Investment capital is flowing into fintech startups, yet it is still challenging to get capital to many fintechs addressing last-mile challenges. Evidence suggests this is driven in large part by a lack of information. Using data collected to test an initial set of Data Standards for Inclusive Fintech, this report presents insights into what we can learn about fintechs as businesses and how they address challenges of inclusion. This report was made possible by generous support from MetLife Foundation.

Results of the Fintech Benchmarks Proof-of-Concept

This paper presents what MIX has learned from developing and testing a methodology on a sample of DFS funding flows. The first half of this paper presents the methodology itself, the tools that have been developed to identify, classify and measure DFS funding flows, as well as some of the challenges involved in those processes. The second half presents an initial analysis of DFS funding flows data from testing the methodology on a sample of projects from a selection of funders.

Measuring Funding Flows for Digital Financial Inclusion

Fintech investment is booming. In 2018, a record USD 111.8 billion was invested in fintech, and the sector garnered extensive media coverage and interest. But despite fintech’s growing profile—and even though it can help unlock trillions of dollars in value by reaching financially underserved households and businesses—fintech solutions have yet to reach the majority of the financially excluded.
It is against this backdrop that we at MIX worked with MetLife Foundation, Visa Inc., Accion, and IFC to launch the Inclusive Fintech 50, the first global effort to spotlight early- stage fintechs driving financial inclusion. Four key findings emerged from our analysis of applicant data. We believe these findings can help funders, investors, and fintechs in their financial inclusion efforts. The Inclusive Fintech 50 applicant pool provides new insights into inclusion-focused fintech, itself a subset of the fintech universe. By highlighting these high-potential companies, we hope to support the efforts of investors, banking partners, and other fintechs working towards a financially inclusive world.

Inclusive Fintech 50 White Paper [2019]

The journey of delivering affordable financial services in emerging markets has evolved over the years. Specifically, FY 2017 presented new opportunities to achieve financial inclusion goals while there were also challenges that were overcome.
At the end of FY 2017, 762 financial service providers (FSPs) submitted outreach and financial performance data to MIX Market. Year-over-year lending growth remained steady at a rate of 9.8% in the number of active borrowers and 14.3% in the gross loan portfolio. In absolute figures, the total number of active borrowers grew to 120 million and the gross loan portfolio stood at USD 112 billion at the end of FY 2017.

Global Outreach and Financial Performance Benchmark Report [2017-2018]

For FY2016, 774 financial service providers (FSPs) submitted outreach and financial performance data to MIX Market.
These FSPs reported an outreach of 115.0 million borrowers with access to credit products, corresponding to a gross loan portfolio of USD 96.6 billion. Savings products offered by these FSPs reached 98.8 million depositors, accounting for USD 64.0 billion in deposits. At the global level, compared to FY2015, FSPs reporting to MIX Market recorded an annual growth rate of 11.1% in the loan portfolio and 9.8% in borrowers.
Total deposits grew by 8.7% and depositors by 13.0%. FY2016 was a difficult year for portfolio risk in several regions, particularly in Africa and Eastern Europe and Central Asia, reflected by a global rise in the weighted average portfolio at risk &gt; 30 days ratio (PAR 30) from 5.3% in FY2015 to 7.2% in FY2016.

Global Outreach and Financial Performance Benchmark Report [2016]

In FY 2015, 1033 institutions reported to MIX. These institutions reported an outreach of 116.6 million borrowers who have access to credit products, corresponding to a gross loan portfolio of USD 92.4 billion.
These financial service providers (FSPs) also have saving products that reach 98.4 million depositors and account for USD 58.9 billion of deposits. The South Asia region continues to have greater coverage in the microfinance sector with the primary focus on serving female borrowers, representing 92.0%.
Over the year, FSPs in the industry have experienced a decline in outreach as compared to previous years both in terms of actual numbers reported by the FSPs as well as the projections made by institutions during the year as per MIX's Barometer Forecast, a quarterly report. At a global level, FSPs reporting to MIX Market recorded an annual growth of 8.6% in the loan portfolio and 13.5% in borrowers.

Global Outreach and Financial Performance Benchmark Report [2015]

The findings from this research highlight the demand for standard metrics to guide decision making on alternative delivery channels in a changing environment. The research also indicates that financial service providers must begin by updating their reporting systems and dashboards to track these metrics. Doing so will allow them to analyze alternative delivery channel performance within their institutions and also to contribute their data to create visibility onto the overall market.

Measuring the Performance of Alternative Delivery Channels

Over the past eight years, more than 1,000 financial service providers (FSPs) have demonstrated their commitment to information transparency by reporting social performance data to MIX.
Drawing from this wealth of information collected, we conducted a regression analysis that explores the synergies and trade-offs between social, operational and financial performance using data reported by 780 FSPs during the 2014-2015 period.
This is MIX’s second analysis on this topic, after the study performed in 2010 on a smaller sample of 200 FSPs. The entire array of social performance indicators1 that MIX collects were analyzed against productivity, portfolio quality, and efficiency. Statistically significant findings emerged mainly in five areas, namely - governance, women as a target market, poverty segmentation by target market, social responsibility towards staff and borrower retention.
This analysis supports most of the trends observed in MIX’s previous publication and also brings to light new meaningful findings. The implications of these results are powerful: social performance management is much more than just as a practice instrumental to the advancement of an institution’s mission. It is indeed a fully-fledged business strategy.

Where Good Intentions Meet Good Business Practice

This report presents the financial and operating data of 1064 financial service providers (FSPs) that have reported to MIX Market during the year, providing 112.5 million financially underserved clients with access to credit, corresponding to a gross loan portfolio of USD 87.3 billion.
The report finds that the microfinance sector continues to primarily serve female borrowers, representing 81.0% of total borrowers. At a global level, the surveyed financial service providers (FSPs) recorded 12.6% annual loan growth and 13.9% growth in borrowers. Return on assets (ROA) for institutions reporting to MIX aggregated to 2.5% whereas return on equity (ROE) stood at 13.8% in FY 2014.

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