From mobile payments to behavioral changes, innovation in financial inclusion takes many shapes and sizes.

This post is adapted from the recently-released publication “<a href="http://www.centerforfinancialinclusion.org/storage/Inclusive_Insurance_Final_2018.01.06.pdf">Inclusive Insurance: Closing the Protection Gap for Emerging Customers</a>,” a joint-report from the Center for Financial Inclusion at Accion and the Institute of International Finance, in partnership with MetLife Foundation.

New technologies are dramatically changing the landscape for insurance around the world and enabling insurers to reach new mass market segments. New data sources and analytical tools are changing risk models by enabling new ways to create, capture, and analyze valuable information that can help insurers better calculate and manage the risk associated with customers. Machine learning applied to satellite imagery is changing agricultural and disaster insurance, allowing for more sophisticated claims management, even facilitating pre-loss payments that can help minimize the cost of a disaster before it is full-blown. The expansion of identity solutions and onboarding options is lowering operations costs and enhancing convenience. These innovations are helping the global insurance industry transform from a passive risk-transmission industry into an active risk mitigation and advisory partner for individuals, businesses, and governments.

The use of mobile phones to deliver insurance is no longer a novelty, but there is tremendous scope for growth. Mobile phone penetration in emerging markets is now 80 percent, making mobile devices excellent distribution channels. Mobile phones are convenient for enrollment, transmitting premiums and paying claims. Mobile phones have also been helpful for customer service, policy management, consumer education, and other vital functions.

While mobile insurance products have already broken important new ground, there is a much broader array of more recent innovations paving the way for growth. The joint CFI-IIF report found providers using technology to solve both front-end and back-end challenges. Here are some of the ways providers are addressing customer and business needs through technology.
<h3>Instant Enrollment</h3>
In many countries, advances in identification systems have made it possible to enroll customers instantly. Garrance Wattez-Richard, Head of Emerging Markets at AXA, notes, “National ID is changing everything in China and in India.” In Colombia, Margarita Henao Cabrera reports that customers can enroll in DaviPlata’s insurance in seconds by entering their national IDs into their mobile phones. Richard Leftley, CEO of MicroEnsure, notes that even basic questions such as the customer’s name, age, and other demographics can create a barrier to enrollment, so enrolling customers based only on phone numbers eliminates those barriers. “We don’t know anything about them until they make a claim, not even their name or age,” says Leftley. Depending on the market, automated enrollment mechanisms include internet-based products in China and point-of-sale devices among retailers in Latin America.
<h3>Technology-Enabled Claims Verification and Payouts</h3>
<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/daviplata.png"><img class="wp-image-24911 alignright" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/01/daviplata.png" alt="" width="465" height="507" /></a>

Since paying claims fast builds trust and adds customer value, Allianz is experimenting with payments that do not require customers to submit a claim—for instance, if the distribution partner reports that a customer has been in an accident. Parametric or index insurance using data from weather satellites enables automatic payments for farmers. Claims payouts and management are even being enhanced by drones. Drones allow access to isolated and dangerous areas after disasters to collect aerial data and assess loss through cutting-edge imagery analytics. Munich Re has been experimenting with the technology and has partnered with U.S.-based drone company PrecisionHawk. The two companies worked together in the aftermath of the April 2016 earthquake in Ecuador.
<h3>Back-Office Systems</h3>
Modernizing back-office IT systems helps bring down administrative costs, making low-premium products cheaper to manage. When AXA acquired MicroEnsure, its first investment was to improve legacy IT infrastructure. LeapFrog Investments also prioritizes IT with its microinsurance investments. To further reduce transaction costs, some experiments use blockchain technology, such as Consuelo, offered by the Mexican-based mobile platform Saldo.mx, in this case to facilitate microinsurance for Mexican migrant workers in the United States. By providing a universal and tamper-proof record of transactions, blockchain technology could reduce human error, fraud, data duplication, processing delays, and opaqueness—ultimately increasing efficiency and lowering operational and administrative costs for the insurance industry. (Though at a very high energy cost.)
<h3>Using New Data to Reappraise Risks</h3>
Historically, there has not been enough data to feed actuarial analysis that can inform a relevant product at a fair and attractive price for newer and lower income market segments. However, data has now become available on people who have a national ID or mobile phone number. Data analytics can then be effective at identifying prospective customers and their behavior patterns. Salmaan Jaffery of DIFC Authority looks forward to using artificial intelligence and machine learning in product development and risk assessment. With new data tools, the sector will look at risk differently. As Jaffery explains, “It may become apparent, through the analysis of behavioral and social data, that lower-income people may not be any greater risk than those with higher income profiles.”

For more on the uses of technology in inclusive insurance, including how it’s enabling integrated services for health insurance, read “<a href="http://www.centerforfinancialinclusion.org/storage/Inclusive_Insurance_Final_2018.01.06.pdf">Inclusive Insurance: Closing the Protection Gap for Emerging Customers</a>.”

Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2018/01/08/inclusive-insurance-closing-the-protection-gap-for-emerging-customers/">Inclusive Insurance: Closing the Protection Gap for Emerging Customers</a>

<a href="https://cfi-blog.org/2017/04/13/making-microinsurance-work-in-bangladesh-three-takeaways/">Making Microinsurance Work in Bangladesh: Three Takeaways</a>

<a href="https://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

&nbsp;

&nbsp;

How Technology Is Propelling Inclusive Insurance

MetLife Foundation

Innovation Spotlight

Agricultural and Rural Finance

Credit

Financial Technology

Inclusive insurance

Insurance

Insurance Companies

Insurtech

Blog Post

&gt; Posted by Aurora Bila and Kim Dancey, Director of Payment Systems at the Bank of Mozambique and Head of Payments at First National Bank

Of the 338 million citizens of the Southern African Development Community (SADC) member states, 138 million lack adequate official means of identification. This limits their access to and usage of many government services, as well as the range of services offered by financial service providers. This affects their well being in a host of ways, which is why the U.N. Sustainable Development Goals include the goal of a robust “Identity for All” by 2030.

Some SADC countries lack a standardized form of identification, and citizens require various pieces of documentation to access financial services in the formal sector. And in some instances there are no legislative frameworks for issuing any form of formal identification document.

Even among those SADC adults who do have national IDs, documents are often not accepted across borders for opening bank accounts or sending remittances home. Banks and remittances agencies in SADC countries face more stringent Know Your Customer (KYC) requirements for cross-border than for domestic remittances. Therefore, if the identity source document is not easily verifiable to the level of assurance required, to manage both internal risk and to comply with Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) requirements in force, the provider will not make the service accessible. Furthermore, global standard-setting bodies are increasing the pressure on local regulators regarding identity. For example, it is no longer sufficient to identify only the remittance-sending customer. Financial services providers are now compelled to also know the identity of the recipient and to hold these identities throughout the payment transaction. Consequently, only institutions willing and able to price and charge for the risk and cost will offer the services.

Some SADC remittance corridors are among the most expensive in the world, and these identity issues are likely contributing to the costs. The World Bank has <a href="https://remittanceprices.worldbank.org/en">reported</a> that the average cost of sending a small sum (US$200) from South Africa to other SADC countries is around 16 percent. Recent research from FinMark Trust, an SADC think tank, <a href="http://www.finmark.org.za/wp-content/uploads/2016/11/cross-border-remittances-2016.pdf">suggests</a> that this average may be closer to 7 percent. But even that level is still expensive, certainly compared with global <a href="http://www.un.org/sustainabledevelopment/inequality/">sustainable development goals</a> of reducing the average cross-border remittance cost to 3 percent by 2030.

How can SADC achieve much lower remittance costs, while also advancing other goals of financial inclusion – all with, not at the cost of, financial integrity? We believe that a solution worth considering is a robust, secure digital financial identity system for SADC countries which can be relied on by financial service providers and which is acceptable to regulators across the SADC region. Such a system would support the expansion of financial access in a secure manner and provide the opportunity to leapfrog the less-efficient brick-and-mortar way of doing business and focus strongly on digital finance services. It would also enable easy monitoring of suspicious transactions in real time, which does not happen in informal channels. If a migrant living in South Africa could open an account using an identity document that a bank could easily verify to be genuine, then the risk for banks and other remittance providers would fall substantially, which should have a direct impact on costs.

How could such an SADC-wide digital ID come about? We have several practical suggestions. First, issuing the digital ID would need to be done in a way that does not replace or undermine the efforts of SADC national governments to enroll citizens. Instead, the digital ID would specifically be geared to allowing financial institutions to recognize verification of identities done by other financial institutions across SADC borders. Second, we recommend that SADC governments not have to drive or fund the effort – in part as this arrangement would likely result in a longer time frame – although regulators would have to vet it. Nevertheless, governments may welcome such an initiative if it stimulates demand for government issued so-called ‘breeder documents’ (government-issued national IDs) which would be used as the basis to create digital identities.

There may not be a need for a centralized database. New technologies like blockchain and distributed ledgers applied to identity may allow financial services providers to operate as identity nodes in a permission-enabled network of approved counterparties able to verify identity in a way other banks and financial services providers can recognize. There may be opportunities to capture biometric attributes as well, which could be an additional level of assurance. This approach has been followed across the Nigerian banking sector in issuing a unique bank verification number to all clients linked to biometric identities.

We are following the variety of digital identity solutions being applied around the world in this burgeoning area of interest. These solutions have included offering small businesses ‘<a href="https://e-resident.gov.ee/">e-residency’</a> in Estonia (meaning a business can be registered as a business in Estonia without having a physical presence there), to enable firms to conduct business in the EU, a process recently endorsed by the UN. Another are self-sovereign identity solutions which rely on decentralized ledger technology (blockchains) to allow individuals to build and carry their digital credentials with them. Examples of this include Consent from South Africa and Banqu from the United States.

Of course, many issues need further exploration. What is the business case for banks and others financial services providers to fund set up costs associated with such an effort? Could regional bodies like SADC Bankers Association or SADC Payments Association, which have already supported the rollout of innovative digital payment infrastructure in the region, play a coordinating role? How will privacy and data security risks be addressed in the context of domestic regulation?

There is a precedent for a regional identification process in SADC from the transport sector, namely the process of harmonizing standards for drivers’ licenses and creating a regional database to enable safer cross-border road traffic. This process, which means that SADC drivers’ licenses can be valid and accepted across borders, has been underway for a number of years. Of course, a solution for digital financial ID may not solve the problem for all consumers, especially those who do not have a foundational national ID to start with. But if widely accepted and used, a robust digital financial ID may increase the demand for getting a valid national ID.

SADC has a great opportunity to provide a digital financial identity as part of the infrastructure for a 21st century regional economy which includes expanding e-commerce. We hope that SADC Central Bank Governors and the SADC Banking Association will seriously explore this proposal.

This post reflects the views of the authors but not necessary those of their organizations.

 <img class="alignleft wp-image-24735" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/aurora1.png" alt="" width="85" height="84" />Aurora Da Glória V. Bila holds an MSc. in economics from Cass Business School, City University, United Kingdom. Aurora joined the Central Bank of Mozambique in 1999 and since then she has assumed several positions. Aurora is a graduate from the Fletcher School Leadership Program in Financial Inclusion (Tufts University). Aurora has been Director of the Payment System Department of the Bank of Mozambique since June 2014.

<img class="alignleft wp-image-24727" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/kim.png" alt="" width="85" height="85" />Kim Dancey is a lawyer with expertise in digital payments with a focus on creating, and supporting, enabling environments for the adoption and usage of quality, and inclusive, digital financial services. As Head of Payments for FNB International, Kim is responsible for supporting the group strategy, and identifying opportunities in differentiated payment services for the FNB group subsidiaries. 

Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2015/07/15/south-africas-proposed-credit-regulations-irk-credit-providers-please-consumers/">South Africa's Proposed Credit Regulations Irk Credit Providers, Please Consumers</a>

<a href="https://cfi-blog.org/2017/06/15/lack-of-financial-access-the-plight-of-our-south-african-elders/">Lack of Financial Access: The Plight of Our South African Elders</a>

<a href="https://cfi-blog.org/2017/09/29/in-the-wake-of-the-equifax-breach-are-biometrics-the-answer/">In the Wake of the Equifax Breach, Are Biometrics the Answer?</a>

&nbsp;

SADC Needs a Regionally-Accepted Digital Financial ID—and It Is Feasible to Contemplate

South Africa

Enabling Environment

Policy, Regulation and Government Initiatives

The following post was <a href="http://www.ifmr.co.in/blog/2016/05/04/a-change-in-behavior-innovations-in-financial-capability-an-interview-with-elisabeth-rhyne/">originally published</a> on the IFMR Trust blog.

In this blog post we interview Elisabeth Rhyne, PhD, Center for Financial Inclusion, Accion, and co-author of the recently published study A Change in Behavior: Innovations in Financial Capability.

Your paper is the result of a global search for innovative approaches to building consumer financial capability. Financial capability is not a well-known concept. What does it mean?

We define financial capability as the knowledge, skills, attitudes and behaviors a person needs to make sound financial decisions that support well-being. The financial capability approach stems from the research that reveals an important gap between knowing and doing. We may know that savings is important, but we spend instead. Financial capability focuses on behavior change as well as the desired outcome: customer financial health. This approach contrasts with traditional financial education, which has generally been focused on knowledge and information transfer, often stopping short of considering whether information is acted upon.

What prompted you to carry out your scan of the financial capability landscape?

I was reading a lot of material by behavioral economists, and so I was aware of the power of their ideas. However, I didn’t see the kind of uptake in practice that I thought the ideas deserved. I wanted to understand why this wasn’t happening. I was also aware of technology developments that opened exciting new avenues for communicating with consumers, and wanted to find the innovators – organizations like Juntos, a data analytics firm which partners with financial institutions to create personalized SMS conversations containing reminders and tips for customers.

We are also grateful that JPMorgan Chase &amp; Co. provided generous financial support.

What were your main findings?

First, financial capability building needs to happen at the right time and place, especially at the moments when financial service providers and customers interact. Education provided at other times is often ignored or forgot. Much research finds little impact on behavior from traditional classroom-based education, partly because it is distanced from decision-making. Financial service providers have a tremendous opportunity to help customers get informed at exactly the time when they need the information for decisions. Similarly, social service organizations could provide financial capability support at specific “teachable moments”, that is, when people experience life events with sizeable financial implications, like a health crisis or new job.

Second, financial capability interventions should be informed by the way real people really act. There is great learning on this from behavioral economics. To make it easier to spread that learning, we distilled seven behaviorally-informed practices that can improve the effectiveness of capability-building interventions (see box below). We’d like to see these practices used very widely.

You did a “deep dive” on financial capability innovations in India. What did you find?

There is a lot of financial capability innovation in India today, especially in the microfinance sector. For example, two of the most creative organizations using behaviorally-informed practices are Indian MFI – Janalakshmi and IFMR’s own KGFS program. These two programs integrate the “Customize It” practice deeply into their business models. KGFS field staff talk at length with customers about their financial lives and then offer advice on financial products tailored to that household’s specific situation. Janalakshmi has a similar interview tool it calls Kaleido to help customers understand their financial situation, set goals and receive ongoing counseling for achieving those goals.

We also found technology being used to deliver financial capability interventions at scale and cheaply. Indian Money, for example, provides automated advice online, backed up by a call center. While today this site addresses the middle class, innovations like Indian Money will become increasingly relevant to lower income people as smart phones and tablets spread.

On the other hand, the Indian government still relies heavily on strategies such as “financial education camps” in which massive numbers of people receive (often boring) lectures on financial products. In the drive to reach as many people as possible, effectiveness may be sacrificed. Such programs could be vastly improved if the seven behavioral practices we advocate were applied in their design and delivery.

What is the evidence base for financial capability interventions such as the ones you profile in the report?

This depends on the type of intervention. It is easier to gauge the results of interventions to increase use of a specific product or channel or increase savings, and harder to measure broad gains in financial capability. We see an urgent need for more systematic measurement and publication of results. Unfortunately, much of the data on interventions we profiled was proprietary. Providers such as Juntos claim to see significant increases in uses and account balances, but they have not made this data public. Also, many of the interventions we found were new and had not fully tested outcomes. Perhaps the best evidence will be when providers scale up from small pilots, as that will reveal that the interventions are having a significant impact.

How does the concept of financial capability intersect with customer protection?

In theory, more financially capable clients will be better able to protect themselves, so the two concepts are closely linked, and certainly they are often referred to in the same breath. In practice, however, we found very few financial capability interventions that specifically addressed how to be a safe and savvy consumer. We’d like to see a lot more. That said, financial capability building efforts could assist but not substitute for strong consumer protection standards and regulations.

Is financial capability a public good? How do you think these interventions could be best financed?

Both providers and the general public have an interest in increasing financial capability among the population. Most financial capability interventions pursue one of three aims: building broad financial life skills, being a more savvy consumer, or being a more active and capable consumer of financial services. In my view, there is both public and private interest in all three, but the first two sit closer to the public sphere while the last one is more for providers.

As for financing, we are very encouraged by what technology can do to make interventions much cheaper and more scalable. And a central point of the paper is that if providers integrate financial capability building into existing customer touch points, costs can be covered through product revenues. We do see an important role for public expenditures to integrate financial capability building into school curriculums, and especially for interventions specific to consumer protection.

What comes next?

The financial inclusion participants who attended our roundtable on financial capability in Delhi (December 2015) were enthusiastic and eager to apply the seven behaviorally informed practices. We would love to see a network of practitioners and providers formed to carry them forward. We hope the practices will be widely spread and known globally. Ultimately, we would like to see all financial service providers learn how to support the financial capability of their customers.

Please see CFI’s financial capability <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/innovations-in-financial-capability" target="_blank" rel="noopener">page</a> for more details. There you will find the main report, the India deep dive and a Catalogue of Innovations which describes dozens of models identified in the landscape scan. This post cannot do justice to the rich variety of innovations we found.
<div>

Seven Behaviorally-Informed Practices for Effective Financial Capability Interventions:
<ol>
 	<li>Teachable Moments. Reach consumers when they are making financial decisions.</li>
 	<li>Learning by Doing. Let consumers practice using products.</li>
 	<li>Nudges, Reminders, and Default Options. Timely reminders and default options support good habits.</li>
 	<li>Rules of Thumb (Heuristics). Mental short cuts help turn learning into habit.</li>
 	<li>Make It Fun. Games and humor aid learning and retention.</li>
 	<li>Customize It. Tailor advice to an individual’s specific financial situation.</li>
 	<li>Make it Social. Leverage the influence of peers and culture.</li>
</ol>
Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2016/04/12/a-change-in-behavior-innovations-in-financial-capability/">A Change in Behavior: Innovations in Financial Capability</a>

<a href="https://cfi-blog.org/2016/04/14/six-recommendations-on-financial-capability/">Six Recommendations on Financial Capability</a>

<a href="https://cfi-blog.org/2016/05/03/shifting-the-paradigm-providers-as-financial-capability-builders/">Shifting the Paradigm: Providers as Financial Capability Builders</a>

</div>
&nbsp;

A Change in Behavior: Innovations in Financial Capability – An Interview with Elisabeth Rhyne

Financial Inclusion 2020

India

Financial Capability

In the <a href="http://www-groups.dcs.st-and.ac.uk/~history/PrintHT/Longitude1.html">olden days</a>, awards were not given for innovation itself but for how effective an innovation was in relation to the importance of the problem it solved. But what we see today in financial inclusion is the ubiquity of innovation – often front and center - as the lead determinant in a plethora of prize competitions. Check the first <a href="http://www.wsj.com/public/resources/documents/Financial-Inclusion-Challenge-Official-Rules.pdf">judging criteria</a> of this <a href="http://www.wsj.com/public/resources/documents/financialinclusion.html">prestigious contest</a>.

Why would the entity commissioning the award, The Wall Street Journal, care about how innovative or unique the business was or how it broke from tradition? Wouldn’t it care most about how well the service solved a problem and the problem’s significance?

In financial inclusion, innovation itself has been an endgame for quite some time. Take the <a href="http://www.fastcompany.com/713911/fast-50-2008-ideo">much-hyped</a> “Keep the Change,” <a href="https://www.bankofamerica.com/deposits/manage/keep-the-change.go">Bank of America’s</a> program to hoover in payment leftovers at the cash register. If you buy $3.80 worth of coffee, the amount is rounded to $4.00 of which twenty cents goes to your bank account. Greeted as a clever way to encourage savings, the idea was indeed innovative back in 2006. But was it good? Here is what a critic, <a href="http://www.bankrate.com/finance/savings/spend-to-save-accounts-helpful-or-hoax-1.aspx">citing another critic</a>, had to say about Keep the Change: "If you want something that makes it quick and easy, lets you fool yourself into thinking you're actually saving, (spend-to-save) programs are good." But despite this perversion, Keep the Change has been the winner of multiple awards, many with innovation in their <a href="http://www.businesswire.com/news/home/20060927005182/en/2006-Outstanding-Corporate-Innovator-Award-Announced-PDMA#.Vgh20HiPJUR">descriptions</a>.

Plenty of ideas are creative and go nowhere. That’s where the ideas I have in the shower go, where they should, down the drain. But innovation is the crack-cocaine of the funding world. Funders including donors and impact investors want to be thought of as doing something new and what is newer than innovation? Innovation is the new excellence, the new buzzword, the new impact.

Design firms that feed funder appetite for innovation are generating an explosion of events that dub those in attendance “expert-for-a-day.” I just completed my third and possibly last human-centered hackathon, a forum that deemed every idea safe and every suggestion good, no matter how absurd. We were instructed as we brainstormed to stay mentally positive and intellectually curious, even if what was on offer was decidedly insane. This open-mindedness, we were told, was the heart of the innovation process. But after a day of outlandish ideation, we were permitted little room to pronounce any proposal doomed or even dangerous. By the close of the workshop, we had offered up pounds of sticky-notes, colored dots, and Sharpies to the grand deity of design: the prototype. But to what end?

A Brazilian banker friend, in pleasantly accented English, reflected on his own experience a few years back where he had endured weeks and weeks of co-design and prototyping in the name of financial inclusion. The process was led by the very same firm that engineered Keep the Change. “It was all so exciting, so energizing,” he remembered. Asked how the product performed, he responded: “Oh, uptake was so low and usage lower.”

Innovation in financial inclusion is not a problem per se; it can be a path to socially important solutions. And, not all innovation is led by design firms, but rather by <a href="http://unreasonable.is/mexico-series-kiwi/">committed entrepreneurs</a> and leaders. Yet, should innovation be a goal rewarded for its own sake? Should it be egged on by brainstorm-brokers who have no ultimate stake in the outcome, especially when those “innovated upon” can become exposed to extreme risk?

Glorifying, even fetishizing innovation in financial inclusion surely has its downsides. Perhaps the biggest is that no one knows what financial inclusion is. Back to the <a href="http://opinionator.blogs.nytimes.com/2012/02/29/prizes-with-an-eye-toward-the-future/">olden days</a>: kings, their navies, and merchant mariners all felt the pinch of not knowing the location of their ships at sea. Only in determining both latitude and longitude could sailors fix their sea-going positions. The “un-longituded” had a problem that was precise, important and finally, though innovation, solved. But that’s not the case in financial inclusion. The problem is imprecise, and if you ask the “un-included,” depending on what scheme you are including them in, inclusion is often irrelevant.

Rewarding innovation qua innovation can point the arrows of effort and resources away from expanding <a href="http://sg2015conference.org/">proven concepts</a> toward accelerating <a href="http://dschool.stanford.edu/blog/2012/11/20/juntos-finanzas-wins-global-innovation-award/">unproven ones</a>. What about the long-established credit union extending business hours in a hard scrabble area or <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/IBGC/Gates%20Residency/FINAL_Fletcher%20Policy%20Memo%202015.pdf">enabling the expansion</a> (pg. 5) of a rural bank network? Tens of thousands of in-the-trenches improvements can advance good financial services, none of which may be particularly innovative or require expensive design processes, but many of which have demonstrated their relevance, <a href="https://www.usaid.gov/results-data/success-stories/three-boxes-one-rising-community">are worthy of attention</a>, and even deserve a prize.

<img class="alignleft wp-image-19620" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/10/kim-wilson.jpg?w=150" alt="" width="100" height="98" />Kim Wilson is a Lecturer at the Fletcher School, Tufts University, a Senior Fellow of Fletchers' Council on Emerging Market Enterprises and incoming Board Member of the <a href="http://fletcher.tufts.edu/hitachi/">Hitachi Center for Technology and International Affairs</a>.

Have you read?

<a href="http://cfi-blog.org/2014/10/29/the-great-competition-and-innovation-deficit/">The Great Competition and Innovation Deficit</a>

<a href="http://cfi-blog.org/2015/08/10/new-fi2020-e-magazine-three-essential-debates/">New FI2020 E-Magazine: Three Essential Debates</a>

<a href="http://cfi-blog.org/2014/08/06/reality-check-three-ways-we-hype-up-financial-inclusion-break-throughs/">Reality Check: Three Ways We Hype Up Financial Inclusion Breakthroughs</a>

The False God of Innovation

Agent Banking

Banks

Human Centered Design

<img class="alignright wp-image-16972" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/01/ipad-407799_640.jpg?w=300" alt="" width="279" height="186" />Amidst all the excitement about disruptive fintech innovators it helps to sort out what innovations are actually at play. Australia Wealth Investors, together with KPMG-Australia and Australia’s Financial Services Council, have created a list of the <a href="http://fintechinnovators.com/" target="_blank" rel="noopener">top 50 fintech innovators for 2014</a>, based on a combination of ability to raise capital and subjective judgment about the degree of innovation or disruption the company represents.

I clicked on all 50 (so you don’t have to) to get a sense of where the action really is. Here’s my quick and dirty categorization. It may help to read this to the tune of "The 12 Days of Christmas", starting with:


<ul>
 	<li>11 investment management and stock trading companies. Clearly, innovators go where the money is. The top-ranked company, Wealthfront, is into investment management. (And so is Australia Wealth Advisors, the provider of the list. I’m just saying…)</li>
 	<li>8 e-payments companies. From Klarna to Dwolla, these companies have the coolest names. M-Pesa, surprisingly, is pretty far down the list, in 48th. </li>
 	<li>6 business crowdfunding websites. These range from relatively retail sites like Funding Circle to AngelList (not to be confused with Angie's List), which finds angel investors and arranges syndications. Kickstarter, which funds arts and creative projects, is part of this group.</li>
 	<li>5 peer to peer lenders. In some ways, they could be combined with the business crowdfunding sites, as they all provide a matchmaking service. I wonder if any of their principals started out with Match.com.</li>
 	<li>3 big data companies. Given the level of hype about big data, this number is surprisingly small. One company, Kreditech, specializes in credit scoring, while the other two offer a range of customer analytics as well.</li>
 	<li>3 personal loan companies. Wonga, the U.K.-based company recently in the news for poor consumer protection practices, made the list.</li>
 	<li>3 small business lenders. Two provide standard loans. Receivables Exchange, does receivables finance.</li>
 	<li>2 international money transfer companies.</li>
 	<li>2 financial advice services.</li>
 	<li>2 bitcoin transaction facilitators.</li>
 	<li>2 back-office platforms.</li>
 	<li>1 accounting software provider.</li>
 	<li>And an ATM network in Chennai. (You can actually sing that one.)</li>
</ul>
I found it helpful to look at the fintech world through this lens. It did provide some surprises, though it is hard to know how representative the list actually is. If this list accurately reflects what is going on, it is clear that the payments space is heavily contested right now, that back office has taken a back seat, and that very few innovations actively seek to build the capability of consumers.

Geographic distribution is interesting, too. The list has a strong first world and Anglophone bias, with by far the greatest number of companies headquartered near Silicon Valley, followed by London. A few U.S. surprises included businesses located in New Orleans, Des Moines, and Atlanta. Middle and lower income countries are represented only by China, India, and Kenya (one each).

I’d like to see a list of the 50 top financial inclusion fintech innovators – companies aiming at the base of the pyramid in middle and lower income countries. I’m sure such a list would rival this one in terms of variety and creativity. Perhaps Omidyar or Accion’s Frontier Investment Group and Venture Lab would create a list like that. I’m throwing out the challenge…

Image source: <a href="http://pixabay.com/en/ipad-online-tablet-internet-screen-407799/" target="_blank" rel="noopener">Pixabay</a> 

Have you read?

<a href="http://cfi-blog.org/2014/12/15/four-barriers-and-four-solutions-to-financial-inclusion-through-payment-innovations/" target="_blank" rel="noopener">Four Barriers - and Four Solutions - to Financial Inclusion Through Payment Innovations</a>

<a href="http://cfi-blog.org/2013/09/27/financially-included-through-crowdsourced-financing/" target="_blank" rel="noopener">Financially Included Through Crowdsourced Financing?</a>

<a href="http://cfi-blog.org/2014/11/05/accion-venture-lab-responds-to-the-great-competition-and-innovation-deficit/" target="_blank" rel="noopener">Accion Venture Lab Responds to 'The Great Competition and Innovation Deficit'</a>

&nbsp;

The Twelve Days of Fintech

Trends

From mobile payments to behavioral changes, innovation in financial inclusion takes many shapes and sizes.

Aurora Bila

Elisabeth Rhyne

Kim Wilson

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

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