This post is an adaptation of Paul’s speech. More on the symposium can be found here.
In reflecting on CFI’s Symposium on “Getting Inclusion Right,” I want to begin by winding the clock back to the beginning of the day, when an observation in Beth Rhyne’s opening remarks particularly struck me. Beth (Rhyne, Managing Director of CFI) identified that the biggest change over the ten years since CFI was founded was not, in fact, technology, as one might initially think, but the dramatic shift in the composition, number and nature of the players involved in financial inclusion since the formative days of microfinance.
This vast expansion in breadth and diversity of the ecosystem brings new challenges that are critical to getting inclusion right. This point is borne out in a number of the essays that CFI commissioned not only for the Symposium but also to catalyze thought and action as we look forward to the next ten years. I encourage you to read them all, but I will highlight several in the context of changing actors.
In his essay on payments, Mark Pickens notes that the engine pulling financial inclusion forward is innovation in adjacent industries, such as health, education, energy and entertainment. In the essay on regulatory policies, Ariadne Patakis and Simone di Castri note that alternative market players are reaching consumers the formal sector has not reached before, and in his essay on infrastructure, Chris Skinner notes that financial inclusion requires an ecosystem involving multiple players to make it happen.
Within the individual realms of many new actors in financial inclusion, existing business models must be re-evaluated. Not only must they adapt to the dictates of technology, but also to the specific characteristics, needs and aspirations of a new customer base which, together with opportunity, brings a set of very particular individual fragilities and vulnerabilities. In the words of Garance Wattez-Richard’s essay on insurance, “the insurance model must be spun in its axis” to meet the challenges and opportunities of financial inclusion.
This focus on the new actors in the financial inclusion ecosystem is not to downplay at all the transformative impact of technology, which is highlighted in several essays, not least by Skinner’s observation that in 2013 China had no mobile money system to speak of yet today over $15 trillion is transacted in a year through Alipay and WeChat. Tim Adams notes in his essay on capital markets that technology is changing the equation in payments, savings, credit and insurance. In her essay on getting data right, Katharine Kemp reminds that “all data is credit data” and recognizes that a widely held tech mantra regarding data is “collect everything.”
As we witness and welcome the potential for tech to unlock transformative change in financial inclusion, it is timely here to reflect on the warning words of none other than Apple’s CEO just last month at an EU conference. But before turning to October 2018, let me wind the clock back even farther, to 1873, to remember that disruption or seemingly spectacular innovation in so called financial services, some less savory than others, is not at all new. From Anthony Trollope’s novel of that time, The Way We Live Now, I might paraphrase this observation: “For many years past we have exchanged paper instead of actual money for our commodities. So now it seems under the new regime an exchange of words is to suffice.”
Today we might substitute “exchange of words” with “exchange of data” and therefore doubly heed the words of Apple’s CEO Tim Cook, “Platforms and algorithms that promised to improve our lives can actually magnify our worst human tendencies…..Every day billions of dollars change hands, countless decisions are made, on the basis of our likes and dislikes, our friends and families, our wishes and fears, our hopes and dreams….Taken to its extreme, the process creates an enduring digital profile and lets companies know you better than you know yourself.”
Moving on from tech, let’s reflect on what CFI’s Symposium achieved. The speakers and participants assembled a set of complex and dynamic issues that challenge the future development of true financial inclusion, and debated those issues from many angles and perspectives. That discussion identified areas for action, research and debate.
Where does CFI fit into that? Brandee McHale put it well: CFI is a focal point for integrated thought and action. It will synthesize the discussions to suggest ways to move forward and to measure progress.
As I reflect on both the Symposium and the 10 Essays, two key areas loom large. One area is centered on the impact of data, and two aspects in particular: one, the transformative impact of data on the scale of financial access and product development and, secondly, the imperative of responsible engagement with customers operating in a digital environment for the first time. The other area is the need to “get the industry infrastructure right” to support the new opportunities and challenges brought by a vastly expanded world of financial inclusion actors. Traveling down those two roads will in turn further inform future direction and focus.
These are some of the challenges ahead. I have no doubt as CFI faces the next ten years it will meet the challenge of its own, which is to shine the bright light of its deep expertise and practical experience in the field and in the rooms of research and regulation, to engage with all of you to create together a financially inclusive world in the very truest sense.