<p>Content from Financial Inclusion Week 2020 under the themes of data, gender, climate change, consumer protection, and COVID-19.</p>
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The session provided lessons and recommendations for stakeholders navigating their way through the COVID-19 pandemic in the hope that these lessons  learned can similarly steer organizations toward future success as they emerge from the crisis.

Visit the  <a href="https://www.centerforfinancialinclusion.org/series/weathering-the-storm-ii" target="_blank" rel="noopener noreferrer">Weathering the Storm II</a> series page for the case studies.

Past, Present, Future: What Previous Crises Can Teach Us About the Road Ahead

<img class="alignright wp-image-40142 size-thumbnail" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/grateful-emoji-283-150x150.jpg" alt="grateful " width="150" height="150" />
<h2>Grateful</h2>
I am feeling an incredible level of gratitude to all the people who participated in Financial Inclusion Week last week. We had more than 1,200 people register for FIW’s various events. The agenda featured more than 40 sessions covering a broad spectrum of topics, time zones, and regions. Each and every session required planning and coordination. A huge thanks goes to all of our partners who chose to participate and share their learning and experiences during FIW.
<h2><img class="alignleft size-thumbnail wp-image-40143" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/monocle-5-150x150.png" alt="" width="150" height="150" />Curious</h2>
I am already a major advocate for women’s financial inclusion and believe the inclusive finance industry needs to get more sophisticated on this topic. The CFI <a href="https://youtu.be/MxXWHaNhYcY" target="_blank" rel="noopener noreferrer">podcast on social norms</a>, the Caribou Digital session on <a href="https://www.youtube.com/watch?v=SbIBJO_7cJs&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">features that drive women’s usage of DFS</a>, and the Pinbox session, "<a href="https://youtu.be/b2ulPv9INEA" target="_blank" rel="noopener noreferrer">Saving the Next Generation from Old Age Poverty</a>" (especially women, who live longer) were eye-opening. I am curious to see where our collective focus on this topic will take us.
<h2><img class="alignright size-thumbnail wp-image-40144" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/tempted-heart-eyes-emoji-150x150.png" alt="heart eyes emoji " width="150" height="150" />Tempted</h2>
There were so many sessions to choose from that there were moments I felt like a kid in a candy store. Fortunately, the sessions have all been recorded and I can go back to the ones I missed and catch up on them (and I will have a full year to do that). I’ve even mapped out a plan of action for when I’ll get up to speed on what I missed. This week, I plan on listening to the Inclusive Finance India <a href="https://youtu.be/E0Snagg7TYM" target="_blank" rel="noopener noreferrer">session on remittances</a> and GSMA’s session, "<a href="https://www.youtube.com/watch?v=B3Khho7Bgac&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">Beyond One Billion: Exploring the State of Mobile Money in Africa</a>."
<h2><img class="alignleft wp-image-40145" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/connected-emoji-300x268.png" alt="connected emoji" width="184" height="164" /></h2>
<h2>Connected</h2>
We have all been struggling to adjust to our new, social-distanced and Zoom-based world, and I was worried that more virtual events might be difficult. I was surprised at how connected I felt to the inclusive finance industry. I learned so much from the various panelists, whether it was the elaborate -- yet achievable -- <a href="https://www.youtube.com/watch?v=FLWs9JMdj7M&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">ideas posed by Sarah Gammage</a> on the role of financial services in mitigating climate risk and supporting livelihood adaptation, or <a href="https://www.youtube.com/watch?v=qjVT1EaN3QE&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">David Medine’s insightful explanation</a> as to why consent-based systems are no longer relevant for addressing data usage and data privacy concerns. There’s been a lot of talk that this industry has become more fragmented as we each dig deeper into specific silos, but this week showed me the power of coming together. It takes some effort, but the results are evident.
<h2><img class="alignright size-thumbnail wp-image-40146" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/tired-emoji-150x150.png" alt="tired emoji" width="150" height="150" />Tired</h2>
But, alas, I am human and not a complaints bot or <a href="https://www.youtube.com/watch?v=9tXAN0oicVE&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">algorithm</a>, like the ones covered in some sessions. This means by the end of the week I was tired after an incredibly packed agenda and so many interactive sessions.
<h2><img class="alignleft size-thumbnail wp-image-40149" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/cry-emoji-4-150x150.png" alt="cry emoji" width="150" height="150" />Sad</h2>
That’s why my next emoji is complex. Despite my tiredness, I am sad to see FIW 2020 come to an end. I hope that this community that has come together to share and learn from one another can somehow keep the momentum going. At CFI, we will certainly do our best to engage and learn from our partners.
<h2></h2>
<h2><img class="alignright wp-image-40150" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/lightbulb-emoji-2-300x292.png" alt="inspired lightbulb emoji " width="161" height="157" />Inspired</h2>
My final emoji is my overwhelming sense of inspiration. I hope you found FIW as inspiring a learning event as I did. From our first day with the panel, "<a href="https://www.youtube.com/watch?v=im7EP5TtGdA" target="_blank" rel="noopener noreferrer">Serving Low Income Households Impacted by Climate Change</a>," to the last day with Aspen Institute’s session, "The Road to 2030: An Action Agenda for Inclusive Financial Systems," I am inspired that so many organizations are already thinking about and taking action on some of the toughest challenges that poor people face during this extraordinary time in history.

&nbsp;

Financial Inclusion Week and My Emoji Roller Coaster Ride

Two days ago, <a href="https://centerforfinancialinclusion.org/reimagining-inclusive-finance-with-women-in-mind/" target="_blank" rel="noopener noreferrer">we met Carla</a>, a woman in Tanzania with limited access to financial products that could help her save, plan, borrow, and make and receive payments. Now imagine that Carla’s husband became ill with COVID-19 and the market where she normally sells her vegetables has been shuttered by lockdowns to prevent spreading the virus. The family’s income has completely dried up. Carla is eligible for a government program which deposits funds directly into a mobile money account, but Carla has never used mobile money and is completely unfamiliar with the family’s new smartphone that’s registered in her husband’s name. This scenario is playing out around the world for many of the <a href="https://openknowledge.worldbank.org/handle/10986/33635" target="_blank" rel="noopener noreferrer">1.1 billion first-time recipients</a> of cash transfer payments in response to COVID-19. Who will help Carla figure out how to access the funds? Where can she go for help?

COVID-19 and its overwhelming impact on the health and livelihoods of people around the world has been the defining issue of 2020. Unexpected and unparalleled, the pandemic has been particularly devastating for low-income people already living on the brink of poverty. <a href="https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021" target="_blank" rel="noopener noreferrer">The World Bank estimates</a> that COVID-19 is likely to push between 88 and 115 million people into extreme poverty, reversing the poverty reduction trend of recent decades.

With this new wave of economic uncertainty, governments have been quick to adopt cash transfer programs to help people cope with the impact of the pandemic. The World Bank reports that 340 cash transfer programs in 158 countries were initiated in response to COVID-19. Of those, 65 programs in 43 countries are new initiatives which are introducing benefits to 1.1 billion first-time cash transfer recipients.

The scale and speed at which these programs have been created and disbursed is unprecedented and has required governments to adapt their processes to get the funds out the door quickly and efficiently. Many have turned to digital channels. On the one hand, this presents an <a href="https://www.cgap.org/blog/can-emergency-cash-transfers-lead-financial-inclusion">opportunity for onboarding</a> customers to the digital finance ecosystem. On the other, it poses significant challenges for customers who are unfamiliar with the system that stands between them and the funds that they desperately need during these challenging times. If something goes wrong when trying to access the funds, whom can they turn to? If they can’t locate any cash-out locations due to lockdowns, how can they access the funds? If someone thinks they are eligible but has not been enrolled, whom do they contact?

During the course of Financial Inclusion Week, we asked participants to share what they’re seeing with regard to emerging consumer protection risks in light of COVID-19. Here’s a sample of what we heard:
<ul>
 	<li>Most respondents believe the rapid digitization of cash transfers presents increased risks for customers</li>
 	<li>Fraud by staff or agents was the most commonly cited type of risk observed, followed by excessive fees and poor data protection and security</li>
 	<li>Respondents would like to see better mechanisms for supervisors to monitor misconduct, and more consumer awareness and capability trainings by providers</li>
</ul>
Have you experienced similar risks where you live or work? <a href="https://app.sli.do/event/oqxdkouf/embed/polls/c12f34ed-3a47-4023-96fe-73f15cb5a722" target="_blank" rel="noopener noreferrer">We are collecting global examples of risks</a> through an ongoing survey and invite you to help us uncover specific instances we should explore as part of our ongoing research on this topic.
<h2>Looking Ahead</h2>
Beyond the specific and urgent issues related to the proliferation of cash transfer payments, we must continue to reimagine the paradigms that will enable improved consumer protection in a digital age. Supervision Technology, or SupTech, for example, is changing the interaction between customers, financial service providers, and supervisors by providing direct communications channels between customers and supervisors. In the Philippines, the central bank is piloting a <a href="https://www.marketscreener.com/news/latest/Moving-from-Crisis-to-a-Stronger-Tech-driven-More-Inclusive-Philippines--31488613/" target="_blank" rel="noopener noreferrer">chatbot</a> named BOB, or BSP Online Buddy, to handle customer concerns sent by SMS, Facebook Messenger, and online chat. This type of direct connection between customers and supervisors can strengthen monitoring systems and help track the customer experience and where protections are needed. Just as we continue to monitor new consumer risks related to the digitization of financial products, we must also continue to research, test, and advocate for innovative approaches to monitoring market conduct.
<blockquote>Just as we continue to monitor new consumer risks related to the digitization of financial products, we must also continue to research, test, and advocate for innovative approaches to monitoring market conduct.</blockquote>
At the end of 2019, when CFI began to <a href="https://centerforfinancialinclusion.org/new-decade-new-focus-areas-cfis-role-in-an-evolving-space/" target="_blank" rel="noopener noreferrer">consider the future</a> of our consumer protection agenda, we never imagined the world that we now find ourselves in. Yet the questions being raised in this context are not new ones. As we collectively work to expand access and usage of financial services that we know can improve lives, how do we do so in a way that sufficiently protects vulnerable customers? The evolution toward digital channels has been underway for many years, already requiring that we reassess the next wave of priority research topics, yet the rapid expansion of digitized cash transfer payments and the rapidly changing context of the pandemic has propelled this effort and made the work even more urgent.

As <a href="https://pheedloop.com/fiw2020/virtual/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> draws to a close today, we hope the conversations held, the connections formed, and the knowledge gained will be put to productive use as we continue to advance inclusive finance in a way that has consumers best interests in mind at every step.


COVID-19 Ushers in New Challenges for Consumer Protection

The Rizzi family recently returned to the US after living in Italy for three years, during which time a love for all things pizza was cemented. I could write a whole blog about the best Roman pizzeria (it's Roscioli), so when a colleague told us, the data team, about a recent <a href="https://news.stanford.edu/2017/08/03/pizza-privacy-stanford-economist-examines-paradox-digital-age/" target="_blank" rel="noopener noreferrer">study about pizza and data privacy</a> – MIT undergraduates were willing to relinquish their friends’ personal information in exchange for a free pizza – we were interested.

Should we chalk the results up to college students’ love of late-night snacks? Not exactly. This year, the Ipsos Global Trends survey across 33 countries found that despite growing concern around big data, nearly <a href="https://www.ipsosglobaltrends.com/2020/02/data-dilemmas/" target="_blank" rel="noopener noreferrer">half of respondents said they would trade their information away</a> in return for personalized services and products. This was a 7 percent increase since the last time the survey was conducted in 2013. It’s easy to assume that this implies that people don’t care about data protection, but it fails to account for the frequently zero-sum choice presented to consumers for whom access to vital products and services increasingly relies on digital gatekeepers. The financial inclusion field is no exception.
<h2>Unchecked Superpowers?</h2>
For the unbanked and underbanked and those that work with them, the explosion of available data, data-crunching services and data-enabling regulatory schemes bring unprecedented potential. A BFA paper called certain artificial intelligence applications "<a href="https://bfaglobal.com/wp-content/uploads/2019/03/FIBR-Artificial_Intelligence_FINAL_MAY2018-1.pdf" target="_blank" rel="noopener noreferrer">practical superpowers</a>" and the possibilities to unlock wealth and opportunity for the poor indeed seem extraordinary – from prospecting and credit scoring for thin-file consumers to well-timed nudges for saving, from fraud management and complaint chatbots to access to e-commerce platforms and <a href="https://www.cgap.org/blog/open-banking-7-ways-data-sharing-can-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">open banking regimes</a>. At CFI, we feel the case has been <a href="https://centerforfinancialinclusion.org/accelerating-financial-inclusion-with-new-data-2/" target="_blank" rel="noopener noreferrer">well-articulated</a> for supporting a myriad of <a href="https://www.cgap.org/research/publication/using-satellite-data-financial-inclusion" target="_blank" rel="noopener noreferrer">data-driven tools</a> and will continue to be made.
<blockquote>Data-driven tools must also be examined for their risks, pitfalls and unintended consequences.</blockquote>
Our perspective is that for these opportunities for financial inclusion to be fully realized, they must also be examined for their risks, pitfalls and unintended consequences for low-income consumers. This lens is not meant to throw a wet blanket on innovation and enthusiasm, but to have a clear-eyed focus in a world where data is <a href="https://cloudian.com/blog/getting-a-handle-on-data-growth/#:~:text=According%20to%20IDC%2C%20the%20world's,all%20this%20data%20the%20same." target="_blank" rel="noopener noreferrer">growing by the zetabyte</a> (10^21) every month, where tens of thousands of individuals become digital immigrants every day and where innovation <a href="https://www.centerforfinancialinclusion.org/data-consent-lets-share-the-burden-for-effective-consumer-protection" target="_blank" rel="noopener noreferrer">races ahead of traditional guardrails</a> on data protection and privacy.

Our vision is that digitization is catalytic for the poorest and most vulnerable consumers, not just those who are already on the pathway to digital inclusion. Looking at developed markets where smartphone ownership is widespread, we still see vulnerable communities trapped in a state of <a href="https://socialchangenyu.com/review/the-surveillance-gap-the-harms-of-extreme-privacy-and-data-marginalization/" target="_blank" rel="noopener noreferrer">data marginalization</a>, due to gaps in technology access, fear of documentation, or failures of mainstream data collection mechanisms. As the use of alternative data to drive financial products grows and other data tracking systems, such as biometrics, expand, developing countries may see more data silos and failures in capturing a holistic picture of the lives of the poor.

We see evidence of this when looking at the consumer base of digital credit products, which tend to be <a href="https://www.centerforfinancialinclusion.org/making-digital-credit-truly-responsible" target="_blank" rel="noopener noreferrer">younger men living in urban areas</a>. There are many reasons why women may not be accessing these products, but failing to account for <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2020/05/GSMA-The-Mobile-Gender-Gap-Report-2020.pdf" target="_blank" rel="noopener noreferrer">limits on women’s use of smartphones</a> is a structural barrier to collecting accurate data to use in digital credit decision models. Pushing for rapid onboarding to digital finance without an understanding of these dynamics could lead to a more entrenched digital divide, unintentionally excluding those who could benefit most from new products and services because of their incomplete digital footprints.
<blockquote>CFI plans to build on its experience in financial consumer protection to focus on key questions around data and financial inclusion.</blockquote>
CFI plans to build on its decade of experience in financial consumer protection to focus on key questions around the promise of data and financial inclusion. And we are raising several of these issues as part of <a href="https://pheedloop.com/fiw2020/virtual/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week 2020</a>.
<h2>Hot Topics</h2>
<h3>Responsible Algorithms</h3>
The data-driven predictions in the financial inclusion space that have grabbed the most headlines in recent years have been on <a href="https://www.accion.org/digital-lenders-can-help-unlock-full-financial-inclusion" target="_blank" rel="noopener noreferrer">consumer creditworthiness</a>. In economies where there is less access to reliable financial data, providers are leveraging other sources, the bulk of which come from mobile phones but can also include social media, geospatial data, etc., in order to make underwriting decisions. Today there is limited visibility into the type of data that financial service providers are collecting and how they are using it, with few incentives for transparent data practices.

CFI is interested in examining how financial inclusion actors approach the use of algorithms and automated decision-making, especially using alternative data, as their use becomes ever more pervasive in the industry. Within this arena are several important topics, including how to effectively measure capacity to repay with alternative data as well as how to mitigate against biased decisions. Although algorithms and automation don’t necessarily lead to discrimination, bias can occur at <a href="https://medium.com/impact-engineered/understanding-bias-in-algorithmic-design-db9847103b6e" target="_blank" rel="noopener noreferrer">varying stages</a> – from the data sources, processing, model development, or outputs. And there are heightened risks that biases, which could undermine financial inclusion goals, could arise from data that does not paint a full enough picture of a low-income person or customer segment.
<blockquote>Algorithms are not designed to be interpretable or explainable.</blockquote>
Compounding this, algorithms are not designed to be interpretable or explainable, and are often treated as trade secrets that are only understood by few within an organization. Data protection frameworks have emerged in developed markets that empower consumers with data rights vis-à-vis automated decision-making, and rely heavily on <a href="https://gdpr-info.eu/art-22-gdpr/" target="_blank" rel="noopener noreferrer">consent</a>. As the principles in these frameworks percolate into emerging markets, we wonder what constraints and barriers there are in their implementation.
<h3>Beyond Consent</h3>
While notice, choice and informed consent have been the traditional approach to data privacy, those concepts seem ill-equipped for our data-driven world. For instance, you probably already knew that the apps you use monitor your location to send you custom advertisements, but did you know that a <a href="https://www.wired.com/story/wired-guide-personal-data-collection/" target="_blank" rel="noopener noreferrer">hedge fund might also buy</a> that geolocation data to figure out which stores you like? Or that there is a whole industry of data brokers – scraping, compiling and collating bits of data about you to monetize and make predictions about your behavior? <a href="https://www.fastcompany.com/90310803/here-are-the-data-brokers-quietly-buying-and-selling-your-personal-information" target="_blank" rel="noopener noreferrer">Acxiom</a>, one of the biggest, operates in more than 62 markets and has information on over 2.5 billion consumers. Especially for low-income or vulnerable consumers, who are both often targets for data collection efforts and less likely to understand or use basic privacy protections, consent-based approaches seem insufficient. New approaches beyond consent are <a href="https://www.cgap.org/events/beyond-consent-why-new-approaches-data-protection-and-privacy-digital-age-are-needed" target="_blank" rel="noopener noreferrer">clearly needed for data</a> protection in financial inclusion (and beyond), but what might those look like in practice, who bears the cost for them and who determines their efficacy?

We hope you continue to engage us and challenge us on these issues, not only during this <a href="http://www.financialinclusionweek.org" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a>, but as we roll out our new <a href="https://centerforfinancialinclusion.org/reflecting-on-the-past-and-charting-a-new-direction/" target="_blank" rel="noopener noreferrer">strategy</a>. There will always be tension – sometimes healthy, sometimes unhealthy – in the use of technology for inclusive finance: will it make better lives within reach? Or will technology overstep and infringe on privacy rights….or worse?

Data for Inclusive Finance: Delivering on the Promise for Consumers

Imagine a woman living in a village near Arusha, Tanzania. Let’s call her Carla. She lives in a small home with three young children and her husband. They have a small plot of land behind their house where they raise vegetables, chickens. When income is steady and predictable, they buy a few goats. She learned to make cheese from a local NGO, so she sells goat cheese and milk, along with her vegetables or crafts, and she puts her earnings into her savings group. Her husband is a day laborer and farmer, but work can be hard to come by, so he often travels into town looking for work and can be gone for weeks at a time. School expenses, sending money to her parents and mother-in-law, and keeping up with her microloan repayments from her savings group weigh on her mind from the moment she wakes up to the time she finally gets to rest after everyone else has gone to sleep.

Carla’s not alone. Nearly two billion low-income people around the world, 56 percent of whom are women, remain <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">excluded from formal financial services</a>, along with millions more dormant bank accounts worldwide. Carla could benefit from financial products that keep her money safe, access to government schemes to support her and her family with money and food, insurance for when the unexpected happens, and carefully designed credit products when she needs them.
<blockquote>Most financial products were not designed with someone like Carla in mind.</blockquote>
These types of products exist on the market today. But Carla doesn’t have access to them. And even if she did, most of these products were not designed with someone like Carla, her family, and her community in mind. Despite the fact that Carla is careful and committed to her savings group and inventive when it comes to livelihood opportunities, most, if not all, formal banks would consider her, and others like her, too risky to bank.
<h2>Are We Listening to Women Enough?</h2>
The persistent global gender gap in account ownership, mobile phone ownership and usage speaks to this misperception. The existing financial system – including <a href="https://www.ifpri.org/publication/beyond-access-gender-transformative-financial-inclusion-agriculture-and-entrepreneurship" target="_blank" rel="noopener noreferrer">aspects</a> of the inclusive finance industry – was not designed with women’s needs in mind, low-income women in particular. Gender roles and norms – behavior based on social expectations – determine men’s and women’s caregiving duties, mobility, livelihoods, education, and access to economic opportunities and financial services. By and large, women who are able to participate in paid labor are also expected to care for dependents. They choose livelihoods that allow them to also perform care work – most often livelihoods that are underpaid and contingent, where the individual worker is dispensable. Frequently, women are unable to choose their occupation or claim ownership over assets as gender norms are also <a href="https://wbl.worldbank.org/" target="_blank" rel="noopener noreferrer">embedded</a> within the legal and banking systems. Women the world over are subject to these norms.
<blockquote>Frequently, women are unable to choose their occupation or claim ownership over assets.</blockquote>
We bring gender assumptions and expectations with us into every aspect of our lives, including when designing and delivering financial products and services. For example, basic bank requirements have assumptions embedded into the very forms and documents meant to help banks get to know customers. Who is the person who can complete a know-your-customer (KYC) form? Not people like Carla. Who is the person who can show valid state-issued identification? Likely not people like Carla. Who is the person who can show proof of ownership over their land? Unfortunately, it’s unlikely Carla has a deed in her name.

It is time we ask ourselves if the current system work for everyone? And if not, what needs to change? Can we as an industry claim that we are listening to women?

This is a massive opportunity for the industry to rethink our work. In fact, there are numerous examples of providers and funders exploring these questions and thinking critically about how successfully and sustainably to reach women.
<ul>
 	<li>Grameen Foundation created a <a href="https://www.prnewswire.com/news-releases/in-midst-of-rural-poverty-nearly-1-3-million-gain-access-to-financial-services-through-grameen-foundation-womens-networks-300845966.html" target="_blank" rel="noopener noreferrer">network of female agents</a> in India and the Philippines – training low-income women to bring financial services to rural communities.</li>
 	<li><a href="https://www.tymebank.co.za/" target="_blank" rel="noopener noreferrer">TymeBank</a> is a fully digital bank based in South Africa that provides basic banking services and financial guidance to its customers. It <a href="https://juntosglobal.com/tymebank-launches-new-conversational-education-service-to-support-customers-during-covid-19/" target="_blank" rel="noopener noreferrer">recently launched</a> a financial literacy service for its first-time banking customers to help them navigate their financial lives during the COVID-19 pandemic.</li>
 	<li>JazzCash, a mobile money provider based in Pakistan, <a href="https://www.financedigitalafrica.org/wp-content/uploads/2018/02/FiDA-Snapshot-9-Best-practices-in-big-data-analytics.pdf" target="_blank" rel="noopener noreferrer">designed a marketing campaign</a> specifically to address potential female-clients. They also embedded a gender lens using behaviorally informed text messages to encourage current users to refer more women.</li>
 	<li>IDRC-funded research is <a href="https://www.idrc.ca/en/research-in-action/harnessing-transformative-potential-womens-financial-inclusion" target="_blank" rel="noopener noreferrer">improving our knowledge-base</a> of what women need and how financial services can transform their lives.</li>
 	<li>Researchers out of Innovations for Poverty Action (IPA) -- Kyle Holloway, Zahra Niazi, and Rebecca Rouse -- <a href="https://www.poverty-action.org/sites/default/files/publications/Womens-Economic-Empowerment-Through-Financial-Inclusion-Web.pdf" target="_blank" rel="noopener noreferrer">analyzed specific supply- and demand-side gender based barriers</a> to financial inclusion. Their research highlights more providers using a gender lens to improve their services to female customers.</li>
</ul>
<h2>Are Women's Lives Actually Improving?</h2>
CFI’s <a href="http://reflecting-on-the-past-and-charting-a-new-direction/" target="_blank" rel="noopener noreferrer">new strategy</a> puts advancing women’s financial inclusion at the foreground, where our research and advocacy will center around the question: do financial solutions improve women’s lives? This work focuses on three critical elements seen in Carla’s story: social norms, the digital divide, and gaps in gender data. Knowing how to design products to serve Carla’s needs – and how to rethink financial systems – begins with understanding her aspirations, limitations, and resources. At CFI, we will gather data to understand her life, which will inform providers and policymakers to better meet the Carlas of the world where they are.
<blockquote>Knowing how to design products to serve Carla’s needs begins with understanding her aspirations, limitations, and resources.</blockquote>
Women are not a single market segment; a deeper understanding of the lives of women – for example, their livelihoods and the social norms that shape their lives – will help inform providers of their financial service needs and how the sector can better serve them. CFI is leading research to understand the necessary components for building women’s financial and digital capability as well as the key normative constraints impacting providers and limiting women from improving their lives through financial services. The hope is that evidence will catalyze knowledge, innovation, and initiatives to embed norms-transformative work throughout the inclusive finance field.
<h2>Join Us</h2>
CFI's <a href="http://financialinclusionweek.org/event-calendar-2020" target="_blank" rel="noopener noreferrer">Financial Inclusion Week lineup</a> includes a lively podcast conversation with three experts on gender norms and gender transformative financial services and a live webinar that unpacks design principles for building women’s financial capability. We hope participants walk away with a deeper understanding for why and how to build women’s financial inclusion.

The conversation doesn’t stop after Financial Inclusion Week concludes. CFI hopes to continue to learn from the industry to better shape our work. Want to tell us about what you’re doing? Please contact Julia Arnold, Senior Director, Gender and Financial Inclusion at <a href="mailto:jarnold@accion.org">jarnold@accion.org</a>.

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Reimagining Inclusive Finance With Women In Mind

Climate change is having severe economic impacts globally, and low-income, vulnerable populations are being disproportionately affected. Many low-income countries are experiencing longer, hotter heat waves and more extreme storms, which is leading to food insecurity, income losses, lost livelihood opportunities, adverse health impacts, and displacement.

Additionally, climate change is a <a href="https://www.ipcc.ch/sr15/chapter/spm/" target="_blank" rel="noopener noreferrer">threat multiplier</a>, exacerbating inequity for low-income households discriminated against based on gender, race, socioeconomic class, age, and disability.
<h2>Mitigating Climate Risk</h2>
The international consensus is that systems change is necessary to mitigate these climate risks. In this context, systems change refers to altering systems of production and consumption to stabilize the amount of greenhouse gases emitted into the atmosphere. For example, the ongoing shift from non-renewable to renewable energy is an outcome of systems changes and required policy initiatives by government, public and private investment in renewable technology, and changes in fuel utilization by households.
<blockquote>Financial services will play an important role in helping low-income households adapt their livelihoods</blockquote>
Systems change will impact low-income communities through the creation and elimination of livelihood opportunities. The types of systems changes required to mitigate climate impacts at a global level will impact livelihoods in communities across the globe as carbon emitting industries are replaced or innovated with climate resilient technologies. Some estimates project 1.5 billion jobs will be created by this process. Arguably more importantly, many jobs will be <a href="https://unfccc.int/resource/docs/2016/tp/07.pdf" target="_blank" rel="noopener noreferrer">altered, eliminated, or replaced</a>. Financial services will play an important role in helping low-income households adapt their livelihoods to cope with these changes as they will require significant investment to update production processes.
<h2>Resilience, Adaptation, and the Role of Financial Services in the Meantime</h2>
Systems change is a process which will occur in the medium to long-term. In the short term, financial services can support low-income households to improve their resilience to climate shocks. Before a shock, low-income households can prepare in a variety of ways, such as improving housing, diversifying their livelihoods, adopting climate-resilient business practices, and accumulating financial resources to respond to shocks when they happen. After a shock, low-income households need to respond to food insecurity, livelihood disruption, loss of assets, and increased health and safety risks. In addition to their pre-shock preparation, low-income households may seek to draw in other household and community resources to boost their resilience. Households may also choose to migrate to areas less exposed or better prepared to respond to climate events.

There is broad evidence of the critical role financial tools – cash transfers, savings, insurance, and credit – play in helping households respond to shocks. There is strong evidence for the role of person-to-person (P2P) and government-to-person (G2P) cash transfers in helping households survive in crisis environments. Studies have shown that P2P and/or G2P transfers have <a href="http://documents.worldbank.org/curated/en/537771507750178892/Philippines-Lessons-learned-from-Yolanda-an-assessment-of-the-post-Yolanda-shortand-medium-term-recovery-and-rehabilitation-interventions-of-the-Government" target="_blank" rel="noopener noreferrer">helped households respond</a> to various weather events in Kenya, earthquakes in Rwanda, and rainfall shocks in the Philippines.

A large body of impact evidence makes clear that savings is also a powerful financial tool in these environments. Innovations for Poverty Action (IPA) has summarized the evidence supporting the role of savings in preparing for shocks. For formal financial services, they found evidence that low and no-fee savings accounts helped households self-insure against shocks, and there was strong evidence for the role of <a href="https://www.poverty-action.org/sites/default/files/publications/Building-Resilience-Through-Financial-Inclusion-January-2019.pdf" target="_blank" rel="noopener noreferrer">behavioral approaches</a> (such as commitment savings devices) in promoting savings for shock mitigation.

There is some positive evidence on insurance and credit as well. Weather-indexed crop and livestock insurance can promote investment by smallholder farmers in communities likely to experience extreme weather events, and a review of the evidence by IPA articulates examples of credit products encouraging investment in farm inputs and technology by smallholder farmers in sub-Saharan Africa. In addition, a <a href="https://www.adb.org/publications/microfinance-disaster-recovery-lessons-nepal-earthquake" target="_blank" rel="noopener noreferrer">limited</a> <a href="https://www.mercycorps.org/blog/nepal-impact-report-earthquake" target="_blank" rel="noopener noreferrer">number</a> of studies have shown households with access to formal credit had better short and long-term outcomes following a crisis compared to similar households without access to credit.
<h2>Critical Gaps in the Current Knowledge Base</h2>
The evidence makes clear the promise of financial services in supporting low-income households’ response to climate change, but there are numerous demand side and supply side challenges that need to be studied in order to maximize the utility of financial services. Additionally, the role of government in creating an enabling environment and enacting social safety nets to promote mitigation and adaptation needs to be explored.

On the demand side, low-income households have less access to and are <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">less likely to use formal financial products</a> compared to middle and high-income households. This is also true of climate-related financial tools. For instance, the evidence shows that voluntary take up of weather-indexed insurance products is <a href="https://www.poverty-action.org/sites/default/files/publications/Make-it-Rain-Policy-Bulletin.pdf" target="_blank" rel="noopener noreferrer">too low to sustain a market</a> for them without subsidy despite their effectiveness. There are numerous product design challenges that may be contributing to this. Gender bias in program and product design persists, making <a href="http://documents.worldbank.org/curated/en/484541544643269894/pdf/130659-REVISED-PUBLIC-Managing-Coal-Mine-Closure-Achieving-a-Just-Transition-for-All-November-2018-final.pdf" target="_blank" rel="noopener noreferrer">interventions less effective</a> for women and multiple studies have articulated the need for improved financial capability to promote uptake and regular, effective use of financial tools.

On the supply side, there is little visibility into the range of products and financial service providers (FSPs) offering climate-focused financial products to low-income households. This hinders industry learning about what products or services are working and why. This opacity contributes to financial institutions in emerging and developed markets being admittedly unsure about how to best design their products to support households’ resilience to climate change. There is good reason to think providers will need to learn what innovative models work as analysts expect climate risks to create new challenges for pricing credit and insurance products, among others. For instance, in 2019, Munich Re, the world’s largest reinsurance firm, warned that climate-risk could <a href="https://www.theguardian.com/environment/2019/mar/21/climate-change-could-make-insurance-too-expensive-for-ordinary-people-report" target="_blank" rel="noopener noreferrer">make insurance premiums unaffordable</a> for most people.

Governments play a critical role, too. However, there are a limited set of evidence-based best practices for responding to this situation. For instance, unemployment insurance and other social safety nets have proven to be important tools in supporting livelihoods during systems change, but such benefits are less common in emerging markets than in advanced economies. They are also less effective at reaching low-wage and informal workers. How can governments establish policy and programs to better protect the livelihoods of these workers? Are there innovative safety net systems that they could use, or are other policy tools effective?
<h2>CFI’s Climate Agenda</h2>
CFI is embarking on an ambitious agenda to address these gaps. Our immediate focus is on building the evidence for what works on the demand and supply side and for government policies.

On the demand side, CFI will focus on two major activities. First, CFI will map the impact evidence, identifying what financial products and services help low-income households effectively respond to climate change. This is a critical early step as it will inform the industry of what is known and unknown about this topic. It will also serve as a foundation from which CFI will operate, helping us identify what evidence gaps need filling. Second, CFI will conduct qualitative and quantitative research with consumers to establish a baseline understanding of consumers’ experience with and financial needs for mitigating and adapting to climate change.
<blockquote>CFI will map impact evidence and conduct research to understand consumers' experiences with and financial needs for mitigating and adapting to climate change.</blockquote>
On the supply side, CFI will leverage the expertise acquired through its strategic <a href="https://content.centerforfinancialinclusion.org/mix-and-cfi-announce-strategic-integration-to-drive-industry-knowledge-for-inclusive-finance/" target="_blank" rel="noopener noreferrer">integration</a> with MIX to shed light on emerging patterns in climate-related finance and help catalyze investment in evidence-based solutions for low-income households. CFI will do this through two main activities. First, CFI will inventory financial products to understand their target market, design, reach, and effectiveness. This will enable us to promote the development of appropriate climate products with FSPs. Second, CFI will track investment in climate-related finance by monitoring funding flows from public and private sources. Given the attention to climate-related finance, it will become increasingly important for funders to have visibility on funding flows related to climate change and finance that impact low-income households.
<blockquote>CFI will shed light on emerging patterns in climate-related finance and help catalyze investment in evidence-based solutions.</blockquote>
Emerging market governments are enacting policies to help their countries mitigate and adapt to the effects of climate change. This gives us a sense of <a href="https://www.afi-global.org/publications/3036/Inclusive-Green-Finance-A-Survey-of-the-Policy-Landscape" target="_blank" rel="noopener noreferrer">what governments are doing</a> in response but it is unclear which policies are most effective for low-income households and why. In order to identify effective policy solutions, CFI will conduct mixed-method case studies of climate policies and their impact on the supply and demand side of the ecosystem.

Our goal for developing the evidence base is to provide information that decision makers need to deliver climate-informed financial products to vulnerable populations across the globe with the hope that it ultimately helps facilitate the transition to a more sustainable economy for all. Financial Inclusion Week is the first step in our journey, and we look forward to sharing our impact in the months to come.

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Financial Services are Needed to Help Low-Income People Mitigate and Adapt to Climate Change

Just over one year ago, I joined the Center for Financial Inclusion (CFI), and what a year it has been. <a href="http://financialinclusionweek.org" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> presents a great time for me to reflect on this past year and to share with you CFI’s plans for our next chapter. We are using Financial Inclusion Week to feature the work of so many of our partners. And we are also using the week to focus attention on the themes we have identified in our new strategy as the pillars for this week’s <a href="http://financialinclusionweek.org/event-calendar-2020" target="_blank" rel="noopener noreferrer">calendar of events</a>.

CFI emerged from the rubble of the financial crisis to spearhead the most pressing issue the inclusive finance field needed at the time: improved consumer protection. We are now well into our second decade and our industry is reeling from the ravages of the COVID-19 pandemic. It is perhaps the right time for CFI to reenergize its mandate and spearhead what we believe is needed to “build back better” as the saying goes. As tragic as the pandemic’s consequences have been and continue to be, it has at least laid undeniably bare the failures of the status quo and has created a heightened sense of urgency, for financial services to build back better.

CFI was founded at a particular moment when it was becoming more apparent that market forces alone would not ensure positive outcomes for financial inclusion, and that sustained intentionality would be necessary. The coronavirus pandemic has, at the September 2020 time of writing, infected more than 33 million people and killed nearly 1 million. Beyond the rapid and catastrophic spread of illness and death, the pandemic has devastated global economies. Millions of micro, small, and medium enterprises (MSMEs) around the world have seen revenues plummet and have suspended operations or gone out of business altogether. Hundreds of millions of families have lost jobs and incomes, and many of them live in countries where social safety-net protections are patchy at best. The pandemic also reversed, seemingly overnight, social and economic development gains that had taken decades to achieve: the World Bank estimates that 70 million people are at risk of falling back into poverty. Women and children have been among those most affected: children because schools around the world have been shuttered, and women because they are more likely than men to lose their jobs and to shoulder the responsibility of supervising and homeschooling children.

For CFI, the pandemic has reenergized our purpose. Financial services are critical to reducing low-income populations’ vulnerability and helping them to recover from this and other recurring crises in their lives. We believe we have a leadership role to play in this intensified global effort. We have more than a decade of recognized global leadership in understanding the financial needs and behaviors of low-income vulnerable populations. Complementing this demand-side expertise, our recent <a href="https://content.centerforfinancialinclusion.org/mix-and-cfi-announce-strategic-integration-to-drive-industry-knowledge-for-inclusive-finance/" target="_blank" rel="noopener noreferrer">integration</a> with MIX brings supply-side expertise to the table, as they have been studying and reporting about financial service providers for the past 20 years. These complementary strengths, combined with our history of thought leadership and our role as conveners, positions CFI to pursue an ambitious three-year strategy made all the more urgent in the context of the pandemic.
<blockquote>The pandemic has reenergized our purpose.</blockquote>
The strategic plan which will guide CFI’s work through 2024 focuses on four thematic areas. All of them, to significant degrees, have either been exacerbated by the pandemic or have been revealed by this crisis as urgent and under-attended priorities. The common thread among the themes is that progress in these areas is essential to ensuring that all people have the financial tools needed to improve their lives and to prosper.
<h2>Financial Services to Respond to the Risks of Climate Change</h2>
Just as the pandemic’s effects have been most severe on those who were already the most vulnerable, so too are the effects of climate change. Low- and moderate-income countries (LMICs) in the Global South are likely to experience longer, hotter heat waves and more extreme storms which in turn will create income loss, food insecurity, adverse health effects, and displacement that will hit already-vulnerable LMIC populations hardest.
<blockquote>Financial services are an indispensable tool to help prepare for climate-related shocks and recover.</blockquote>
CFI recognizes that climate change is ultimately an issue requiring long-term systemic changes to entrenched patterns of production and consumption. In the short term, however, financial services are an indispensable tool to help low-income vulnerable people prepare for climate-related shocks and recover from them when they happen. Our work in this theme will focus on understanding what those people need and the constraints they face, uncovering product innovations that can help, and then pilot testing such innovations and scaling-up lessons learned.
<h2>Women’s Financial Inclusion</h2>
Around the world, in many different geographies and socioeconomic contexts, women occupy a “last in, first out” position of vulnerability. The fall-out from the pandemic has made this abundantly clear. Whether it is a workplace where the more recently hired woman is let go before the more senior man, or a financial system that only prioritizes women’s needs when times are good, women’s economic inclusion is seen as a nice-to-have rather than a must-have. Women’s financial inclusion is powerfully shaped by broader societal norms, the unspoken assumptions and values governing men’s and women’s roles. CFI believes that efforts that focus solely on process fixes or product design will not succeed in women’s financial inclusion unless those efforts also seek to transform, rather than merely acknowledge, the underlying norms.

Our work in this area will accordingly include an intensive focus on research into successful norms-transformative initiatives, and how those might be scaled up. We will also work to improve the digital and financial capability of subsegments of women customers, and to influence the policy environment for women’s financial inclusion.
<h2>Data Risks and Opportunities</h2>
The pace of change created by the technology revolution is much faster than law, policy, or social mores can match. Although data privacy and protection regimes have begun to emerge, especially in wealthy countries, data by its nature is universal. To date, there is no universal framework setting forth who even owns personal data, much less governing how it can be used, by whom, and under which circumstances. The COVID-19 pandemic has provided a powerful illustration of both the risks and the opportunities of digitized data. The public health benefits of documenting and following diagnosed COVID-19 cases, and of tracing patients’ contacts, are obvious. But the risks to patients of stigmatizing, discrimination (whether of access to insurance, housing, employment, or otherwise), and other abuses are also very real.

Similarly, in financial services, data is the key that can unlock access to a full range of personalized, effective products that can help low-income people achieve their goals. The risk is that many LMICs have no effective consumer data protection regimes in place and that even where those exist, people with low levels of digital and financial sophistication may, in their eagerness to receive financial services, sign away their rights without even fully understanding them.
<blockquote>CFI will focus on means to bring transparency to data practices in DFS.</blockquote>
CFI’s work in this area will focus on means to bring transparency to the data practices of digital financial service (DFS) providers. We will also study how financial service providers use algorithms, which can be biased against already-underserved populations, in automated decision-making. We will monitor emerging frameworks around the world to document what does and does not work to advance financial inclusion while safeguarding data privacy, portability, and other consumer rights.
<h2>Consumer Protection in the Digital Economy</h2>
As the inclusive finance landscape evolves, so too must the approaches to consumer protection. Social platforms, ecommerce giants, fintechs, and pay-as-you-go providers are all relatively recent entrants into the field, and this means a multi-pronged approach is necessary to ensure safe practices are the norm. This is especially true since many of these business models fall beyond the scope of existing banking regulation. Consumer protection is an evergreen challenge, and one where CFI has long been active.
<blockquote>Consumer protection is an evergreen challenge.</blockquote>
We plan to devote intensive study to the practice of government-to-person (G2P) digital cash transfers, since these are often the on-ramp to digital financial services for low-income populations. We want to understand the risks that digitized G2P transfers present and how governments are mitigating those risks. We also want to document innovations around redress of grievances, financial capability-building add-on services, resolution of connectivity issues, and other relevant lessons learned.

In addition, CFI will partner with regulators and supervisors to test new technologies, such as chatbots or algorithmic audit tools, that can allow supervisors to be in direct dialogue with consumers, without consumer voices being mediated via the financial service providers. Such a dialogue can ultimately improve customers’ experience with financial services and democratize the financial sector by involving customers in the development of financial sector policies. To date, much of the recent work in regulatory technology (RegTech) and supervisory technology (SupTech) has prioritized the data reporting and compliance, but CFI believes its potential for advancing consumer protection has been underappreciated.
<h2>Conclusion</h2>
CFI developed its three-year strategic plan by weighing the needs of the inclusive finance industry against what we see as our own comparative advantages. We recognize that the four thematic priorities we intend to pursue are not an exhaustive list of everything that needs to happen to ensure positive outcomes for low-income people, and we also recognize that other individuals and organizations are doing excellent work in the areas we intend to pursue. We look forward to collaborating with all stakeholders who share the vision of a world where all people are able to equitably participate in the economy and are able to use financial tools to improve their lives and to prosper.

We hope you will participate in the rest of Financial Inclusion Week, which is packed with amazing speakers, events and activities. And, we want to hear from you. Please participate and tell us what you think about CFI’s thematic priorities.

Reflecting on the Past and Charting a New Direction

Content from Financial Inclusion Week 2020 under the themes of data, gender, climate change, consumer protection, and COVID-19. 

Financial Inclusion Week 2020

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