjee of the International Finance Corporation - <a href="https://www.linkedin.com/pulse/financial-inclusion-what-demand-says-supply-premasis-mukherjee?deepLinkCommentId=6194785159502495744&amp;anchorTime=1476951875577&amp;trk=hb_ntf_MEGAPHONE_ARTICLE_COMMENT">Financial Inclusion: What Demand Says to Supply</a>
Premasis Mukherjee examines the financial inclusion supply versus demand debate, and considers the viewpoint that financial inclusion is an agenda to include formal financial services as part of people's existing financial lives. He offers examples of how formal financial services can be a mismatch for the financial needs of the unbanked and gives three main hurdles that banks and financial services providers must cross.

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 4

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

&gt; Posted by Lizzy Bolze, CFI Analyst

[caption id="attachment_21293" align="aligncenter" width="490"]<img class="wp-image-21293 size-full" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/05/abf_photo_1.jpg" width="490" height="326" /> Africa Board Fellows at the HBS-Accion Program on Strategic Leadership in Inclusive Finance. Pictured left to right: Felix Achibiri, Fortis Microfinance Bank, Nigeria; Titos Macie, Socremo, Mozambique; Elijah Chol, South Sudan Microfinance Development Facility; Charles Njuguna, Faulu Microfinance Bank, Kenya[/caption]

It seems almost commonplace for financial institutions across sub-Saharan Africa to be confronted with currency devaluation, interest rate caps, political conflicts, increasing capital requirements, and disruptive technologies – not to mention the impact of wars, disease, climate change, and natural disasters. With all these complications and risks, I am left to wonder how can boards of financial institutions in Africa focus on anything other than constantly extinguishing crises?

In March, alumni of the <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> (ABF) attended the <a href="http://www.centerforfinancialinclusion.org/collaborators-a-sponsors/harvard-business-school-accion">HBS-Accion Program on Strategic Leadership in Inclusive Finance</a>. During the weeklong executive education program, CFI staff had the opportunity to sit down with the four fellows pictured above to discuss some of the challenges they are facing.

A common challenge was the hardship caused by currency devaluations. MFIs often receive loans in U.S. dollars, and so as the value of local currency diminishes, squaring their balance sheets becomes increasingly tough. Elijah Chol of South Sudan reported that the Minister for Finance and Economic Planning announced a <a href="https://www.linkedin.com/pulse/how-currency-devaluation-affecting-microfinance-industry-chol-elijah">500 percent devaluation</a> of the South Sudanese Pound last December. At the South Sudan Microfinance Development Facility’s annual meeting a day later, the board was unable to take immediate action because the devaluation was so unexpected. Though prices in South Sudan’s market have since improved slightly, the impact of such extreme devaluation has posed great challenges across the microfinance sector.

Titos Macie and Socremo Bank are encountering the same problem in Mozambique. The devaluation of Mozambique’s currency happened very quickly and affected the country’s ability to pay for its imported commodities. For a country with an economy that relies on importing major commodities, the lack of money has significantly decreased the price of Mozambique’s key exports of coal, aluminum, and fish.

Recently, sub-Saharan Africa’s microfinance sector has also faced interest rate caps – most recently a proposal to install caps in Nigeria. In a <a href="https://cfi-blog.org/2016/03/30/interest-rate-caps-in-nigeria-may-not-be-good-for-clients/">CFI blog post</a> the Smart Campaign’s Nadia van de Walle notes: “Interest rate ceilings are typically introduced as a government response to concerns about predatory lending, when consumers are struggling to afford high-priced loans, and particularly in markets where disclosure and transparency are poor and financial literacy is low.” Felix Achibiri of Fortis Microfinance Bank in Nigeria is concerned. If the interest rate ceilings are set too low, <a href="http://www.cgap.org/blog/worrying-trend-interest-rate-caps-africa">the following challenges</a> might occur: financial service providers having difficulties recovering costs, slower growth, reduced service delivery in rural areas and other more costly markets, less transparency about the total cost of loans, and in some cases, institutions exiting the lower end market entirely.

When we met with him in March, Titos Macie mentioned how new bank capitalization requirements can abruptly arrive and require quick action. Macie had recently received word from regulators that Socremo had a very short time to comply with new bank capital requirements. His board was in the process of communicating with regulators to explain when and how they would meet this unexpected requirement.

Implementing a plan for accelerated growth is another hot topic for MFI board members in Africa. Charles Njuguna shared how his institution, Faulu Microfinance Bank in Kenya, recently implemented internal controls in preparation for an anticipated major growth period. The Africa Board Fellowship program aided his ability to support healthy growth, Njuguna remarked. His ABF program advisor facilitated an opportunity for him to visit three MFIs in Latin America and deepen his focus on customer centricity. Njuguna noted that the ABF experience spurred his institution to engage with clients by instituting more in-person meetings, a measure that has assisted him in managing sustainable growth.

If boards are to be proactive in facing moments of crisis, they need to have conversations about issues like this. When we talked with the ABF fellows, they expressed the value of the ABF program in building a network of peers to discuss the challenges and opportunities they are facing and to learn from the mistakes and successes of others.

For more on the Africa Board Fellowship program, <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/abf">click here</a>.

Have you read?

<a href="https://cfi-blog.org/2014/12/19/deepening-microfinance-governance-in-africa-through-dialogue-and-exchange/">Deepening Microfinance Governance in Africa Through Dialogue and Exchange</a>

<a href="https://cfi-blog.org/2016/04/25/is-weak-governance-to-blame-for-bank-collapses-in-kenya/">Is Weak Governance to Blame for Bank Collapses in Kenya?</a>

<a href="https://cfi-blog.org/2015/07/23/lessons-learned-from-abfs-convening-of-microfinance-leaders-in-cape-town/">Lessons Learned from ABF's Convening of Microfinance Leaders in Cape Town</a>

Views from the Top: Africa Board Fellows on the Challenges of Inclusive Finance

&gt; Posted by Gloria Grandolini, Senior Director, Finance and Markets Global Practice, the World Bank Group

<a href="http://www.fi2020week.org/">FI2020 Week</a><a href="http://www.fi2020week.org/"><img class="alignright wp-image-19409" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/fi2020-week-logo.png" alt="" width="350" height="141" /></a> is a global conversation on the key actions needed to advance financial inclusion, grounded in the findings of the recently launched FI2020 Progress Report. From November 2-6, 2015, stakeholders around the world are participating in more than 30 events and sharing their voices over social media, with #FI2020.

Despite <a href="http://www.worldbank.org/en/programs/globalfindex">significant progress</a> and the increased technical and financial resources devoted to financial inclusion, 2 billion people worldwide still lack access to regulated financial services.

As I read the <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a> and cast my vote on how the world is doing on the five aspects of financial inclusion the FI2020 report covers, I’m reminded of the recent <a href="http://www.afi-global.org/global-policy-forum/2015">Global Policy Forum of the Alliance for Financial Inclusion</a> (AFI), where I had rich discussions with AFI members regarding how to meet challenges to expanding access to financial services.

The successes and obstacles which AFI members shared echo many of the points identified in the FI2020 Progress report as shaping the future of financial inclusion.

These hurdles can be distilled into five main challenges:

Financial literacy and capability. Countries must develop financial capability programs to ensure people can make sound financial decisions, select financial products which best fit their needs, and know how to use related channels, such as ATMs or mobile banking. Recent World Bank Group Financial Capability Surveys in <a href="http://documents.worldbank.org/curated/en/2014/12/23974005/enhancing-financial-capability-inclusion-morocco-demand-side-assessment">Morocco</a> and <a href="http://documents.worldbank.org/curated/en/2014/08/20151823/enhancing-financial-capability-inclusion-mozambique-demand-side-assessment">Mozambique</a>, and studies on remittance services among migrants in France and Italy, show that a lack of awareness prevents people from using suitable financial products and services. Behavioral insights are leading to more effective – and lower cost – financial literacy efforts, which can improve uptake of new accounts and increase savings, including through tailored SMS texts.

Valid identification documents. Providing people with a valid ID is essential to enabling access to financial services. Without valid and accessible IDs, it’s not possible to shift large payment flows like social benefit transfers and wages into transaction accounts. The process to obtain a valid proof of ID and to open an account needs to be streamlined. In countries where ID documents are not sufficiently robust and easy to authenticate as required by Know-Our-Customer requirements, financial inclusion efforts haven’t made as many inroads.

Financial consumer protection and regulation. For mobile money and other e-money products to safely expand financial access, strengthened regulatory frameworks and oversight are needed. <a href="http://documents.worldbank.org/curated/en/2014/06/20272197/digital-identity-toolkit-guide-stakeholders-africa">Secure and reliable platforms</a> to protect data privacy and funds can promote confidence in using electronic payments. It’s also important to treat new customers fairly, adequately disclose key product information, and establish safety and reliability standards to allow customers to make informed choices about products they select.

<a href="https://www.flickr.com/photos/10816734@N03/2689582039/"><img class="alignright wp-image-19913" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/2689582039_fcfd86ab5f_z.jpg" alt="" width="350" height="224" /></a>Women and the rural poor. <a href="http://www.worldbank.org/en/programs/globalfindex">Women in developing countries are 20 percent less</a> likely than men to have an account and 17 percent less likely to have borrowed from a formal financial institution in the past year. Financial institutions need to adapt financial products to suit <a href="http://www.theguardian.com/visa-partner-zone/2015/jun/11/world-bank-group-unbanked-women-global-findex">women’s needs</a>. This effort can range from providing women with valid proof of ID and enabling them to independently open an account, to enhancing their ability to make basic financial decisions. The <a href="http://documents.worldbank.org/curated/en/2014/12/23974005/enhancing-financial-capability-inclusion-morocco-demand-side-assessment">2014 World Bank Group Financial Capability Survey in Morocco</a> showed that women and people living in rural areas score significantly lower on various financial capability metrics (budgeting, coping with unforeseen events, etc.) compared to men and the urban population. Overall, they tend to be less educated or less likely to be formally employed.

Usefulness. Opening a transaction account is the first step, not the end goal. Transaction accounts must be useful and serve as a gateway to other financial products such as savings, credit, and insurance. Some <a href="http://www.worldbank.org/en/programs/globalfindex">355 million adults</a> in developing countries who report having an account still remit money in cash or over-the-counter. Governments and the private sector can play a key role in accelerating usage by depositing wages into accounts versus paying cash. For example, India’s <a href="http://www.pmjdy.gov.in/">Pradhan Mantri Jan-Dhan Yojana</a> (PMJDY) initiative is shifting benefits, including for the LGP-fuel subsidies, into transaction accounts on a large scale, and has reportedly opened more than 180 million accounts.

In the last two years, the World Bank Group has committed more than <a href="http://www.worldbank.org/en/news/infographic/2015/09/03/getting-to-universal-financial-access-2020">$8 billion in financial support</a> for expanding financial access and inclusion, and for developing enabling regulatory frameworks and financial infrastructure.

This past spring, the <a href="http://www.worldbank.org/en/topic/financialinclusion/brief/ufa2020-building-coalition-of-partners">World Bank Group and a number of public and private-sector stakeholders</a> committed to reaching the remaining unbanked people in the next five years through the <a href="http://www.worldbank.org/en/topic/financialinclusion/brief/achieving-universal-financial-access-by-2020">Universal Financial Access 2020 (UFA2020) initiative.</a> The World Bank Group support alone is projected to enable 1 billion adults to gain access to a transaction account. The UFA2020 initiative focuses on 25 countries where 73 percent of the world’s unbanked population lives. However, we are eager to work with all countries where we can add value as a technical partner or provide critical financial support.

At the global level, the World Bank Group and the <a href="https://www.bis.org/cpmi/">Committee of Payments and Market Infrastructures</a> (CPMI) of the Bank for International Settlements (BIS) have analyzed these challenges in the <a href="https://consultations.worldbank.org/consultation/payment-aspects-financial-inclusion">consultative report on Payment Aspects of Financial Inclusion</a>, which is open for comments until December 7, 2015.

The report examines what elements of retail payments are critical to financial inclusion and how improving the payments infrastructure and services could accelerate access to and use of transaction accounts.

Once finalized, the report will suggest key actions countries should take to advance access to transaction accounts.

These actions will be crucial to making financial inclusion a reality.

<a href="http://www.worldbank.org/en/about/people/gloria-m-grandolini">Gloria Grandolini</a> is senior director of the Finance and Markets Global Practice at the World Bank Group. Follow @WBG_Finance on Twitter and use #FinAccess2020 to read about the World Bank Group’s work on <a href="http://www.worldbank.org/en/topic/financialinclusion">Financial Inclusion</a>.

Image credit: <a href="https://www.flickr.com/photos/10816734@N03/2689582039/">Curt Carnemark / World Bank</a>

Have you read?

<a href="http://cfi-blog.org/2015/10/01/rating-progress-toward-financial-inclusion-on-a-scale-of-1-to-10/">Rating Progress toward Financial Inclusion on a Scale of 1 to 10</a>

<a href="http://cfi-blog.org/2015/10/08/why-we-gave-consumer-protection-a-5/">Why We Gave Consumer Protection a 5</a>

<a href="http://cfi-blog.org/2015/10/07/addressing-customer-needs-off-to-the-data-mines/">Addressing Customer Needs? Off to the Data Mines</a>

Tackling Five Challenges to Accelerate Financial Inclusion