Financial Inclusion Week

<p>Financial Inclusion Week (FIW) is an annual, virtual gathering of the global community working to advance inclusive finance. It’s a forum for exchanging ideas, developments, and perspectives from convening stakeholders all around the world. It’s an opportunity to showcase work, share ideas on what’s ahead, and more.</p>


In 2022, advances in artificial intelligence captured our collective imaginations in unprecedented ways. Whether it was the artistic text-to-image renderings of <a href="https://openai.com/dall-e-2/" target="_blank" rel="noopener noreferrer">Dall-E2</a> shown in this blog post or in-depth conversations with <a href="https://openai.com/blog/chatgpt/" target="_blank" rel="noopener noreferrer">ChatGPT</a>, the implications of data advances in analysis, prediction, and generation became clearer than ever to the “non-techy” public. Last year, governments around the world raced to stay on top of data advances through various data governance approaches, such as <a href="https://www.dlapiperdataprotection.com/" target="_blank" rel="noopener noreferrer">data protection legislation</a>, or draft approaches to regulating AI including the <a href="https://www.whitehouse.gov/ostp/ai-bill-of-rights/" target="_blank" rel="noopener noreferrer">White House’s AI Bill of Rights</a> and the <a href="https://artificialintelligenceact.eu/" target="_blank" rel="noopener noreferrer">EU’s AI Act</a>. What has become very clear is that there is both tremendous excitement at the promise of these advances, as well as significant concern.

Several sessions at <a href="https://financialinclusionweek.org/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> (FIW) 2022 focused on data-driven advances in inclusive finance that grappled with the duality of exciting opportunity and concerning risk – particularly with regards to low-income and vulnerable consumers, like female-owned MSEs and migrants.
<h1>Data Opportunities</h1>
A few sessions shared how customer data is helping to shape product design for traditionally underserved consumers. The UN Capital Development Fund hosted a session on <a href="https://www.youtube.com/watch?v=g15noAC2vWU&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=5" target="_blank" rel="noopener noreferrer">Driving Women’s Financial Inclusion and Resilience</a>, with a focus on how consumer data, whether administrative or survey based, can drive innovative financial products for women. In this session, a speaker from <a href="https://imeremit.com.np/" target="_blank" rel="noopener noreferrer">IME Nepal</a> talked about how the company is leveraging remittance transaction data during COVID to better understand consumers and expand its digital offerings, including a wallet. UNCDF highlighted demand-side research that showed the challenges women face in onboarding to digital remittance services. My colleague <a href="https://www.centerforfinancialinclusion.org/bio/anindita-chakraborty">Anindita Chakraborty</a> contributed to the discussion with insights from CFI’s research on the difficulties <a href="https://www.centerforfinancialinclusion.org/research/covid-19-and-msmes-data-and-analysis-to-understand-impact">female-led MSEs</a> faced during the pandemic, and how that data should inform products to help MSEs be more resilient in future shocks.
<blockquote>Customer data is helping to shape product design for traditionally underserved consumers.</blockquote>
In addition to leveraging consumer data, looking at data on a larger scale can have significant benefits. In a <a href="https://www.youtube.com/watch?v=F0aZV-Zfzd0&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=5" target="_blank" rel="noopener noreferrer">short session by Principal Financial Group</a>, the Principal team shared the launch of the Global Financial Inclusion Index, a ranking of 42 markets based on what governments, financial systems, and businesses are doing to advance financial inclusion for their populations. This index aims to give investors insights into the strength and resilience of these markets.

Several fintechs and providers shared insights on their data-driven business models. A <a href="https://www.youtube.com/watch?v=WwecOBYOyi4&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=6" target="_blank" rel="noopener noreferrer">session</a> hosted by Korean fintech giant <a href="https://www.sentbe.com/" target="_blank" rel="noopener noreferrer">SentBe</a> presented how its cross-border money transfer services leverage data on traditionally underserved consumers – including migrants from Bangladesh and Cambodia working in Korea – to provide customer-centric receipt options. Senegalese fintech <a href="https://www.lebfay.com/" target="_blank" rel="noopener noreferrer">LebFay</a> presented <a href="https://www.youtube.com/watch?v=DA8wqNKl2f4&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=7" target="_blank" rel="noopener noreferrer">its business model</a> that uses an app and artificial intelligence-driven scoring model to lend to traditionally underserved MSEs and tradesmen. And, <a href="http://imbita.org/" target="_blank" rel="noopener noreferrer">Imbita Swaziland Women’s Finance Trust</a> spoke about the digitalization journey in offering its savings and credit cooperative society (SACCO) members a USSD-based platform to save, borrow, and make mobile payments.
<h1>Data Risks</h1>
<blockquote class="pullquote--right">Challenges, including privacy, bias, and other human rights issues, can stem from the exponential growth of digital lending.</blockquote>
At the same time, several sessions highlighted the risks around data-driven innovation and what inclusive finance stakeholders need to do about it. <a href="https://aapti.in/" target="_blank" rel="noopener noreferrer">Aapti Institute</a>, an India-based think-tank that conducts research at the intersection of technology and digital rights, hosted a session <a href="https://www.youtube.com/watch?v=lXLY7BsG_fg&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=3" target="_blank" rel="noopener noreferrer">on AI and Financial Inclusion</a>, discussing risks and opportunities for risk mitigation with representatives from <a href="https://www.dvara.com/research/" target="_blank" rel="noopener noreferrer">Dvara</a>, <a href="https://rbihub.in/" target="_blank" rel="noopener noreferrer">RBI Innovation Hub</a>, and <a href="https://www.undp.org/india" target="_blank" rel="noopener noreferrer">UNDP</a>. This session raised challenges, including privacy, bias, and other human rights issues, that could stem from the exponential growth of <a href="https://www.centerforfinancialinclusion.org/digital-credit-algorithms-in-india-expanding-access-or-cementing-exclusion">digital lending in India</a>. I was honored to moderate a session on the <a href="https://www.youtube.com/watch?v=J0QaPM6sDDk&amp;list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb&amp;index=2" target="_blank" rel="noopener noreferrer">Potential of Privacy by Design for Inclusive Finance</a> with inputs from <a href="https://www.paypal.com/us/home" target="_blank" rel="noopener noreferrer">PayPal</a>, <a href="https://foundation.mozilla.org/en/" target="_blank" rel="noopener noreferrer">Mozilla Foundation</a>, and the <a href="https://www.dlak.co.ke/" target="_blank" rel="noopener noreferrer">Digital Financial Services Association of Kenya</a>. Representatives from PayPal and Mozilla discussed how Privacy by Design has been implemented in their business models, and Kevin Mutiso of DFSAK shared how startup fintechs can integrate and benefit from strong privacy practices.
<h1>Looking Ahead</h1>
As we look ahead to 2023, CFI will be monitoring how advances in AI are integrated into the inclusive finance space. Will there be chatbots or financial capability curricula that use ChatGPT? We’ll also be watching for countries to codify the use of AI and enforce data protection legislation. With so much happening in this space at the moment, there is a lot to pay attention to as we continue to grapple with the duality of data opportunities and risks.

View the full <a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_4MWcg0tioe63vFk1WA8Clb" target="_blank" rel="noopener noreferrer">Data Risks &amp; Opportunities</a> Playlist from FIW 2022.

Financial Inclusion Week 2022 had over 3,300 registered participants from 2,000 organizations across 148 countries. With almost 400 speakers and 125 sessions, FIW 2022 was the largest event to date. All sessions from FIW 2022 can be viewed here.

And be sure to save the date for FIW 2023 which will take place October 16-19, 2023.

FIW Recap: Grappling with Data Opportunities and Risks in Inclusive Finance

Each year, World Consumer Rights Day is celebrated on March 15 as a means of raising global awareness about consumer rights and needs. To join in spreading the awareness, this post outlines current risks and opportunities emerging in the field of consumer protection.

By October 2022, when <a href="https://financialinclusionweek.org/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> (FIW) was held, the world was beginning to emerge from more than two years of pandemic lockdowns and accelerated digitalization. The Global Findex 2021 showed that the share of adults in developing economies making or receiving digital payments <a href="https://www.worldbank.org/en/publication/globalfindex" target="_blank" rel="noopener noreferrer">grew from 35 percent in 2014 to 57 percent in 2021</a>, with over one-third of adults paying their utility bills digitally for the first time during COVID. In addition, growth in digital lending <a href="https://www.jbs.cam.ac.uk/wp-content/uploads/2021/03/2020-ccaf-global-covid-fintech-market-rapid-assessment-study-v2.pdf" target="_blank" rel="noopener noreferrer">dropped by 8 percent</a> in the first two quarters of 2020 but showed a <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/36883/9781464817304_Ch04.pdf" target="_blank" rel="noopener noreferrer">strong recovery when lockdowns eased</a>.

While these numbers reveal opportunities to use digital financial services to drive financial inclusion, there is also evidence of rising risks that can increase vulnerabilities among newly included consumers. CGAP’s research found that the frequency, breadth, and complexity of risks <a href="https://www.cgap.org/research/reading-deck/evolution-of-nature-and-scale-of-dfs-consumer-risks-review-of-evidence" target="_blank" rel="noopener noreferrer">have increased since 2017</a>. The <a href="https://finaccess.knbs.or.ke/reports-and-datasets" target="_blank" rel="noopener noreferrer">2021 FinAccess Survey</a> found that 47 percent of Kenyans using mobile money have lost funds, a sharp increase from the 8 percent who had cited the same problem in 2019. Digitalization has rapidly increased identity theft, fraud, and mobile money scams.

The impact of these risks is not experienced uniformly by all consumer segments. This indicates that our approach to consumer protection needs a more nuanced, segmented approach to address vulnerabilities. Data from the United Nation’s 2022 <a href="https://www.unwomen.org/sites/default/files/2022-09/Progress-on-the-sustainable-development-goals-the-gender-snapshot-2022-en_0.pdf" target="_blank" rel="noopener noreferrer">Progress on the Sustainable Development Goals</a> report is not encouraging. According to the report, it will take us approximately 300 years to address discriminatory laws and close prevailing gaps in legal protection for women. In addition to issues of fraud and financial losses that all consumers experience, women are also subject to greater harassment due to breaches of privacy and online harassment.
<h1>Consumer Protection was a Clear Focal Point at FIW 2022</h1>
This rise in consumer risks has not gone unnoticed by the inclusive finance community. The urgency to address these risks, particularly before consumer trust in digital financial services is eroded, was a leitmotif across many of the sessions at Financial Inclusion Week 2022. For example, in <a href="https://www.youtube.com/watch?v=J0QaPM6sDDk&amp;list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY&amp;index=1&amp;t=11s" target="_blank" rel="noopener noreferrer">CFI’s global plenary</a>, we discussed the need to embed privacy into the design and delivery of financial services, and expert panelists highlighted international examples to illustrate how this might be done.
<blockquote class="pullquote--right">The urgency to address these risks, particularly before consumer trust in digital financial services is eroded, was a leitmotif across many of the sessions at Financial Inclusion Week 2022.</blockquote>
Digitalization tends to exacerbate existing risks and introduces new risks that must also be detected and addressed. Standards such as the <a href="https://www.ada-microfinance.org/en/toolbox/social-and-environmental-performance#:~:text=The%20Universal%20Standards%20for%20Social%20and%20Environmental%20Performance,Universal%20Standards%20take%20into%20account%20seven%20fundamental%20dimensions%3A" target="_blank" rel="noopener noreferrer">Universal Standards for Social and Environmental Performance Management</a>, SPTF’s <a href="https://cerise-sptf.org/digital-financial-services/" target="_blank" rel="noopener noreferrer">Standards for Responsible Digital Financial Services</a>, and others emerged as important tools to address existing risks. In a session <a href="https://www.youtube.com/watch?v=CJ9_P7bGOvA&amp;list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY&amp;index=4&amp;t=2540s" target="_blank" rel="noopener noreferrer">hosted by SPTF</a>, there was agreement among discussants that standards provide a guideline for best practices for known risks. However, these guidelines may need to be adapted to specific contexts and may not reflect emerging risks or be sufficient to address them.

A <a href="https://www.youtube.com/watch?v=kYmfrSk094w&amp;list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY&amp;index=3&amp;t=8s" target="_blank" rel="noopener noreferrer">session by Incofin</a> highlighted investors as an important stakeholder group to enforce best practices through due diligence and monitoring. And in <a href="https://www.youtube.com/watch?v=7y8x44tLk2I&amp;list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY&amp;index=6" target="_blank" rel="noopener noreferrer">CFI’s on-demand session</a>, we also spoke to investors about how they shape market-level incentives through advocacy and catalytic capital investments. Catalytic capital investors can spur lending in underdeveloped markets while extending a stamp of responsible lending to companies they invest in at an early stage.
<h1>The Way Forward</h1>
As technology increasingly affects inclusive financial services, consumer protection risks are beginning to arise from areas outside the remit of traditional financial sector regulation. In addition, consumers must face risks from newer sources, which impact their financial lives. These new sources of risk include climate shocks, changes in weather patterns, the evolving nature of work, and factors like changing societal structures and norms. These risks can cause vulnerabilities in consumers’ lives at any stage of their interaction with financial services.

Consumer research, policy advocacy, and legislation must adapt to this new normal to take a different lens on identifying and addressing these challenges. By doing so, the industry can help low-income consumers achieve the goals of financial resilience and well-being. CFI’s consumer protection strategy addresses this by using a <a href="https://www.strivecommunity.org/insights/financial-services/consumer-protection" target="_blank" rel="noopener noreferrer">vulnerability framework</a> that identifies where consumer vulnerability is liable to exist in financial services. Identifying causes of vulnerability at any point in the consumer’s life captures moments where consumer resilience can be eroded and thus requires action by various stakeholder groups – investors, regulators, supervisors, and policymakers.
<blockquote>Identifying causes of vulnerability at any point in the consumer’s life requires action by various stakeholder groups – investors, regulators, supervisors, and policymakers.</blockquote>
CFI also convenes the <a href="https://globalrff.org" target="_blank" rel="noopener noreferrer">Responsible Finance Forum</a> (RFF), a global platform for dialogue and knowledge sharing on responsible inclusive finance and consumer protection. The RFF aims to confront the changing nature of consumer risks and collectively arrive at solutions that the inclusive finance industry can adopt to deliver financial services responsibly.

View the full <a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY" target="_blank" rel="noopener noreferrer">Consumer Protection playlist</a> from FIW 2022.

Financial Inclusion Week 2022 had over 3,300 registered participants from 2,000 organizations across 148 countries. With almost 400 speakers and 125 sessions, FIW 2022 was the largest event to date. All sessions from FIW 2022 can be viewed <a href="https://financialinclusionweek.org/2022-event" target="_blank" rel="noopener noreferrer">here</a>.

And be sure to save the date for FIW 2023, which will take place October 16-19, 2023.

FIW Recap: Consumer Protection – Crucial to Driving the Inclusive Finance Agenda

FIW Recap: Women’s Financial Inclusion Remains Key Global Focus

The theme for Financial Inclusion Week (FIW) 2022 was “Inclusive Growth in a Digital Era.” For years, financial products and services have been moving digital, and the pandemic further accelerated the trend toward digitalization. As digital becomes the new norm, we must ensure that these services are safe and inclusive of all people and do not exacerbate the exclusion of marginalized and vulnerable groups. FIW 2022 explored how the global financial inclusion community can harness digital innovation to expand inclusive financial services for all people across the globe, ensuring that products meet customer needs, have appropriate safeguards in place, and contribute to inclusive economic growth.

FIW 2022 hosted 125 live and on-demand sessions, featuring nearly 400 speakers from around the world. With over 3,330 registered participants from 2,000 organizations and 146 countries, FIW 2022 was the largest event to date.

To capture the learnings and key takeaways from the many Financial Inclusion Week 2022 sessions, CFI is compiling short summaries that highlight content and ideas from FIW 2022 sessions on select topics.

FIW 2022 Recap

Financial Inclusion Week (FIW) 2022 took place in October during an important time for climate discussions. In 2022, there were deadly floods in Pakistan and Nigeria, tropical storms in Central America, and an ongoing drought in the Horn of Africa – to name only a handful of devastating climate-related disasters which have created a backdrop of urgency to address climate change. In early November, COP27 focused the world’s attention on the urgent need for climate action. In December, CFI hosted a <a href="https://globalrff.org/december-2022" target="_blank" rel="noopener noreferrer">Responsible Finance Forum (RFF) convening</a> focused on the intersection of climate risks and consumer protection. And in the last quarter of 2022, CFI was also in the process of finalizing our multi-year strategy for climate work.

While the urgency of climate change is not new, what has changed in the past year is our understanding of what financial services can – and can’t – do to help low-income and vulnerable people respond to various climatic risks.

The inclusive finance sector has stepped up to this challenge and 2022 marked an important year. The European Microfinance Platform’s Green Inclusive and Climate Smart Finance Action Group (GICSF AG) published its updated <a href="https://www.e-mfp.eu/sites/default/files/action-groups/Green_Index_3.0_conceptual_framework.pdf" target="_blank" rel="noopener noreferrer">Green Index</a>. The <a href="https://www.cifaralliance.org/" target="_blank" rel="noopener noreferrer">CIFAR Alliance</a> has continued to build an industry agenda for the role of digital finance in climate resilience (including a session at FIW on <a href="https://www.youtube.com/watch?v=IyUlwUPPY40." target="_blank" rel="noopener noreferrer">democratizing access to carbon markets</a>). CGAP integrated climate into their <a href="https://www.cgap.org/blog/era-urgent-climate-risk-does-financial-inclusion-matter" target="_blank" rel="noopener noreferrer">new strategy</a> and they ended the year by publishing a <a href="https://www.findevgateway.org/slide-deck/2022/12/cgap-strengthening-climate-resilience-adaptation-through-financial-services" target="_blank" rel="noopener noreferrer">new taxonomy</a> of climate-responsive and climate-supportive financial products. At COP27, AFI published its <a href="https://www.afi-global.org/publications/roadmap-for-inclusive-green-finance-implementation/" target="_blank" rel="noopener noreferrer">Inclusive Green Finance Roadmap</a>, and inclusive green finance is a key priority for UNSGSA Queen Máxima as well as many other development actors.

The importance and urgency of climate change was clear to attendees joining the many FIW 2022 sessions that covered climate and green issues. In <a href="https://www.youtube.com/watch?v=2qENaGgm_4k&amp;t=548s" target="_blank" rel="noopener noreferrer">CFI’s global plenary</a>, we brought together a diverse group of stakeholders to discuss how the impacts of climate change are complex and highly variable. For example, fishing populations in the Philippines, poor urban women in Gujarat, and refugees in Uganda are all negatively impacted by climate change, and panelists described how financial services need to be able to support them all.
<blockquote>Fishing populations in the Philippines, poor urban women in Gujarat, and refugees in Uganda are all negatively impacted by climate change, and FIW 2022 panelists described how financial services need to be able to support them all.</blockquote>
Among the FIW sessions related to climate, there was general agreement that the current state of financial systems is not going to be enough to meet the needs of climate-vulnerable populations, and that we need more innovation and better systems for responsible investment. Catalyst Fund chaired a fascinating panel on the <a href="https://www.youtube.com/watch?v=3XFplsvWs1I" target="_blank" rel="noopener noreferrer">business case for investing in climate resilience ventures</a>. One of my favorite sessions of the week was chaired by David Porteous, exploring whether <a href="https://www.youtube.com/watch?v=D2wQFh8SCZ4" target="_blank" rel="noopener noreferrer">ESG frameworks were for purpose</a> from the perspective of financial institutions in developing nations. And looking ahead to 2023, the organizers of <a href="https://www.ada-microfinance.org/en/sam-2023/home" target="_blank" rel="noopener noreferrer">SAM 2023</a> explored <a href="https://www.youtube.com/watch?v=1PvZtMqYlnI" target="_blank" rel="noopener noreferrer">the links between inclusive finance, agriculture, and food security in Africa</a>.
<blockquote class="pullquote--right">We are hoping that a lot of the promise of 2022 turns into action and investment where it is needed most.</blockquote>
So, what about 2023? At CFI, we have already started on our climate work and recently released our <a href="https://www.centerforfinancialinclusion.org/green-inclusive-finance-a-framework-for-understanding-how-financial-services-can-help-low-income-and-vulnerable-people-respond-to-climate-change">latest research on green inclusive finance</a> and the ways it can impact low-income and vulnerable populations. We aim to build on this and go deeper into the role of inclusive financial services in responding to specific climate risks, like extreme heat or flooding. We are hoping that a lot of the promise of 2022, such as the commitment to funding for loss and damage at COP27, turns into action and that we can turn some of our ideas and concepts into real world action and investment where it is needed most.

FIW Recap: The Pressing Agenda of Climate Change and Financial Services

As each year comes to a close, it’s natural to reflect on the key moments and events that shaped the year. Beyond the political and economic events and trends – the war in Ukraine, the rise in inflation globally, the floods in Pakistan, and COP27 – the field of inclusive finance itself is reshaping its contours to meet the moment. We saw this very visibly in this year’s <a href="https://financialinclusionweek.org/">Financial Inclusion Week (FIW)</a>, the largest event we have hosted to date – with virtual participants from 2,000 organizations across 146 countries. The topics covered reflect the priorities of global actors in inclusive finance, pointing to the direction the field is going.

<img class="wp-image-45545 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/12/Screenshot-2022-12-12-at-11.27.19-AM.png" alt="" width="967" height="429" />

To me, the scale of this year’s FIW and the coming together of the minds of stakeholders worldwide during this difficult time signals an urgent need and momentum to accelerate our understanding of how inclusive finance must evolve to address global challenges. With over <a href="https://financialinclusionweek.org/2022" target="_blank" rel="noopener noreferrer">50 hours of live content and 70 on-demand sessions</a>, FIW has something for everyone. While it would be amazing to watch the hours of rich live and on-demand content oneself, we know few people have this luxury. We have been reflecting on this at CFI and will launch a blog series that highlights takeaways on key topics covered during FIW 2022.

<img class="wp-image-45546 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/12/4_Closing_Plenary-2-1.jpg" alt="" width="960" height="761" />

FIW 2022 left me with several reflections on the state of the inclusive finance sector and what needs to be prioritized. While FIW covered many sub-topics, the overall theme for the week was “Inclusive Growth in a Digital Era,” exploring how our community can harness digital innovation to expand inclusive financial services and contribute to inclusive economic growth.

In hindsight, as I reflect on the content, I would revise the theme and say that this year’s FIW was really about: “How we can create shared prosperity in our digital era.” Many of the sessions at FIW highlighted that, despite digital financial services’ promise to create inclusive solutions, there are serious shortfalls in how the digital economy is evolving, and new risks and gaps are emerging. We learned that while access and usage continue to rise, indicators linked to resilience have worsened. Even more concerningly, numerous examples of fraud and online harassment were spotlighted during the sessions indicating that the digital economy has yet to pan out as the equalizer that we thought it would be.

Some key messages I took away from FIW 2022 include:
<h3><strong>The future of micro and small enterprises (MSE) on digital platforms needs attention</strong>.</h3>
In a joint <a href="https://www.youtube.com/watch?v=0FCpTM0TAac" target="_blank" rel="noopener noreferrer">session</a> hosted by CFI and Mastercard Center for Inclusive Growth, panelists discussed the status quo – where platforms retain substantial bargaining power and most MSEs lack the skills or power to benefit fully from the economies of scale offered through platforms. While alternative business models, such as platform cooperatives or open networks, may be options worth exploring, integrating elements of these emerging models into today’s established business models is likely to produce the greatest benefits to MSEs and platforms alike. Sessions by CGAP on <a href="https://www.youtube.com/watch?v=8VlU8U3DOdI" target="_blank" rel="noopener noreferrer">digital platforms</a> and <a href="https://www.youtube.com/watch?v=iGzlBKRK-PU" target="_blank" rel="noopener noreferrer">fintechs</a> surfaced regulatory fragmentation, payment rails, and e-KYC norms as pressing issues limiting workers and MSEs from fully benefitting from the digital economy. Regulators, donors, investors, and other industry stakeholders should invest more explicitly to enable a rebalancing of power to favor MSEs.
<h3><strong>Trust needs to be earned; regulators, providers, and consumer organizations each have a role in making that happen.</strong></h3>
A <a href="https://www.youtube.com/watch?v=yXw-r70lLXc" target="_blank" rel="noopener noreferrer">session by Consumers International</a> shared evidence on both existing and emerging consumer risks. These included significant increases in consumer complaints in Fiji and major issues around trust in digital finance in India, where 60 percent of digital finance users surveyed stated that they stopped usage because of trust issues. While several digital financial services users sought redressal through customer care channels, 20 percent of respondents in India never had their issue resolved.

Regulators can play a critical role in shaping market conduct. Another <a href="https://www.youtube.com/watch?v=CJ9_P7bGOvA" target="_blank" rel="noopener noreferrer">session hosted by SPTF</a> provided compelling evidence of fraud and abuse in markets like Kenya and discussed what provider practices could help mitigate these risks. Fair Finance’s session brought up an example of how a regulator can step in to enable greater trust in the financial system for low-income consumers and businesses: they mentioned the Central Bank of Rwanda's approach, where they are working to build trust via a consumer protection law, retaining oversight of financial consumer protection, creating tools to compare providers, and establishing instant complaints systems that allow consumers to submit complaints through email and social media.

These sessions reinforced the need for rigorous research, progressive regulation, and market conduct supervision that incentivize providers to be responsible and strong consumer organizations who can advocate on behalf of the silent majority in most developing markets. Donors and investors working to support market development must ensure that these fundamental guardrails are in place before they scale innovations.
<h3><strong>Regulation and regulators are important in addressing gender inequity and creating trust.</strong></h3>
Gender inequity is perhaps the gap that received the greatest attention during FIW 2022. Toronto Centre’s panel on <a href="https://www.youtube.com/watch?v=ISoRGWNdaQQ&amp;list=PL30fMMRd3G_7IGUKLWAQm_Z3zDVIu6LCB&amp;index=28" target="_blank" rel="noopener noreferrer">Advancing Cybersecurity and Financial Inclusion</a> highlighted the large gender gaps – such as access to technology – and the greater vulnerability, whether harassment, gender-based violence, or outright discrimination, and looked at what regulators are doing to counterbalance the system that is stacked against women.

<a href="https://www.youtube.com/watch?v=FFIFIvuVo0U" target="_blank" rel="noopener noreferrer">CFI’s Edoardo Totolo</a> delivered one of the four keynotes and highlighted both the opportunities and the risks posed by new embedded finance players. He emphasized the increasingly important role unregulated non-financial actors play in the design and delivery of financial services and the regulatory ambiguity around who is responsible for what. His keynote ends with a cautionary note to regulators and policymakers to clearly define the regulatory perimeters, articulate the role of third-party actors, promote interoperability and open architecture, and above all, create a level playing field.
<h3><strong>One-size fits all solutions are insufficient; segmentation is necessary.</strong></h3>
Several panelists emphasized that low-income customers are not a monolith and recognized that low-income consumers occupy different societal groups, each with its unique strengths, challenges, and starting points. A key takeaway from these sessions is that when we design without understanding the specific segment we are trying to reach, we will de facto design products and services for men. Instead, we must be intentional and create solutions that address specific consumer needs.

<a href="https://www.youtube.com/watch?v=-jz8tnEuAIQ" target="_blank" rel="noopener noreferrer">AXA’s session</a> on developed markets, including Japan, the US, and France, provided a unique look at excluded segments and approaches providers were taking to be inclusive in these highly competitive and highly regulated markets. For example, French provider <a href="https://nickel.eu/fr" target="_blank" rel="noopener noreferrer">Nickel</a> noted their rapid trajectory of delivering a simple product with very clear and fair terms and relying on distribution systems that leverage existing points of sale used by low-income consumers. In another <a href="https://www.youtube.com/watch?v=jC2AmET0HXI" target="_blank" rel="noopener noreferrer">session by Mastercard Strive</a>, a panelist from <a href="https://www.withboost.co/" target="_blank" rel="noopener noreferrer">Boost</a> Nigeria noted that women-owned small businesses are not a homogenous retail segment. Recognizing that women business owners had varying levels of digital and financial capabilities, Boost adopted a range of strategies that tried to meet women where they were in their journeys. A <a href="https://www.youtube.com/watch?v=Yp5yhELqTqI&amp;t=12s" target="_blank" rel="noopener noreferrer">session hosted by the Kashf Foundation</a> noted that despite the progress prompted by the pandemic, the digital divide is a nuanced issue that merits attention. Affordability to broadband is perhaps the next frontier, particularly when women don’t always have full control of household income or phone ownership.
<h3><strong>We need to focus on climate adaptation; prioritizing mitigation is not enough.</strong></h3>
In his keynote, USAID’s <a href="https://www.youtube.com/watch?v=_hUipQztGXs" target="_blank" rel="noopener noreferrer">Songabae Lee</a> provided a realistic and sobering view of the limitations of development finance, noting that mobilizing capital is the current priority at the global level. Recognizing that private sector capital is best geared toward mitigation, while adaptation still requires grant funding, Lee urges the audience to take advantage of what’s currently open rather than beating on a closed door. The open door is to start by leveraging capital for mitigation and then work to advocate for and shift attention to adaptation.

A <a href="https://www.youtube.com/watch?v=IyUlwUPPY40" target="_blank" rel="noopener noreferrer">session hosted by BFA Global</a> on the business case for climate resilience adopts a more optimistic lens, where investors start recognizing the need to move faster toward adaptation. The session delved into the experiences of multilateral development banks (MDBs) in financing climate initiatives that can be leveraged for earlier-stage ventures, highlighted the creation of the <a href="https://gca.org/news/collaborating-to-accelerate-investment-in-climate-adaptation-and-resilience/" target="_blank" rel="noopener noreferrer">adaptation and resilience collaboration</a> with 18 organizations, and the importance of data and measurement to help move this agenda forward. The urgency of scaling climate adaptation finance was also highlighted in a <a href="https://www.youtube.com/watch?v=2qENaGgm_4k&amp;t=1s" target="_blank" rel="noopener noreferrer">session</a> organized by CFI, where panelists from SEWA, FSD Mozambique, and UNHCR unequivocally emphasized the threats and income shocks low-income communities and refugees were exposed to in the absence of solutions tailored to support adaptation and resilience building at the community level.

My colleagues will go deeper into some of these messages in the blogs to follow in this series. If you are interested in revisiting the recordings, all sessions from FIW 2022 are available online. Check out the full playlist <a href="https://financialinclusionweek.org/2022" target="_blank" rel="noopener noreferrer">here</a>.

For curated session lists by topic, please see the links below for the playlists we’ve developed thus far.
<ul>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_7YYIjKT10xi4v5vjOKbuLl" target="_blank" rel="noopener noreferrer">Women’s financial inclusion</a></li>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_4ysbJRWLiVICDCCHEKSTMY" target="_blank" rel="noopener noreferrer">Consumer protection</a></li>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_434ImijU6wxmZro4JHG7vu" target="_blank" rel="noopener noreferrer">Climate and inclusive finance</a></li>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_5l8T1UH24TIm7H-EM7gydP" target="_blank" rel="noopener noreferrer">Micro and small enterprises</a></li>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_5Mn-Gm3O2hgxyaSo9ajB7a" target="_blank" rel="noopener noreferrer">Digital assets and digital currencies</a></li>
 	<li><a href="https://www.youtube.com/watch?v=-jz8tnEuAIQ" target="_blank" rel="noopener noreferrer">Developed markets and inclusive finance</a></li>
 	<li><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_4yq2Ugx050YBIt4wwN5rMs" target="_blank" rel="noopener noreferrer">Impact measurement</a></li>
</ul>

End-of-Year Reflections

So much has happened in the last 12 months. It is hard to believe that this time last year, during <a href="https://financialinclusionweek.org/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> 2021, we were imagining the end of the pandemic and a return to ‘normal.’ But of course, Omicron was just around the corner, and it came with a bang. Other variants followed and infection rates skyrocketed once again by May 2022. At the same time, by January, the pandemic was overshadowed by the war in Ukraine, which continues to have countless ripple effects on both developed and developing countries. Rising oil prices, disruptions in supply chains, increasing food prices, concerns about food insecurity, and of course inflation have been persistent themes across the airwaves and the headlines.
<blockquote class="pullquote--right">It’s hard to keep up with what feels like endless shocks to the global economy and people’s day-to-day lives.</blockquote>
And the backdrop to all of this has been the climate crisis and an endless series of natural disasters around the world. <a href="https://www.economist.com/graphic-detail/2022/09/15/devastating-floods-like-pakistans-will-be-more-common-in-a-warming-world" target="_blank" rel="noopener noreferrer">Floods in Pakistan</a> have killed thousands and displaced 33 million people, so far covering one-third of the country. With record temperatures in Europe, North America, South Asia, and the Middle East, and another summer of fires in <a href="https://www.reuters.com/business/environment/brazils-amazon-sees-worst-august-fires-over-decade-2022-08-31/" target="_blank" rel="noopener noreferrer">Brazil</a>, <a href="https://www.downtoearth.org.in/news/natural-disasters/india-s-forest-fires-are-getting-bigger-and-hotter-like-the-rest-of-the-world-82319" target="_blank" rel="noopener noreferrer">India</a>, <a href="https://www.voanews.com/a/major-wildfire-in-spain-forces-the-evacuation-of-1-500-/6701137.html" target="_blank" rel="noopener noreferrer">Spain</a>, <a href="https://www.telesurenglish.net/news/Portugal-Under-Alert-as-Fires-Continue--20220822-0018.html" target="_blank" rel="noopener noreferrer">Portugal</a>, and <a href="https://www.reuters.com/world/europe/wildfires-breaking-out-across-world-2022-07-19/" target="_blank" rel="noopener noreferrer">many other countries</a>, it’s hard to keep up with what feels like endless shocks to the global economy and people’s day-to-day lives.
<h1>Drivers of Volatility for Developing and Emerging Countries</h1>
While there is a temptation to shut off the news and search for a less turbulent life, it’s virtually impossible given the magnitude of change in our world. Instead, we need to build our resilience and learn to deal with volatility. We should adjust our expectations and plan for unpredictability to be par for the course.

At CFI, we think there are three important drivers of volatility that everyone needs to prepare for.
<h3><strong>1.  Climate change.</strong></h3>
The World Bank estimates that climate change will have an impact on the lives of 100 million people who are likely to fall below the poverty line by 2030. <span class="TextRun SCXW210735729 BCX0" lang="EN-US" xml:lang="EN-US" data-contrast="auto"><span class="NormalTextRun CommentStart SCXW210735729 BCX0">Natural disasters and other extreme weather conditions</span></span><span class="TrackChangeTextInsertion TrackedChange SCXW210735729 BCX0"><span class="TextRun SCXW210735729 BCX0" lang="EN-US" xml:lang="EN-US" data-contrast="auto"><span class="NormalTextRun SCXW210735729 BCX0"> are</span></span></span> <span class="TrackChangeTextInsertion TrackedChange SCXW210735729 BCX0"><span class="TextRun SCXW210735729 BCX0" lang="EN-US" xml:lang="EN-US" data-contrast="auto"><span class="NormalTextRun SCXW210735729 BCX0">estimated to impact</span></span></span><span class="TextRun SCXW210735729 BCX0" lang="EN-US" xml:lang="EN-US" data-contrast="auto"> <span class="NormalTextRun SCXW210735729 BCX0">consumption losses</span></span>. Entire coastal cities in developing countries are expected to be underwater because of rising sea levels. Reversing global trends, <a href="https://www.usglc.org/blog/climate-change-and-the-developing-world-a-disproportionate-impact/#:~:text=Economic%20Development%3A%20The%20World%20Bank,people%20into%20poverty%20each%20year" target="_blank" rel="noopener noreferrer">inequality between developed and developing countries</a> is likely to continue to increase as a result of climate change.

We know that climate change is hurting those least able to cope with the consequences, despite their limited contributions to greenhouse gas emissions. Cumulative shocks – both weather-related and due to the pandemic – have further depleted coping strategies. <a href="https://www.centerforfinancialinclusion.org/climate-change-adds-to-challenges-for-msmes-recovering-from-covid-three-takeaways-from-cfi-surveys">CFI’s research</a> has shown that MSMEs impacted by climate change have struggled to recover from the pandemic more than other small businesses that did not previously face a climate shock, and most MSMEs were unable to actively prepare response strategies to cope with climate shocks.
<h3><strong>2.  Food insecurity and hunger.</strong></h3>
A knock-on effect of climate shocks and the war in Ukraine is the impact on food production and the price of food globally. The World Food Program is calling it a <a href="https://www.wfp.org/global-hunger-crisis#:~:text=2022%3A%20a%20year%20of%20unprecedented,on%20the%20edge%20of%20famine" target="_blank" rel="noopener noreferrer">looming food security crisis</a> where “the number of those facing acute food insecurity has soared – from 135 million to 345 million – since 2019. A total of 50 million people in 45 countries are teetering on the edge of famine." The inflationary effects of the war are hitting developing countries hard and will only further exacerbate food insecurity. <a href="https://www.focus-economics.com/countries/turkey/news/inflation/inflation-comes-in-at-highest-level-since-our-records-began-0#:~:text=FocusEconomics%20Consensus%20Forecast%20panelists%20expect,2022%20and%2036.9%25%20in%202023.">Turkey’s inflation rate</a> reached 80 percent in August. <a href="https://www.bloomberg.com/news/articles/2022-08-31/sri-lanka-inflation-quickens-to-64-3-in-august?leadSource=uverify%20wall" target="_blank" rel="noopener noreferrer">Sri Lanka</a> hit 64 percent. <a href="https://www.imf.org/en/News/Articles/2022/04/29/pr22135-imf-executive-board-approves-two-year-us-billion-flexible-credit-arrangement-for-colombia" target="_blank" rel="noopener noreferrer">Colombia</a>, <a href="https://www.hrw.org/news/2022/08/19/egypt-seeks-exceptional-treatment-imf" target="_blank" rel="noopener noreferrer">Egypt</a>, and <a href="https://www.imf.org/en/News/Articles/2022/09/01/pr22295-imf-reaches-staff-level-agreement-on-an-extended-fund-facility-arrangement-with-sri-lanka" target="_blank" rel="noopener noreferrer">Sri Lanka</a> are a few of the countries recently negotiating emergency support from the IMF in the hopes of reducing or preventing civil unrest linked to price increases.
<h3><strong>3.  Institutional and governance gaps.</strong></h3>
There have been significant economic and political shifts at the global level, creating new alliances and many new uncertainties. The decline of US hegemony has led to increased tensions and competition between the US and China. The war in Ukraine is possibly an outcome of these tectonic power shifts. There is also falling trust in government – 36 percent of the population in 62 developed and developing <a href="https://www.un.org/development/desa/dspd/2021/07/trust-public-institutions/" target="_blank" rel="noopener noreferrer">countries</a> expressed confidence or trust in their governments, a 13 percent decrease in 13 years. According to <a href="https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege" target="_blank" rel="noopener noreferrer">Freedom House</a>, 2020 was the 15th consecutive year of decline in political rights and civil liberties.

Today, there are fewer democracies than in 2005 and many more autocratic regions. The most common form of authoritarian regime is personalist— where power is consolidated in one person or a small group. Personalist authoritarian regimes tend to be the most corrupt and erratic in decision-making, the least likely to plan for succession, and the most likely to start wars and escalate conflicts. The growing democratic deficit, corruption, and a surge in mis- and disinformation campaigns are severely eroding public trust in government. With scores of people falling back into poverty and rising social tensions, the magnitude of the devastation arising from the governance inefficiencies is still being realized.
<blockquote class="pullquote--left">We need to be responsive, nimble, and plan for continued change to be able to catalyze inclusive growth in these turbulent times.</blockquote>
The challenges posed by climate change, rising food insecurity and hunger, and institutional and governance gaps threaten to undo the progress achieved over the past century and adversely impact millions of lives, most of whom are low-income, vulnerable people from the developing world. These trends and forces mean we are firmly in an era of high volatility, where good governance matters more than ever. We need to be responsive, nimble, and plan for continued change to be able to catalyze inclusive growth in these turbulent times.
<h1>Digital Financial Services Support Resilience but Not Enough to Reduce Vulnerabilities and Stress</h1>
The pandemic accelerated an already digitizing world. According to the <a href="https://www.worldbank.org/en/publication/globalfindex" target="_blank" rel="noopener noreferrer">2021 Global Findex</a>, over 40 percent of adults in low-and-middle-income countries (excluding China) made merchant in-store or online payments for the first time using a card, phone, or the internet. Two-thirds of adults worldwide now make or receive a digital payment, with the share in developing economies increasing from 35 percent in 2014 to 57 percent in 2021. Similarly, mobile money accounts drove a huge increase in financial inclusion, particularly for women in Sub-Saharan Africa, where 33 percent of adults had mobile money accounts.

Despite this momentum, the upsides have not been shared equally. CFI’s <a href="https://www.centerforfinancialinclusion.org/digital-adoption-of-msmes-during-covid-19">research on MSMEs</a> has shown that women MSME owners are less likely to conduct financial transactions via a mobile phone, be familiar with or understand the terms and benefits of mobile money, or own a mobile money account. The research also found that digital uptake was slow, sporadic, and in some cases even declined among women-owned MSMEs, pointing to the likelihood that the women-owned firms were not benefitting from the digital economy, even in markets with more built-out digital ecosystems like India and Indonesia.

Most concerning, despite greater access to and usage of digital finance, multiple data sources are pointing to the decline in financial health globally. The Global Findex 2021 looked at the ability of low-income people to access money within 30 days in an emergency, a metric that aims to capture ‘resilience’. It finds that only 55 percent of adults are able to do so in developing countries. This number is 79 percent in high-income economies, where more adults have access to credit cards and opportunities for short-term or gig work to make extra money. <a href="https://www.fsdkenya.org/blogs-publications/publications/inclusive-finance-for-sustainable-economic-development-in-kenya/" target="_blank" rel="noopener noreferrer">Insights from FSD Kenya’s</a> recent FinAccess survey has shown that despite progress in access and usage of digital financial services, much remains to be done when it comes to achieving strong financial health outcomes that allow Kenyans to build resilience, take prudent risks, and make productive investments towards their future.
<blockquote>It is our collective responsibility to carefully consider and address these barriers that impede access to existing solutions and build protection mechanisms.</blockquote>
It is our collective responsibility to carefully consider and address these barriers that impede access to existing solutions and build protection mechanisms, failing which we will be unable to progress toward a vision of inclusive growth for shared prosperity.
<h1>Growing as a Community to Address Today’s Challenges</h1>
The world is advancing at a dizzying pace. The path of progress we’ve come to rely on is threatened by new forces that are more likely to affect the most vulnerable in society. Hiding our heads in the sand will not do any good and expecting market forces alone to lead to inclusive growth is nostalgic thinking. We need a new era of coordinated and thoughtful action to mitigate the effects of the confluence of forces that have the potential to create unprecedented harm to the lives of millions of people.

The inclusive finance community of stakeholders – those who join Financial Inclusion Week – must step up to connect these macroeconomic forces to real people, real livelihoods, and real solutions.

This Financial Inclusion Week, we have a packed <a href="https://financialinclusionweek.org/2022-agenda" target="_blank" rel="noopener noreferrer">agenda</a> with 45 live sessions and a wealth of on-demand content on the most critical topics in inclusive finance. Throughout the week, hundreds of speakers will be discussing varied issues from how to enable MSMEs to reach their potential to cryptocurrency and the potential of CBDCs; from fintech to applying a gender lens in digital transformation; from consumer protection to investing in climate resilience.

We hope that this year’s Financial Inclusion Week provides the opportunity to learn from and join forces with other organizations and stakeholders so that we can work together toward a shared vision. Thank you for joining us at <a href="https://financialinclusionweek.org/2022-registration" target="_blank" rel="noopener noreferrer">Financial Inclusion Week 2022</a>!

Volatile Times Call for Sustained Resolve

Financial Inclusion Week (FIW) is an annual gathering of the global community working to advance inclusive finance. The four-day virtual event is a forum for exchanging ideas, research, and perspectives from around the world. The Center for Financial Inclusion (CFI) convenes FIW each year and invites partner organizations to showcase work, share ideas on what’s ahead, network with others, and more. The community-driven agenda covers the most pressing topics in our space, helping to inform and advise global efforts to advance inclusive finance.

The theme for FIW 2022 was "Inclusive Growth in a Digital Era" and took place October 17-20, 2022.

<strong>All FIW 2022 live and on-demand sessions can be viewed at <a href="http://financialinclusionweek.org" target="_blank" rel="noopener noreferrer">financialinclusionweek.org</a>.</strong>