As countries around the world grapple with the economic impact of the COVID pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income, mostly via digital payments.

Those countries with well-developed social protection systems, payments infrastructure, and wide access to digital financial services have fared much better in getting these payments out quickly, but even they have struggled to rapidly open accounts for their more vulnerable populations. Many of the people at risk fall outside the usual government welfare rolls and risk being overlooked -- especially informal workers, MSME owners/operators, and those working in hard-hit industries like tourism.

The COVID crisis forced policymakers to find innovative ways to deliver rapid support payments to those most in need. A critical aspect of getting this emergency aid out has been the ability to quickly identify and onboard eligible recipients who don’t already have transaction accounts and distribute the payments as soon as possible.
<blockquote class="pullquote--right">What are governments doing to enable rapid payments to those without existing accounts?</blockquote>
CFI’s latest <a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">policy brief</a>, part of our partnership with Mastercard Center for Inclusive Growth and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), explores what governments are doing to enable rapid payments to those without existing accounts. The paper reviews three types of measures being taken to speed up payment distribution. Not surprisingly, the common theme is the ability and willingness of policymakers to be nimble and innovative. Below are a few examples, organized by type of measure:
<h2>1. Rapid Identification of Eligible Recipients</h2>
To quickly determine who’s eligible for COVID support payments, governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.
<h3>Current Beneficiary and Employment Rolls</h3>
<strong>Bangladesh Bank</strong> allowed government disbursement program information to be used to open permanent accounts on behalf of customers. The central bank also permitted the creation of accounts for ready-made garment (RMG) workers based on their employment record, given the low rates of digital IDs or other means to confirm their identity among the predominantly female group.
<h3>Voter Rolls</h3>
The Government of <strong>Togo</strong> established the Novissi cash transfer scheme, to provide support during the pandemic. Because Togo does not have a strong national ID system, they took advantage of a recent voter registration campaign to verify the identity of eligible recipients. <strong>Timor-Leste</strong> was also able to take advantage of its voter registration system, which had high sign-up rates after a recent election.
<h3>Mobile SIM Data</h3>
<strong>Zimbabwe</strong> took advantage of its <a href="https://theconversation.com/zimbabwes-restrictions-on-mobile-money-transfers-are-a-blow-to-financial-inclusion-147109" target="_blank" rel="noopener noreferrer">90 percent mobile money penetration</a> to make payments directly to the e-wallets of all phone numbers mapped to areas targeted for support payments, while <strong>Nigeria</strong> partnered with mobile network operators to <a href="https://blogs.imf.org/2020/06/22/youve-got-money-mobile-payments-help-people-during-the-pandemic/" target="_blank" rel="noopener noreferrer">identify vulnerable informal workers in urban areas through airtime purchase patterns</a>.
<blockquote>Governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.</blockquote>
<h2>2. Simplified Due Diligence for Rapid Account Opening</h2>
During COVID-19, policymakers and FSPs, in cooperation with regulators, have had to apply simplified customer due diligence (SDD), to rapidly open accounts for newly vulnerable recipients. Some of the key ways they’ve done this include use of mobile SIM registration data, employment records and deferred KYC measures.
<h3>Mobile SIM as ID</h3>
The <strong>Bank of Ghana</strong> expanded its tiered KYC to allow mobile phone subscribers to reuse their SIM card registration to open the lowest tier of e-money accounts, called <a href="https://www.bog.gov.gh/wp-content/uploads/2020/03/MPC-Press-Release-March-2020-3.pdf" target="_blank" rel="noopener noreferrer">Minimum KYC Accounts</a>. In <strong>Egypt</strong>, the central bank’s eKYC program allows customers to <a href="https://www.fintechfutures.com/2020/01/central-bank-of-egypt-pilots-ekyc-solution-for-financial-inclusion/" target="_blank" rel="noopener noreferrer">open bank accounts electronically</a>, by submitting their national ID number along with their mobile phone number to the telecommunications authority, which then confirms to the bank the information match for the mobile SIM registration.
<h3>Remote and/or Deferred CDD</h3>
In <strong>Pakistan</strong>, the government suspended the need for biometric confirmation for its Ehsaas Emergency Cash transfers, opening a <a href="https://www.pass.gov.pk/Detailf90ce1f7-083a-4d85-b3e8-60f75ba0d788" target="_blank" rel="noopener noreferrer">web portal for residents to handle applications and resolve any issues</a>, while the Central Bank of West African States (BCEAO) allowed a three-month window following the COVID crisis for in-person due diligence verification for basic accounts.
<h2>3. Use of Alternative Channels for Delivering Payments</h2>
Several jurisdictions have looked to new channels to quickly onboard beneficiaries and distribute social transfers, from mobile apps and websites to postal networks and non-bank financial institutions (NBFIs).
<h3>Apps and Websites</h3>
<strong>Brazil</strong>’s social assistance program aimed at informal workers, the coronavoucher, is accessible through a free mobile app the bank created specifically for this purpose (those without a cellphone could apply via this <a href="http://auxilio.caixa.gov.br/" target="_blank" rel="noopener noreferrer">website</a>).
<h3>Post Offices</h3>
In <strong>Madagascar</strong>, the government’s COVID cash transfer program, called Tosika Fomena, is made via the Madagascar postal system’s (Paositra Malagasy) cash transfer service called Paositra Money, and <a href="http://www.mptdn.gov.mg/?p=1974" target="_blank" rel="noopener noreferrer">can be retrieved</a> at any PO upon <a href="https://fr.allafrica.com/stories/202005261023.html" target="_blank" rel="noopener noreferrer">presentation of a national ID</a>. The <strong>South African Post Office</strong> (SAPO) <a href="https://www.techfinancials.co.za/2020/05/04/south-africa-post-office-unveils-cashless-atm-for-sassa-social-grants/" target="_blank" rel="noopener noreferrer">rolled out 10,000 cashless ATMS in rural shops</a> to allow users to access payments without having to travel to urban centers.

In <strong>India</strong>, the post office enabled people to get their funds delivered to their homes during the COVID crisis, whether they have a postal bank account or not. By downloading the India Post Payment Bank app, the user is able to withdraw funds from any bank account and <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/india-post-delivers-rs-412-cr-cash-in-doorstep-banking-revolution/articleshow/75369897.cms" target="_blank" rel="noopener noreferrer">have it delivered</a> either to the post office branch or to their home.
<h3>NBFIs</h3>
In <strong>Bangladesh</strong>, BRAC turned to the use of the country’s most prominent mobile money wallet, bKash, as a means of delivering aid to their clients. They opened mobile wallet accounts for <a href="http://blog.brac.net/cash-transfers-to-support-families-during-the-covid-19-pandemic/" target="_blank" rel="noopener noreferrer">all the clients who had their own mobile numbers</a> and, for those that didn’t, especially the women, they allowed the use of a trusted family member’s wallet.

In <strong>Ecuador</strong>, the government <a href="http://pubdocs.worldbank.org/en/129771593464547099/World-Bank-G2Px-COVID19-Ecuador-Brief.pdf" target="_blank" rel="noopener noreferrer">implemented a social transfer program</a> aimed at vulnerable households, utilizing cooperatives as well as banks to distribute the funds. Unlike cooperatives in most countries, many of Ecuador’s cooperatives are connected to the national payment system.
<h2>The Path Forward</h2>
While countries have made impressive progress over the last decade in broadening the reach of digital financial services, the COVID pandemic has magnified the remaining gaps and weaknesses in helping the most vulnerable. As governments continue with national infrastructure programs, especially around ID and payments, we offer the following crucial considerations for national governments:
<h3><strong>Value of Universal Access to Basic Accounts Opened Under SDD</strong></h3>
This pandemic has demonstrated the potential value of universal access to basic accounts that can be opened under SDD (simplified customer due diligence) measures and at no initial cost to the customer. Should all members of society, as a matter of course, be able to open accounts – immediately and remotely -- for receipt of government emergency payments?
<h3>Importance of Whole of Government Communication and Policy Responses</h3>
Like many aspects of the COVID crisis, communications have been a critical aspect of program success and/or failure. In some countries, for example, unclear messaging on how to apply for or access funds has led to overcrowding at government offices or state banks, forcing those offices to close and leading to public turmoil.
<h3>Clear, Ongoing Dialogue and Interactive Decision-making</h3>
Clear, ongoing dialogue and interactive decision-making between government ministries, regulators and FSPs -- especially payment service providers -- has proven vital to ensuring quick action on rapid onboarding programs. Governments already have established emergency protocols with telecommunications and power companies. How can governments put in place formal emergency mechanisms to engage all relevant ministries and private-sector actors, especially payment service providers, for any future crisis situations?
<h3>How can countries put in place mechanisms to address identification and verification for future crises?</h3>
One approach is to loosen impediments to the sharing of various government beneficiary databases, but there is much to understand around data privacy and security and it is unclear whether this approach is the answer. Given the likelihood of future crises, it is prudent that governments begin the longer-term dialogue and investment needed to address governance of data sharing.
<h3>What are the mechanisms that governments can use to expedite digital infrastructure partnerships with the private sector?</h3>
Where government doesn’t yet have the necessary infrastructure -- including, among others, digital payments, identification, and government databases -- partnerships with industry allow them to leverage existing capabilities and information sharing. The use of mobile SIM registration is a prime example of collaboration to address shortcomings in existing ID infrastructure. Rather than treating each situation as a one-off event, one approach is for governments to institute ongoing cooperation agreements with MNOs and other private/public sector actors to react quickly to events as necessary.
<h3>Governments must consider how they reach beneficiaries that are not digitally connected and may never be.</h3>
The cases in our report highlighted usage of alternative distribution channels through institutions such as post offices and NBFIs. These players already serve low-income people, often via some combination of cash and digital means. Those beneficiaries that only want to deal in cash must continue to be accommodated. But that doesn’t mean that the institutions they use must also deal only in cash. The further that governments can push out the digitization of payments, especially to the “last mile,” the more efficient and expedient the delivery system can be made before it’s transferred back to cash for final delivery.

<a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">Find out more</a> about these policy considerations, and about how countries have innovated and operationalized social payments for the underserved during this difficult time.

Three Ways Governments Expedited Social Payments During COVID

As countries around the world grapple with the economic impact of the COVID-19 pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income of their citizens.

This policy brief explores what national governments are doing to enable rapid payments to those without existing accounts. The swift measures governments took to speed up payments to citizens during the pandemic include:
<ul>
 	<li>Quick identification of eligible recipients</li>
 	<li>Simplification of customer due diligence for rapid account opening</li>
 	<li>Greater use of alternative channels such as mobile apps, post offices, and non-bank financial institutions (NBFIs) such as microfinance providers.</li>
</ul>
Each section of this brief includes country-specific examples and key takeaways. Efforts by 19 countries to facilitate cash transfers, both digital and non-digital, are discussed.

This publication is the second in a <a href="https://www.centerforfinancialinclusion.org/series/policy-responses-to-covid-19-their-impacts-on-low-income-customers">series</a> of policy briefs on COVID-19 economic policy responses and their impact on low-income customers.

Rapid Response for Social Payments During COVID-19

<em><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.</em>

Far from being “extraordinary and rare,” challenging environments are a “normal” part of business for financial service providers (FSPs) targeting low-income populations. We tend to think that external environment challenges are extraordinary events that cannot be predicted or are too varied and diverse to prepare for—and therefore are best confronted as they arise. What do currency devaluations, deteriorating security, political interference or regulatory upheavals have in common? Can we can plan for them all and prepare effective responses in advance? Do responses need to be tailored to each circumstance?

Through the <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellows program</a>, we have reviewed a wide sample of the external threats faced by the boards of FSPs in recent years in Africa and globally: economic fluctuations, currency devaluations, violence and instability, abruptly announced interest rate caps and capital requirements, natural disasters, terrorism—it’s a long and heterogeneous list.

<img class=" size-full wp-image-25776 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/31589334426_3111c44396_z.jpg" alt="31589334426_3111c44396_z" width="640" height="377" />

Despite this diversity, an engaged FSP – led by an active board – can often do quite a bit to shape and influence the operating environment or ready the institution to survive shocks. Preparing for and responding to crises, threats and opportunities is, in fact, a core responsibility of senior executives and board directors. Conversations with Africa Board Fellows demonstrate that boards <em>can</em> prepare by:
<ul>
 	<li>Anticipating and minimizing the likelihood of adverse external developments</li>
 	<li>Reducing the vulnerability of the institution to such shocks</li>
 	<li>Enhancing the resilience (ability to recover) of the institution to the situations it will inevitably face</li>
</ul>
We’ll tackle the first point on anticipating and minimizing shocks here. We’ll cover the last two points in our next post in this <a href="https://cfi-blog.org/tag/abf-blog-series/">series</a>.
<h3>Anticipating Challenges with an Ear to the Ground</h3>
<img class=" wp-image-25790 alignright" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/how-to-anticipate-changes-as-a-board-member.png" alt="how to anticipate changes as a board member" width="196" height="330" />The first step is to anticipate – and hence be prepared to mitigate – challenges. To do this, board directors must keep abreast of new entrants, potential disruptions, and promising opportunities in the marketplace. Directors cannot rely solely on management for this information. Instead, they should develop their own sources to supplement and confirm management’s view, such as by networking with industry observers and analysts–with management’s knowledge, of course. Locally based board members have an advantage in developing and maintaining such networks, which is one reason it is important to recruit qualified local directors. For example, finding and retaining qualified local directors has been a priority for FSSL South Sudan, given the ongoing political disturbances in the country that make it difficult to maintain continuity of leadership.
<p style="text-align: left">Talking frequently with FSP staff and clients is another way board directors can anticipate challenges. Frontline staff are in a position to report on competition, clients and local happenings. And it should go without saying – but always bears repeating – that clients can provide ground-level insight. Clients may reveal such things as their vulnerability to displacement in government raids on the informal sector or the inability to import goods. When ABF fellows from the Ivory Coast conducted client visits, these were some of the specific challenges about which they learned.</p>

<h3>Getting Ahead of Operating Challenges with Active Participation</h3>
While they can never control the external environment, board members can help shape it to some degree through the following:
<ul>
 	<li><strong><em>Create and participate in industry associations; promote and follow codes of conduct</em></strong>. Industry associations establish frameworks for fair practices and client protection and help facilitate self-regulation and compliance with governance and transparency requirements. An active industry association can also work closely with regulators and other government actors to help shape legislation, regulation and perceptions of the industry, which are all key features of the operating environment. Board directors should support and encourage management to devote time to nurturing strong associations – a medium term project – and engage directly with other FSP board directors to make this an industry priority. As one example, Barnabe Francois, CEO of Microcred Ivory Coast, <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/barnabe_francois_microcred.pdf">has been an active member of banking associations</a>, first in Madagascar and subsequently in Ivory Coast.</li>
 	<li><strong><em>Develop relationships with regulators and government officials. </em></strong>To reinforce the efforts of industry associations, FSP management can also cultivate relationships with government officials to advocate and educate them (and the media) on operating environment challenges. Board directors, particularly well-regarded locally-based directors, can greatly enhance the effectiveness of such engagement. Or, like MicroCred Zimbabwe, the FSP can appoint an experienced bank regulator to the board (perhaps, a retired official or someone who worked in another country) who understands how regulatory bodies work and can connect on a peer-to-peer basis with regulators.</li>
 	<li><strong><em>Build clients’ financial capability</em></strong>. An important aspect of an FSP’s risk management responsibilities is ensuring that clients use financial services responsibly and productively. Misunderstanding how financial services work can lead to multiple borrowing, or mismatched cash flows which often threaten clients’ ability to repay their loans. To ensure good value to clients and the long-term viability of the FSP, board directors should encourage management to include initiatives in strategic plans to help clients build their financial skills and practice good habits.</li>
</ul>
<ol>
 	<li style="list-style-type: none"></li>
</ol>
Such efforts can, over the medium term, reduce the likelihood that an FSP or the entire sector will face certain types of challenges and will help position providers to take advantage of new opportunities.

<em>Stay tuned for the next blog in this series</em><em>, which will highlight reducing an FSP’s vulnerability to external shocks, as well as enhancing resilience.</em>
<h4><strong><i><span style="margin: 0;font-family: 'Calibri', sans-serif"><span style="color: #000000">CFI is currently recruiting fellows for the next cohort of the </span><a href="https://content.centerforfinancialinclusion.org/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship Program</a><span style="color: #000000">. 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.</span></span></i></strong></h4>
&nbsp;

&nbsp;

Navigating Challenges Is What Boards Are All About – Part 1: Anticipating Challenges

Why is it that <a href="http://datatopics.worldbank.org/financialinclusion/">80 percent</a> of bank account holders in Madagascar only use their accounts once a month or less?

What makes the parents of a child requiring unforeseen medical treatment in the DRC choose to approach their <a href="http://cenfri.org/blog/ive-got-your-back">mutualitée</a> (a local form of informal mutual aid society) for a loan despite access to a microfinance institution or local bank?

If a Zimbabwean has a mobile money account, why does he ask a family member to send him money in the care of a bus driver rather than through that mobile account?

The gap between uptake and usage is well documented in financial inclusion. But while these insights are important evidence of the gap, they tell us very little about <em>why </em>this gap exists. The result is that we know there is a problem, but without understanding why, we can do very little to change the problem.

To help us better understand the why, we at <a href="http://www.i2ifacility.org">insight2impact</a> (i2i) have been <a href="http://access.i2ifacility.org/Publications/i2i%20MFW%20Note%203%20-%20Financial%20services%20usage_Digital.pdf">exploring the factors that affect usage</a>. In doing so we have incorporated insights from across multiple fields on human decision-making and applied the most relevant aspects of existing models and understanding to the field of financial inclusion.

Decision-making is important for both financial service providers (FSPs) and policymakers to understand, but it isn’t simple, and, typically, our decisions are not based on one single factor. Furthermore, psychology and behavioral economics have illustrated that in some cases we are not even cognitively aware of many of the important factors that influence our decisions.

Some of these factors appear straightforward at first. For example, in the case of mobile money use in Zimbabwe, although the bus drivers do not carry the money free of charge, they charge the sender and the recipient does not pay a fee.

However, if you unpack this further, you may find that there are other factors that influence the decision. As one mobile money user explained, “It took me a long time to start using it [mobile money account], maybe because I didn’t trust it. I didn’t trust the services … I wasn’t sure how it was going to be working out."

Addressing or removing the barriers to usage does not mean people will automatically make use of specific products, nor does initial uptake (even voluntary uptake) imply sustained use. There is a trigger that results in uptake and first-time use, but this is often followed by a significant drop-off in activity. This is often evident in mobile money, where <a href="http://cenfri.org/documents/MAP/2015/Malawi/MAP%20Malawi%20Diagnostic%20Report.pdf">promotions for free airtime lead to spikes in uptake</a>, but low usage is observed over time, and consumers continue to rely on cash.

So, what are the factors that affect financial decision-making (the drivers of usage)? In our understanding, there are a range of factors, but they largely fall into three categories:

• <strong>Functional:</strong> Fundamentally, positive relative value is required for a person to continue using a device (although perceived value rather than actual value drives decisions). These functional drivers are the most obvious and visible component of decision-making. In the example cited above the respondent asked that money be delivered via a bus driver to avoid paying transaction fees.

It may be tempting to just stop here. However, we know that what influences our decisions goes beyond the basic dollars and cents:

• <strong>Relational:</strong> Relational factors like trust have been explored in detail by other researchers, but we want to delve deeper to understand what constitutes trust in the use of financial services and how this manifests. In our example, the individual in Zimbabwe signed up for a mobile money account but delayed using it until a level of trust had been established. Other relational drivers, like belonging, have not been explored as deeply, yet still appear to play an important role in decision-making.

• <strong>Behavioral:</strong> Individuals may be unaware of some of the factors that influence their thinking and the way they respond to things, but a better grasp of these behavioral drivers (and the way these are affected through specific interventions) will be useful for FSPs attempting to drive usage of specific products and for policymakers keen to deliver impact through financial inclusion policies. One example is hyperbolic discounting – the fact that people prioritize present value over future value and choose smaller rewards now over larger rewards at a later time – which influences the way that people perceive relative value and cost for short and long-term products/needs.

Individuals make decisions within a context and that context has an influence on the outcome of their decision. We call these structural factors.

• <strong>Structural:</strong> We define these as the contextual considerations (for example, gender, level of urbanization, and so forth) that influence the drivers identified above and therefore affect uptake and usage, but which the individual, policymaker or FSP will have no or very little control over.

Of course, given the complexity of human decision-making, many of these factors resist our attempts at simple, neat classification. As an example, trust in financial services is often the outcome of number of experiences, and even a composite of other drivers. It can be affected by behavioral factors like an intrinsic bias (for example, certain providers are “out to get me”) or social factors like having viewed negative comments about a specific provider on social media.

Through a closer examination of the drivers mentioned above, i2i hopes to understand what the most critical drivers of financial product usage are and how they interact and influence each other.

The drivers of usage don’t only explain why or whether people opt to (continually) use a financial service, but which device they use and which provider they turn to – including whether these are formal providers or informal providers like savings groups or friends and family. These insights are likely to be valuable to FSPs, policymakers and development organizations alike.

The objective with this work is not to build an exhaustive model of all the individual factors that influence consumers’ decisions to use financial products, but rather to offer a framework that simplifies reality in that it encompasses all the key factors of customer decision-making in digestible form. Better understanding the range of, and the most important, factors that influence use will aid policymakers and providers to design policy approaches and products that target sustained use rather than merely uptake.

We would love to hear from you if you think we have omitted a category of drivers, or if you have previously conducted research in the field. Email <a href="mailto:jeremy@cenfri.org">jeremy@cenfri.org</a> to contribute to this analysis of the drivers of financial services usage.

<em>In addition to this desktop research on drivers of usage, insight2impact will be piloting demand-side surveys in select countries to better understand people’s financial needs and how they go about meeting these needs in different environments. The insights from our desktop research and these pilots will enable us to refine <a href="http://i2ifacility.org/news/measuring-impact-in-the-financial-sector">our measurement frameworks</a> and contribute to a richer understanding of financial inclusion.</em>

<strong>Have you read?</strong>

<a href="https://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="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/2017/09/27/financial-inclusion-from-a-consumer-perspective/">Financial Inclusion from a Consumer Perspective</a>

Closing the Gap between Uptake and Usage of Financial Products

<em>&gt; Posted by Michael Miebach, President, Middle East and Africa, MasterCard</em>

<em><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>FI2020 Week</em><em> 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.</em>

<a href="http://www.fi2020week.org/">FI2020 Week</a> offers a good opportunity to review the findings in the <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a> and to consider actions the global community needs to take to advance financial inclusion. This is of particular interest to me as I work every day to expand MasterCard’s payments platform in the Middle East and Africa, and in a volunteer capacity, I also serve on the board of directors of Accion.

The report <a href="http://www.fi2020progressreport.org/technology/">asserts</a> that it’s not enough to “build the rails” to enable payment and transaction access, but that “providers, regulators and support institutions need to ensure that the financial services that follow provide value and quality to the passengers who climb aboard.” Here is where interoperability is essential—if last mile customers are to benefit. Banks, telcos, merchants, and governments must be connected—despite different rules and technologies—in a way that is seamless to the user. From a customer perspective, that means ubiquity, safety, and utility—the trifecta of success in financial inclusion. It won’t work if all the stakeholders are competing to create their own end-to-end solutions, or operating in silos. It won’t work if we are creating islands, where the unbanked transact with each other and where data is used in proprietary ways to support individual business models, rather than being shared as a public good.

Now, a parent in Zimbabwe sends money to his daughter studying at university in South Africa using a mobile money operator connected to the global banking system. All he needs to do is go to an <a href="http://newsroom.mastercard.com/press-releases/mastercard-launches-cross-boarder-remittance-service-in-zimbabwe/">EcoCash</a> agent and top up his mobile money account. His daughter then accesses the funds using a MasterCard debit card linked to the same EcoCash mobile money account to purchase text books, and pay university fees as well as other day-to-day expenses while at university in South Africa. This is ubiquity, safety, and utility put into action.


<img class="alignright wp-image-19955" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/thumb_4298b3a77f1a41819e09b1e02e4c3c59.jpg" alt="" width="300" height="200" />Equally critical is the focus on <a href="http://www.fi2020progressreport.org/client-protection/">client protection in the digital age</a>. The explosion of data brings new opportunities for inclusion, but it also requires trust in a system many have never used. The distributed trust model requires that both merchants and customers can trust in a secure transaction when making a purchase without cash. An expanded merchant acceptance network along with an expanded Internet add to the complexities. This will be even more challenging with the rise of P2P transactions, which will bring more micro merchants into the financial system. One solution for increasing protection and decreasing fraud is the use of biometrics. For many people, a biometric ID—using fingerprints or an iris scan—may be the first form of identification they have ever been issued. It increases security and transparency and can open the door to having a bank account, receiving government benefits, and even voting. In this case, biometrics can lead not only to greater financial inclusion, but also to greater social inclusion.

But the fundamental challenge ahead is <a href="http://www.fi2020progressreport.org/addressing-customer-needs/">addressing customer needs</a>, underscored by the gap between access and usage that proves there is still much work to be done despite many new accounts being created. Take the great leap forward of moving from cash to electronic payments for G2P social benefits. This is a good change all around—good for governments, which can reduce transaction costs, leakage and fraud, and good for customers, who can avoid the theft of their money and no longer have to wait in long lines either to receive their social benefits or to pay bills. Yet despite this advance, many customers don’t really take advantage of the service—at least not at first. Many people simply head to the nearest ATM to withdraw all of their funds. Yes, they have avoided the long lines to receive the payments, and the government still saves money—but the customers are not using the service to their own benefit.

This is where the Center for Financial Inclusion’s message about the need for providers to take the long view is key. Take the SASSA debit card in South Africa (the South African Social Security Agency electronic benefits disbursement program). The good news is that, over time, people started changing their behavior when provided with a tool they could learn with through use. We found that from year to year, POS purchases increased by 27 percent, cash withdrawals without a purchase decreased by 24 percent, and cash back with purchase transactions grew slightly by 3 percent. This, of course, means that beneficiaries were not simply cashing out as soon as they received their payments and were using the card to store value in a more secure way. And, along the way, merchants have seen as much as a 30 percent increase in sales in the first year of the card.

For all of us working on financial inclusion, the questions about technology circle back to the central question of the customer experience. If we keep in mind the need to create value for all stakeholders, the access/usage gap will be transformed, and we will move closer to a financially inclusive world.

<em>Michael Miebach is president, Middle East and Africa for MasterCard. Based in Dubai, Mr. Miebach is responsible for driving the evolution of payments in markets across the Middle East and Africa region. Mr. Miebach recently joined the board of directors of Accion.</em>

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/10/13/the-data-story-in-the-fi2020-progress-report-on-credit-reporting/">The Data Story in the FI2020 Progress Report on Credit Reporting</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/2015/10/05/toward-an-agent-free-world/">Toward an "Agent-Free" World</a>

Ubiquity, Safety, and Utility: The Trifecta of Success in Financial Inclusion

<em>&gt; Posted by Center Staff</em>

<a href="http://www.theguardian.com/global-development-professionals-network/financial-inclusion"><img class="aligncenter wp-image-15831" style="margin-top:7px;margin-bottom:7px;border:0 solid #ffffff" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/08/hub.png" alt="" width="610" height="414" /></a>This week, The Guardian Global Development Professionals Network launched its <a href="http://www.theguardian.com/global-development-professionals-network/financial-inclusion">Financial Inclusion hub</a>, featuring stories, infographics, videos, and other resources on financial inclusion issues worldwide. The hub will be updated regularly over the coming months with original content. The first collection of posts includes:
<ul>
	<li>Using mobile money to buy water and solar power in East Africa</li>
	<li>Funeral insurance in South Africa: counting the cost of life and death</li>
	<li>Zimbabwe’s Econet Wireless and the making of Africa’s first cashless society</li>
	<li>An interactive map on ATMs worldwide</li>
</ul>
Guardian Professional Network hubs are community-focused sites, where <em>The Guardian</em> brings together advice, best practice, and insight from a range of professional communities. With this week's launch, financial inclusion is sharing the stage among global development issues such as climate change, global health and nutrition, and urbanization, with the goal of promoting understanding, dialogue, and debate among those working in global development. CFI is a knowledge partner with <em>The Guardian</em> for the Financial Inclusion hub, sharing story and topic ideas and facilitating connections with editors.

Visit the hub at <a href="http://www.theguardian.com/global-development-professionals-network/financial-inclusion">www.theguardian.com/global-development-professionals-network/financial-inclusion</a>. You can join the conversation on Twitter using #NOunbanked

Have some ideas for issues and stories that should be investigated as part of the hub? Let us know in the comments.

'The Guardian' Launches Online Financial Inclusion Hub

<em>&gt; Posted by Eric Zuehlke, Web and Communications Director, CFI</em>

[youtube https://www.youtube.com/watch?v=FDUNjrwt6hs&amp;w=560&amp;h=315]

It's a big couple of weeks for Africa here in Washington, D.C. On Monday, President Obama hosted a town hall meeting to welcome this year's class of the<a href="https://youngafricanleaders.state.gov/"> Young African Leaders Initiative (YALI</a>). Launched in 2010 by Obama, YALI supports young African leaders as they spur economic growth and prosperity, strengthen democratic governance, and enhance peace and security across Africa. These Fellows spend six weeks at one of 20 U.S. universities and colleges undergoing leadership training and mentoring in business and entrepreneurship, civic engagement, and public administration. Next week, the State Department will host the <a href="http://www.whitehouse.gov/us-africa-leaders-summit">U.S.-Africa Leaders Summit</a> with heads of state from 50 African countries to advance the U.S. Administration’s focus on trade and investment in Africa and discuss security and democratic development.

Nearly one-third of all Africans are between the ages of 10 and 24, and approximately 60 percent are below 35. YALI is tapping into the drive and energy of Africa's youth to effect change. Many Fellows in the YALI network are focused on improving access to financial services, whether it's <a href="https://www.newsday.co.zw/2014/06/04/micro-finance-guru-promotes-savings-culture/">encouraging a savings culture</a> in Zimbabwe, <a href="http://www.waryapost.com/amazahra-sigat-garissa-selected-obamas-young-africa-leaders-initiviate/">establishing microfinance programs for women and youth in Kenya</a>, or <a href="https://www.flickr.com/photos/statephotos/14098189014/">creating a microfinance program </a>to help start medical supply stores in Kinshasa, Democratic Republic of Congo.

Financing for small and medium-sized enterprises (SME) is receiving quite a bit of attention in U.S.-Africa relations. In his remarks to the Young African leaders, Obama highlighted the need for SME financing in Africa. "You shouldn't have to be the son or daughter of somebody [special]. If you've got a good idea, you should be able to test your idea and be judged on your own merits," he said. Obama noted that he has been struck during his multiple trips to Africa that young people are less interested in aid and more interested in creating opportunity through business and entrepreneurship at the local level. A main focus of next week's summit will be on how to make sure financing is available to entrepreneurs. Financing isn't enough, however. Obama mentioned that he wants financing to be supplemented with training and networking though programs like YALI.

Indeed, access to finance and capital has been a major impediment to SME growth in Africa. According to <em>Accelerating Entrepreneurship in Africa</em>, a 2012 report from the Omidyar Network, up to 84 percent of SMEs in Africa are either un-served or underserved, representing a value gap in credit financing of $140-170 billion. Self financing and family loans are the main sources of funding.

For more, watch President Obama's town hall with this year's YALI class. (Skip to the video's time mark of 18:35 for a discussion on financing for SMEs.)

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/05/29/the-inclusionist-vs-the-affordable-care-act/" target="_blank">The Inclusionist vs. the Affordable Care Act</a>

<a href="http://cfi-blog.org/2014/04/28/financial-capability-center-stage/" target="_blank">Financial Capability, Center Stage</a>

<a href="http://cfi-blog.org/2014/03/06/greenfield-microfinance-in-africa-where-to-from-here/" target="_blank">Greenfield Microfinance in Africa - Where to From Here?</a>

President Obama Highlights Need for Small and Medium Enterprise Financing for Africa

<em>&gt; Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI</em>

<a href="https://www.flickr.com/photos/99366248@N00/7708830488/"><img class="aligncenter wp-image-15631" style="margin-top:5px;margin-bottom:5px;border:0 solid #ffffff" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/07/7708830488_dbbf2621ac_k.jpg" alt="" width="580" height="409" /></a>Mobile money services have spread like wildfire, making people less cash-reliant and able to easily carry out transactions like bill payments and money transfers. GSMA’s Mobile Money for the Unbanked program identified 14 <em>mobile money sprinters</em> - leaders of some of the fastest growing mobile deployments in the world. Among these, three case studies from mobile money services in Pakistan, Somaliland, and Zimbabwe have been <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/2013_MMU_Compendium-of-case-studies.pdf" target="_blank">published</a>. The case studies highlight the reasons why these particular schemes have achieved significant customer bases and transactions volumes since their deployments.

<strong>Easypaisa (Pakistan).</strong> After only 11 months, Easypaisa registered 5 million transactions and by the end of 2012 it had 100 million transactions with a volume of $US 1.4 billion. Easypaisa was created in late 2009 by the MNO Telenor Pakistan and Tameer Bank, after Telenor acquired a 51 percent stake in Tameer. Telenor acknowledged that launching a mobile wallet product wouldn’t be the ideal way to set up Easypaisa since they only had a 22 percent market share and so the product wouldn’t encompass 40 million non-Telenor customers. Furthermore, regulations in the country called for very comprehensive Know-Your-Customer (KYC) procedures, creating the additional obstacles of increased registration cost and time.

Taking this into account, Easypaisa was set up as an over-the-counter (OTC) service, offering money transfers and bill pay. All of the transactions were assisted by an agent and registration wasn’t required. Customers could go to an Easypaisa agent, present their national ID card and the money to be transferred, and the agent took care of the rest. No mobile phone account was necessary. This model proved to be successful as 70 percent of customers using the services were not Telenor Pakistan clients. Easypaisa’s big-picture vision was to create a mobile wallet product, since the OTC service had the downside of a limited product offering, and then slowly migrate users to the wallet system. This mobile wallet service now has products other than money transfers and bill payments such as savings and insurance through Easypaisa Khushaal.

<strong>Telesom ZAAD (Somaliland).</strong> Telesom ZAAD has been considered a great success; 70 percent of their subscribers actively used the service after one year and users were performing an average of 30 transactions per month. This journey started when a team of senior level officers from Telesom, a mobile network operator in Somaliland with 85 percent market share, traveled to Kenya and Tanzania to learn about the M-Pesa platform. Telesom’s vision was to start a similar service, however from the beginning they had in mind the idea of building an ecosystem that included salary payers and merchants.

Even before launching the service (in June 2009), 170 merchants had agreed to accept payments via mobile money and were encouraged to buy Telesom products using the same service. Likewise, Telesom led by example and started paying all of their employees the entirety of their salaries through Telesom ZAAD. This sent a powerful message to other companies such as Kaah Electric Company and Amoud University, which also started paying their employees using the same method. As of April 2013, ZAAD reported 368,000 customers of whom 59 percent held an average balance of $37 on their accounts, and 8,600 merchants of which 83 percent reported an average balance of $352. In other words, Telesom ZAAD has been effective as a cash replacement tool.

<strong>Ecocash (Zimbabwe).</strong> Econet Wireless, an MNO with 70 percent market share in Zimbabwe, set out to develop a mobile money platform in 2011. Eighteen months after Ecocash was launched it already had 2.3 million registered users, over one million active accounts, and an estimated monthly transactions volume of $200 million. Although Ecocash was launched initially as a person-to-person payments platform, Econet’s vision was to move beyond payments and become the “primary way people pay for goods and services,” explaining the unusually large investment in this mobile money service.

Ecocash identified the most important pain points in the financial system (payment needs of the informal economy, replacing cash, and bridging the gap between formal and informal economies) and has ambitiously set out to address them. Ecocash started simple by offering P2P transfers. Now, it is building two vital structures, a network of merchants that accept mobile money payments and full interoperability with other banks in the country.

These three mobile money services are considered successful and yet they are so different. Easypaisa started as an OTC system, ZAAD for salary and merchants pay, and Ecocash as a P2P system. Why have they all been so successful? They have done well in gaining a deep and detailed understanding of the particular market conditions in their respective countries. Easypaisa acknowledged their market position and the costs of first creating a mobile wallet. Telesom could have transposed the M-Pesa model to Somaliland, but they recognized that this could have failed given the market conditions, including unfamiliarity with mobile money, low income levels, and a lack of formal banking infrastructure. Econet realized that people had lost trust in Zimbabwe’s banking institutions due to the hyperinflation crisis and recognized that there was a role for a prominent MNO to play in the mobile money market.

Though these systems all face their challenges and shortcomings, valuable lessons from their experiences should be shared on how they solved the problems encountered in each market and the obstacles that still remain.

What mobile money deployments do you know of that hold insights for the industry?

<em>Image credit: <a href="https://www.flickr.com/photos/99366248@N00/7708830488/" target="_blank">carol mitchell</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/03/19/mobile-moneys-newest-outpost/" target="_blank">Mobile Money's Newest Outpost</a>

<a href="http://cfi-blog.org/2014/01/31/mobile-money-in-afghanistan-an-uphill-battle/" target="_blank">Mobile Money in Afghanistan: An Uphill Battle</a>

<a href="http://cfi-blog.org/2014/04/18/unexpected-benefits-of-mobile-money/" target="_blank">Beyond On-Ramps and Uptake: Exploring Surprising Benefits of Mobile Money</a>

‘Mobile Money Sprinters’ Adapt to Local Conditions in Pakistan, Somaliland, and Zimbabwe

Loretta Michaels

Paul DiLeo

Jeremy Gray

Rafe Mazer

Eric Zuehlke

Somen Saha

Bangladesh

East Asia and Pacific

Ecuador

Egypt, Arab Rep.

Ghana

India

Latin America and The Caribbean

Madagascar

Middle East and North Africa

Nigeria

Pakistan

South Africa

South Asia

Sub-Saharan Africa

Timor-Leste

Togo

Zimbabwe

Brazil

Jordan

Morocco

Myanmar

Philippines

Thailand

South Sudan

Congo, Dem. Rep.

Kenya

United States

Enabling Environment

Financial Service Providers

Mobile Banking

Partnerships

Payments

Policy, Regulation and Government Initiatives

Challenges and Crises

Governance

Microfinance

Microfinance Institutions

Agent Banking

Behavioral Insights

Digital Financial Services

Women

Credit/Debit Cards

Financial Technology

MSME/SME Finance

Youth

Data Analytics

Impact Investing

Blog Post

Report

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

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.

South Africa is a global hub for fintech innovation. Accion supports and advises South African innovators using technology to help entrepreneurs expand their businesses and families protect their homes around the world.

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.