The severe economic impacts of COVID-19 on low-income households and small businesses have underscored the need for innovative solutions that can build greater financial resilience. Findings from <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/" target="_blank" rel="noopener noreferrer">surveys of MSMEs</a> conducted by the Center for Financial Inclusion (CFI) show that since COVID-19 struck, many small businesses in Indonesia, Colombia, and Nigeria have either had to close or found their profits significantly decreased. At the same time, the pandemic has provided opportunities for inclusive fintechs to <a href="https://centerforfinancialinclusion.org/rapid-innovation-how-fintechs-are-adapting-under-covid-19/" target="_blank" rel="noopener noreferrer">leverage their agility and adaptability</a> to strengthen and support the financial resilience of low-income, financially underserved customers.

Financial resilience is the ability to mitigate, adapt to, and recover from shocks and stresses in a manner that reduces chronic vulnerability and facilitates inclusive growth. Individuals must deftly navigate a delicate balancing act to stay afloat and may be thrown off course by a whole host of shocks, ranging from unexpected health crises to weather-related disasters that can disrupt otherwise appropriate financial plans. The nuances associated with financial resilience can complicate the financial service industry’s ability to develop and design comprehensive solutions for low-income customers.
<blockquote class="pullquote--right">PesaKit and reach52, two winners of the 2020 Inclusive Fintech 50, have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs.</blockquote>
PesaKit and reach52, two winners of the 2020 <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> -- a competition founded by MetLife Foundation and Visa, with support from Accion and IFC, and additional funding from BlackRock and Jersey Overseas Aid &amp; Comic Relief -- have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs. In this paper, we share insights on how these two fintechs have adapted to a challenging economic landscape to serve as early examples of how fintechs have leveraged their agility and innovation during crisis. These findings build on the 2020 Inclusive Fintech 50 <a href="https://www.inclusivefintech50.com/white-paper-2020" target="_blank" rel="noopener noreferrer">white paper</a> that draws on the data submitted by the 2020 cohort of applicants and highlights how fintechs are continuing to advance financial inclusion and resilience for the estimated 3 billion financially underserved people worldwide.

Agility Breeds Resilience: A Tale of Two Fintechs Innovating in the Face of a Pandemic

It’s 7 a.m. in a remote village in India’s Bihar state. Punam Kumari, a bank <em>sakhi</em>, is ready to serve her customers. Many of them have already arrived at her customer service point (CSP). She ensures that everyone is complying with social distancing norms while she also takes COVID-related safety precautions for transactions she conducts.

This early morning routine represents a major shift in how she works. She used to open her outlet at 10 a.m., but since the lockdown was imposed by the government to curb the spread of COVID-19, she has been working from 7 am to 7 pm providing financial services to the village. She caters to customers at her CSP outlet and at a nearby school, where she’s set up shop at the request of local authorities.
<blockquote>Thanks to bank sakhis, accessing money during COVID-19 has been made easier for rural women.</blockquote>
Thanks to her and her colleagues, known colloquially as bank <em>sakhis</em>, what would otherwise have been a daunting task of accessing money during COVID-19 has been made easier for rural women. Bank <em>sakhi</em> – literally “female banker friend” in Hindi – is an informal term for female banking agents, who are collectively known in India as business correspondents (BCs). Equipped with smartphones, tablets, or laptops and biometric scanners, they provide basic banking services and financial access for women, self-help groups and many others in some 20,000 difficult-to-reach villages in rural India. Punam has been a bank <em>sakhi</em> since 2018 after her husband passed away, and she needed a way to support her three children.
<h2>The Banking Correspondent Model Works Toward Gender Equality</h2>
The BC model, supported by the Reserve Bank of India (RBI) since 2006, allows third-party agents to provide banking services on behalf of banks, eliminating the need for brick-and-mortar structures. In 2015-16, <a href="http://documents.worldbank.org/curated/en/662851590658776125/pdf/Self-Help-Group-Members-as-Banking-Agents-for-Deepening-Financial-Inclusion.pdf" target="_blank" rel="noopener noreferrer">a female BC model</a> was promoted by the National Rural Livelihoods Mission (NRLM), with support from the World Bank, financed the <a href="https://projects.worldbank.org/en/projects-operations/project-detail/P104164" target="_blank" rel="noopener noreferrer">National Rural Livelihoods Project</a> (NRLP), which was built on the <a href="https://www.giz.de/en/downloads_els/sakhimodel.pdf" target="_blank" rel="noopener noreferrer">GIZ-NABARD</a> experience. This pilot initiative helped in reducing the gender gap in access to financial services and provided a regular income stream for local women who were trained and employed as BCs. Fifty-four percent of <a href="https://pmjdy.gov.in/">Pradhan Mantri Jan Dhan Yojana</a> (PMJDY) accountholders are women and, unofficially, <a href="https://www.microsave.net/2018/05/01/india-needs-more-women-business-correspondent-agents/">most BC agents are men</a>, but these women BC agents are servicing first-time women customers and challenging gender disparities in an otherwise male-dominated profession. On average, approximately 6000 NRLM BCs across 9 low-income states collectively complete 700,000 transactions each month, worth over INR 2.5 billion.
<h2>Leveraging the Power of Business Correspondents During the Pandemic</h2>
In the past couple of months, Punam’s business volume has increased considerably due to the government-initiated direct benefit transfer (DBT) schemes as part of the <a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1608345" target="_blank" rel="noopener noreferrer">Pradhan Mantri Garib Kalyan Yojana (PMGKY) - COVID-19 relief package</a> announced by the prime minister on March 26. Under the PMGKY, 206 million PMJDY women account holders are now receiving INR 500 per month for three months.

During the COVID-19 lockdown, BC agents have proven effective in the delivery of financial services in rural areas and have been granted exemption because the Indian government has now classified their services as essential. In Bihar, Odisha, Madhya Pradesh, Jharkhand, Chhattisgarh and several other states, bank <em>sakhis</em> have continued working to provide cash flow in their villages since the lockdown. They now wear gloves while conducting the transactions, regularly sanitize their devices and require all customers to wash or sanitize their hands before completing the required biometric scanning. While they’ve had to discontinue service delivery at their customers’ doorsteps during this period, they’ve set up services from home, roadsides, and are helping with information dissemination in communities, ensuring that their customers are aware of COVID-19 guidelines on quarantine, handwashing and social distancing.
<h2>Insights on BC Transactions During the COVID-19 Era</h2>
A quick review of daily transactions of 39 bank <em>sakhis </em>(SHG-BCs in the graph below) of a private sector bank in rural Bihar -- the data was collected from mid-March to April -- reveals three interesting points:
<ul>
 	<li><strong>An initial drop in daily transaction volumes immediately after the lockdown was announced</strong>. These 39 agents conducted 3035 transactions worth about INR 9 million in mid-March, which dropped by about 50 percent to 1629 transactions and INR 4.5 million right after the lockdown was announced.</li>
 	<li><strong>A spike in transactions in the first week of April corresponding with the release of the first tranche of the PMGKY G2Ps cash transfers</strong>. While the size of transactions in the first week of April is lower than in the preceding weeks, cash flow resumed in the rural economy. The agents completed 4895 transactions by April 10, 2020, but with a lower value of INR 7.6 million and this uptick continues through May.</li>
 	<li><strong>A corresponding increase in transaction failures</strong>. These are largely due to network and bandwidth requirements for a spike in demand for services, mostly in the case of inter-bank transactions.</li>
</ul>

Gender Gap Narrowing “Bank Sakhis” Take Crucial G2P Support the Last Mile During COVID-19

Over the past year, I’ve been paying close attention to how financial service providers (FSPs) are using technology to optimize their <a href="https://www.findevgateway.org/topics/agent-networks">agent network</a> models. Why? Because technology offers them an opportunity to make agent models more efficient and productive distribution channels. This isn't a surprise.

The unfortunate reality, however, is that many <a href="https://www.findevgateway.org/topics/agent-networks">agent networks</a> still leave much to be desired. Long lines, cash shortages and manual processes are just a few encumbering problems.

In our recent report, <a href="https://www.centerforfinancialinclusion.org/leveraging-technologies-to-improve-the-quality-and-maximize-the-productivity-of-agent-models">Leveraging Technologies to Improve the Quality and Maximize the Productivity of Agent Models</a>, Amin Khairy of the <a href="https://www.iif.com/">Institute of International Finance</a> and I explain how institutions can benefit from technology solutions to optimize their agent models. We interviewed 23 representatives of financial institutions, fintechs, and other entities to explore the role of technological innovation in improving the quality and maximizing the productivity of agent networks. This the final report from our six-part series on how FSPs are innovating to reach the base of the pyramid, <a href="https://www.centerforfinancialinclusion.org/program_teams/mainstreaming-financial-inclusion">Mainstreaming Financial Inclusion: Best Practices</a>, in partnership with <a href="https://www.metlife.com/corporate-responsibility/metlife-foundation/">MetLife Foundation</a>.
<h2>The Storytelling Approach</h2>
I love conducting qualitative research, but I also got to explore a different approach in this report: storytelling. We decided to employ this approach to illustrate commonly cited challenges and bring to life the three main stakeholder groups in agent transactions: financial institution representatives, agents, and customers. Teresa, a senior manager at the fictitious Sahil Bank; Amar, a Mumbai shopkeeper eager to add Sahil’s agent banking services to his offerings; and Manisha, a seamstress looking to try out money transfers at an agent’s shop, are fictitious characters with vastly different backgrounds but a common interest in making agent networks work. The narratives we use to tell their stories are juxtaposed with real-world scenarios of how technological integration and innovation has served to improve and streamline processes within agent networks.

We chose to channel our creativity in order to highlight the dynamic role that humans have in contributing to the healthy functioning of FSPs in developing markets.

Take, for example, how <a href="https://www.bai.org/banking-strategies/article-detail/bank-branches-coming-to-a-cafe">several commercial banks</a> in developed markets are experimenting with converting branches into consumer hangouts – for example, coffee shops – in response to the tremendous uptake of online banking. This new setup repositions tellers as bank ambassadors. We see them stepping out from behind the counter to directly engage with customers by leading money management sessions and other non-financial activities. In many markets, <a href="https://www.centerforfinancialinclusion.org/how-artoo-helped-ujjivan-unlock-the-power-of-data">fintech platforms</a> are obviating the need for traditional loan officers to do time-intensive calculations or assess the risk of prospective borrowers. Today’s loan officers now have increasing time to provide in-depth support to their customers.
<blockquote>Banks as "customer hangouts"  positions tellers as bank ambassadors.</blockquote>
We also consider how the agent model will evolve over the long-term in light of the diminishing role of cash as a payment form and an increasing readiness of institutions to embrace digital transformation.

We hope you enjoy stepping into the shoes of our characters. And we hope, no matter if you’re a financial institution, researcher, or just someone with a general interest in agent networks and financial service operations, that you benefit from this report.

Telling a Human Story of Tech in Agent Networks

As recently as 2011, more than <a href="https://globalfindex.worldbank.org/">2.5 billion adults globally</a> did not have a formal financial account. Since then, an astonishing 1.2 billion adults have obtained an account with a bank or mobile money service, representing great strides in escaping poverty and boosting prosperity. Progress has been most notable in <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/07/GSMA-Sub-Saharan-Africa-SOTIR-presentation.pdf">Sub-Saharan Africa</a>, where account ownership increased from 23 percent in 2011 to 43 percent in 2017. This great achievement can be attributed in large part to the incredible growth of mobile money.

Mobile money has emerged as the mainstay of financial inclusion in Sub-Saharan Africa. According to the latest <a href="https://globalfindex.worldbank.org/">Findex</a> report, the share of adults with a financial institution account (excluding mobile money) across Sub-Saharan Africa has risen by a modest four percentage points between 2014 and 2017, while the share with a mobile money account has grown twice as fast, increasing by nine percentage points. With 21 percent of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This finding is confirmed by the GSMA’s own <a href="https://www.gsma.com/mobilemoneymetrics/">supply-side data on mobile money</a>, which shows that Sub-Saharan Africa <a href="https://www.gsma.com/mobilefordevelopment/africa/sub-saharan-africa-the-enduring-epicentre-of-mobile-money-part-1/">remains the epicenter</a> of mobile money.

What has underpinned this success? Regulation calibrated to enable low-cost services for the financially excluded has been crucial. In fact, we’ve found a clear correlation between countries in the region with high mobile money adoption rates and those with <a href="https://www.gsma.com/mobilefordevelopment/programme/mobile-money/introducing-the-mobile-money-regulatory-index-an-interactive-tool-to-measure-the-effectiveness-of-mobile-money-regulatory-frameworks/">more enabling regulatory environments</a>. Industry leaders in these markets adopted a myriad of strategies to drive adoption of mobile money services, but the successful strategies shared some fundamental business characteristics. The most foundational characteristic was investment in building a robust agent distribution network – a powerful model for extending the reach of financial services – which both disrupts and complements traditional “brick and mortar” banking. Mobile money agents across the region are more prevalent than any other channel, with approximately 60 agent outlets per 1,000 sq km, compared to only one bank branch and two ATMs in the same space.
<blockquote>Regulation calibrated to enable low-cost services for the financially excluded has been crucial.</blockquote>
Remarkably, and contrary to predictions, there has been a shift away from using cash toward digital payments. Across the region, people are increasingly using mobile money in diverse ways, extending beyond basic use cases such as person-to-person (P2P) transactions and airtime top ups. Today, millions of consumers are using mobile money in their daily activities: paying for children’s school fees, accessing loans to invest in their farming activities, saving for the financial future of their household, and mitigating financial risks and shocks. Innovative partnerships between mobile network operators and banks, MTOs, governments, and businesses have played a key role in digitizing payments and formalizing the economy across the region. Orange, for instance, has established partnerships with governments to offer a range of person-to-government (P2G) payments via mobile money across <a href="https://www.gsma.com/mobilefordevelopment/resources/championing-a-unified-digital-person-to-government-p2g-payments-strategy-lessons-from-orange-p2g-payments-in-africa/">five of its operations</a> in West and Central Africa (Senegal, Burkina Faso, Côte d’Ivoire, Cameroon and DRC). Another example is the partnership between PayPal and Safaricom, enabling users in Kenya to securely transfer funds between PayPal and M-Pesa.

Despite this progress, there is still a sizeable opportunity to further digitize the economy to drive efficiency and transparency, and to convert informal cash and non-financial assets into the formal financial system. This is where the shift towards a “<a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/02/Embracing-payments-as-a-platform-for-the-future-of-mobile-money.pdf">payments as a platform</a>” business model will have a demonstrable impact, not only in growing the ecosystem and incorporating more partners into the mobile money platform, but also in terms of deepening engagements with individuals and businesses. Industry-wide initiatives will also play a central role in driving the digitization of more complex use cases such as merchant payments and international remittances. <a href="https://www.gsma.com/mobilefordevelopment/uncategorized/unlocking-mobile-money-interoperability-and-merchant-payments-across-africa-through-mowali/">Mowali</a>, a joint venture between Orange Group and MTN Group to enable interoperable payments across the African continent, is a great example of industry collaboration enabling customers to seamlessly transact across borders.
<h2>Challenges Ahead</h2>
Sub-Saharan Africa has come a long way in the past decade, but there are still strides to be made in certain markers, and across the wider African continent. Africa’s three most populated countries, Nigeria, Ethiopia and Egypt – home to a combined adult population of over 242 million – have low rates of financial inclusion (below 40 percent) and limited availability of mobile money services. All three markets have had unfavorable conditions for mobile money uptake. We anticipate that recent reforms in these markets could spark a wave of adoption with the potential to unlock over 110 million new mobile money accounts in the next five years, offering a financial future to millions of previously financially excluded people.

Micro, small and medium-sized enterprises (MSMEs) play a major role in economic development across the region. According to the IFC, MSMEs account for roughly <a href="https://www.ifc.org/wps/wcm/connect/2c6289c3-df5e-4f90-b910-2a04e1000922/IFC+SME+Ventures+Final+low+res+30+Nov+2018.pdf?MOD=AJPERES&amp;CVID=mtQwg2S">90 percent of all businesses</a> across Sub-Saharan Africa, and contribute to 78 percent of the region’s employment. Despite this, financial institutions are not currently meeting the majority of MSMEs’ financial needs across the region. We see a huge opportunity for mobile money providers to bridge this gap and offer solutions that can help MSMEs with day-to-day management of their business and financing needs.
<blockquote>Mobile money providers can offer solutions to help MSMEs with day-to-day management of business and financing needs.</blockquote>
Over the course of the next decade, a dramatic rise in mobile internet usage and smartphone adoption is expected in Sub-Saharan Africa. This growth, alongside the shift to “payments as a platform” model, will empower millions of young entrepreneurs, innovators and small businesses to maximize new income generation opportunities and gain new skills. Increased access to financial services is a cornerstone of prosperity, and the future for financial inclusion in Sub-Saharan Africa holds much promise.

<em>Learn more by checking out GSMA's <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2019/07/GSMA-Sub-Saharan-Africa-SOTIR-presentation.pdf">State of the Mobile Money Industry in Sub-Saharan Africa</a> presentation.</em>

Sub-Saharan Africa Mobile Money: Diverse Use Cases, Enabling Environment Boost Adoption

As a means of reaching underserved customers at low cost, financial institutions have designated authority and responsibility to banking agents to deliver financial products and services. Agent banking is a model for delivering financial services whereby an institution — be it a financial service provider or a mobile network operator — partners with a retail agent to extend services in remote or hard-to-reach areas.
<blockquote>Innovative financial institutions are streamlining and digitizing their processes, and utilizing real-time data and analytics to increase both the efficiency and effectiveness of agent networks.</blockquote>
Despite the growing volume of agents, the agent network model is rife with utilization and operational challenges. The good news is that technology offers financial institutions an opportunity to make agent models more efficient and productive for themselves and their customers. Based on in-depth interviews with industry experts and senior bank officers, and supplemented by a review of the literature, this brief examines the role of technological innovation as a potential driver for improving the quality and maximizing the productivity of agent models.

We found it useful to study this topic across two time-horizons: the short-and long-term; and from the perspectives of the main stakeholders in the agent network triad: the financial institution, the agent, and the customer. This structure allows us to account for two key trends: 1) the diminishing role of cash as a payment form, and 2) an increasing readiness of institutions to embrace digital transformation. It also allows us to explore commonly-cited challenges with agent networks through an illustrative, hypothetical narrative lens, giving voice to each stakeholder group. The narratives are accompanied by real-world examples of how technological integration and innovation has helped to improve and streamline processes within agent networks. Finally, we anticipate that in a future financial services ecosystem that is digital and cashless or cash-lite, we will see the role of the agent evolving from transaction processors to solution providers.

Leveraging Technologies to Improve the Quality and Maximize the Productivity of Agent Models

Today there are close to 700 million mobile money accounts registered worldwide — a number that, if it were a population, would rank as the world’s third-largest country. East Africa continues to lead in digital financial innovations as well as account usage, with two-thirds of the combined adult populations of Kenya, Rwanda, Tanzania, and Uganda actively using mobile money. With the proliferation of mobile financial services, particularly among underserved populations, it is vital that users be treated fairly and with dignity. In the momentum to define responsible digital finance and recognize providers of high-quality financial services, the industry must not forget the consumer.
<h1>Client Voices: Why We Listened</h1>
<a href="/about/what-we-do/the-smart-campaign/">The Smart Campaign</a>, a global initiative to create an environment in which financial services are delivered safely and responsibly to low-income clients, has long recognized that client perspectives are often underrepresented in consumer protection discussions. With the Client Voices Project, the Campaign questions whether the industry’s assumptions about what constitutes problematic treatment rightly reflect what clients themselves worry about.

The dual objectives of the project are to solicit input from low-income clients about what they consider good and bad treatment in their interactions with financial service providers and to assess the prevalence of consumer protection problems among these clients, using quantitative surveys. The project is designed to act as a catalyst for financial service providers, regulators, industry associations, consumer advocacy groups, and others to improve client protection in ways that are grounded in client feedback.
<h1>Major Findings</h1>
Based on a survey of over 1,200 people in three districts in Rwanda, this report delves into the experiences of individuals who use digital financial services (DFS), the main client protection issues they are concerned about, and the impact and prevalence of negative experiences. We find that mobile money enjoys a high degree of satisfaction and trust from clients in Rwanda, even though 40 percent of clients report being targeted by fraudulent schemes, which have become increasingly sophisticated.
<blockquote>Customers report wising up to scams and fraud, but with a continuous influx of new mobile money users and fraudsters who innovate quickly, the threat is real and constant. Fraud represents the greatest potential to damage customer trust and engagement with mobile money in Rwanda.</blockquote>
However, there are many ways that DFS operations and practices can be improved to better protect clients and strengthen trust. Client recourse mechanisms, for example, represent an important area for improvement: many clients shared that they feel helpless and unsure about what to do after realizing they have been duped. Additionally, for business models that rely more on the mobile interface than on human interaction, clients increasingly rely on agents for information and guidance. This presents an opportunity to provide better service, as well as a risk for poor client treatment.

We hope that providers, industry associations, support organizations, regulators, consumer protection advocates, and clients can benefit from these findings to create a stronger, more inclusive client protection ecosystem. We offer specific recommendations for many of these stakeholders.

Client Voices: Rwandans Speak on Digital Financial Services

<em>Lauren Hendricks of the Grameen Foundation recently spent time at the Bidi Bidi camp. Below are her reflections.</em>

The Bidi Bidi refugee camp, in northwestern Uganda, is the largest refugee settlement in the country, and the second-largest refugee camp in the world, hosting 220,000 refugees who have fled the devastation and humanitarian crisis of the protracted civil war in South Sudan. In contrast to long-established refugee settlements elsewhere in the country, the inhabitants of <a href="https://www.theguardian.com/world/2018/may/19/inside-world-largest-refugee-camp-uganda-south-sudan-civil-war">Bidi Bidi</a> are newcomers: all of them have arrived since the 2016 “<a href="https://reliefweb.int/report/south-sudan/south-sudan-finding-way-forward-after-july-2016-crisis">July Crisis</a>” in South Sudan.

Because of the long-term stability, favorable policy and social environment, and freedom of movement in Uganda, the majority of refugees in more established camps are either already engaging in small businesses or would like to start one (a recent World Bank study cited that 72 percent of refugees are operating some sort of micro or agri-business.) But at Bidi Bidi, the relationships and arrangements among people that create an active economy have not had time to develop, and economic activity remains low. These refugees arrived with literally just the clothes on their back and the few assets they could carry, and are to a greater extent than most refugees in Uganda, still struggling to establish themselves and supplement the limited support NGOs and the UN can provide.

However, there is a potential game changer: mobile phones and mobile money are widely available, and they hold enormous potential for generating economic activity. <a href="https://grameenfoundation.org/where-we-work/sub-saharan-africa">Grameen Foundation</a> is working with <a href="https://www.gsma.com/r/mobileeconomy/sub-saharan-africa/">GSMA</a> (the association of mobile network operators) to develop ways to increase financial inclusion among the refugees. In my visit to Bidi Bidi to consider how mobile money could help kick start the camp economy activity, I found many possibilities.

The challenge is to make it easier for people to make payments. Right now, many people receive transfers from abroad and from relief agencies via mobile money. In order to use this money for purchases, they either need to find an agent who can cash it out or a merchant who accepts mobile payments. Both are in extremely short supply in Bidi Bidi. Currently when refugees receive transfers from abroad, or from relief agencies, it can take up to a week to find an agent with liquidity. The camp has only 17 agents for over 200,000 people. To reach the ideal penetration ratio of 1,000 to 1 it would need ten times as many agents.

Our work has shown that a focus on female agents will pay off, especially because a majority of the refugees are in women-headed families. Increasing the number of agents cannot be done all at once, however. Currently, agents report an average of 20-30 transactions per day, which does not suggest an overwhelming demand. The pace of recruitment of new agents would need to track the development of the payments and transfer ecosystem within the camps.
<blockquote>A focus on female agents will pay off, especially because a majority of the refugees are in women-headed families.</blockquote>
Equally important is acceptance of mobile money payments by local merchants, which will allow refugees to use mobile money to purchase food and essential goods. Currently, merchants in the camps accept only cash. When refugees cannot turn their relief and transfer payments into purchases, they face severe delays in access to food and essentials. Many merchants believe that accepting mobile money is expensive, but new products are on offer that reduce fees significantly.

Another supporting element for creating an active payments ecosystem is to attract a "super agent," such as a microfinance institution (MFI) or bank that can help agents and merchants balance their liquidity, an essential function. One possibility is <a href="https://rufimfi.com/">RUFI</a>, a unique MFI founded by South Sudanese refugees in 2009 and working on both sides of the South Sudan-Uganda border, and the only microfinance institution serving refugees in Bidi Bidi. RUFI is also an agent for Centenary Bank, offering savings and other services. Currently RUFI’s nearest office is over 30 kilometers away, a significant distance barrier for refugees. By locating in Bidi Bidi and becoming a super agent for mobile money, RUFI could not only help manage agent liquidity, it could also get to know agents and merchants that could become credit clients, and move its own credit and savings transactions to digital form. This would position it well to develop a loan product to help <a href="https://reliefweb.int/report/uganda/refugee-entrepreneurs-boost-host-communities">female entrepreneurs</a> finance the capital needed to become agents.
<blockquote>A super agent can help agents and merchants balance their liquidity and get to know potential clients.</blockquote>
Reports by <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=2ahUKEwiJh6D2mPjiAhXqqFkKHRNtDvAQFjAAegQIAxAC&amp;url=https%3A%2F%2Fwww.uncdf.org%2Fdownload%2Ffile%2F127%2F6633%2Fuganda-refugee-remittances-assessment-report0620v3pdf&amp;usg=AOvVaw1uX4vhWZodJZ-OcUtUJAML">UNCDF</a>, DCA, and Platform for Inclusive Finance indicate that informal savings groups are active in Bidi Bidi settlement, though estimates range widely regarding how many adults participate (from 11 to 49 percent, depending on the report). Working with savings groups could be an effective way to increase digital financial literacy among refugees, increasing their comfort with digital payments. One of the appeals of digital money is its security, and savings groups may be looking for ways to secure their pooled resources, given security issues within the settlement. Encouraging savings groups and their members to use mobile money would help develop the market for mobile money which in turn is needed to support an agent network.

With steps like these, the economy can slowly begin to rev up, providing benefits to all the residents of Bidi Bidi.

A Ugandan Refugee Camp Hosts Potential for Financial Inclusion

“Up until today, I have never received a SIM card from XXX” (a leading mobile network operator). “The agent SIM I use is not mine, it is in the identity of another person, and I bought it from him,” explained Francis Malamu.

Francis is a mobile money agent from Kongo Central in the Democratic Republic of Congo (DRC). His problems with registration came up while we were determining his pathways of becoming a mobile money agent. MicroSave Consulting recently conducted a market research study in the DRC to determine the <a href="https://www.microsave.net/wp-content/uploads/2019/02/190207_Agent-Network-Accelerator-research-report-002.pdf">key trends, success factors, and challenges in the operational management of agent networks</a>. The research comprised 50 in-depth interviews with digital financial services (DFS) agents across the DRC, as well as interviews with key staff from Airtel, Equity, FINCA, Orange, and Vodacom.

In this blog post, we take a deep dive into one of the key findings from the market research study—the reselling of MNO agent SIMs on the black market.

This is not a phenomenon unique to the DRC. In fact, we’ve observed this across numerous markets, usually during the initial stages of DFS industry growth. We believe that DFS providers in the DRC need to address this issue urgently if the sector is to flourish in a way that is sustainable for providers while providing high quality, transformative financial services.
<h2>What is the “Black Market” for Agent SIMs?</h2>
A black market for agent SIMs is created when the original owner of an agent SIM re-sells it for use by an unregistered third party, who will use the SIM to provide DFS services. A special SIM is necessary to enable a person to act as an MNO agent, carrying out cash-in and cash-out transactions, among other services, and reaping the accompanying commissions.

We established that there are two main reasons for the agent SIM black market:
<ol>
 	<li>MNOs generally have a permissive agent SIM card issuance policy, enabling one agent to own many—or even an unlimited number in some cases—agent SIMs. Some of these are then sold (illegally) to people who are keen to become DFS agents.</li>
 	<li>Regulations allow MNOs generally to have agent selection criteria that are less strict than the banking sector. MNOs tend to issue agent SIMs relatively freely to interested parties. Without any real barrier to entry for this work, the perception is that it is an easy job to get and that it will generate income quickly.</li>
</ol>
Unfortunately, this means many new agent SIM owners are underprepared for the job. They lack capital, skills, and sufficient client base, among other factors. Moreover, agents rely on commission earnings: if they do not transact, they quickly become inactive. Inactive agents may choose to re-sell their SIMs to other people who are interested in becoming agents, thus perpetuating the black market.

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Rogue Mobile Money Agents and Black Market SIMs of the DRC: A Barrier to Financial Inclusion

<em><span style="text-align: left;color: #333333;text-indent: 0px;letter-spacing: normal;font-family: Georgia,'Times New Roman','Bitstream Charter',Times,serif;font-size: 16px;font-variant: normal;font-weight: 400;text-decoration: none;cursor: text;float: none;background-color: transparent">This post originally appeared on </span><a href="https://www.ictworks.org/do-farmers-really-want-to-be-paid-in-mobile-money/#.Wyqvx6kpDBL">ICTworks</a></em><span style="float: none;background-color: transparent;color: #333333;cursor: text;font-family: Georgia,'Times New Roman','Bitstream Charter',Times,serif;font-size: 16px;font-style: normal;font-variant: normal;font-weight: 400;letter-spacing: normal;text-align: left;text-decoration: none;text-indent: 0px"><em> and is re-posted here with permission</em>.</span>

&gt; <em>Posted by By Chrissy Martin, U.S. Global Development Lab, USAID
</em>

Do farmers really want to be paid in mobile money? To answer this question, I’ll ask you to first entertain a brief thought experiment.

Imagine that your employer told you that next pay period, your company will start paying you in <a href="https://bitcoin.org/en/">Bitcoin</a>.  How would you react?  Sure you’ve heard about Bitcoin, but you have lots of questions as to what it will mean to receive your salary this way, such as:
<ul>
 	<li>Am I getting swindled?!</li>
 	<li>Where can I use bitcoin?</li>
 	<li>Can I spend it like dollars, or will I have to convert into dollars first?</li>
 	<li>Where can I convert?</li>
 	<li>How much is the conversion fee?</li>
 	<li>Will I be paid into my same bank account?</li>
</ul>


Your employer has some responses to your questions:
<ul>
 	<li>There are <a href="http://coinmap.org/">only a few places to use Bitcoin</a> in Washington, DC.</li>
 	<li>In order to spend your money anywhere else, you’ll have to convert first, and pay a fee to do so.</li>
 	<li>You’ll have to set up a new account, and learn a new app.</li>
 	<li>If you want to help to learn this new system, you can take unpaid leave to sit in a classroom and attend a financial literacy training…</li>
</ul>
<h3>Your Response to Bitcoin Is Their Response to Mobile Money</h3>
Perhaps this sounds like a less than ideal situation, but it really is not that different from how a farmer must feel when the company they usually sell their produce to decides, or offers, to start paying them in mobile money.

Maybe the farmer has heard of mobile money; she’s heard some good things, but she’s also heard some stories about fraud.  Besides, she’s used to cash, and she doesn’t have the luxury of time to learn an entirely new system since she needs to tend to her farm, her children, and the other side jobs she takes on to help pay the bills.

Why is this thought experiment relevant? Efforts are currently underway in many countries to digitize payments along the agricultural value chain. This is due to both the growing evidence that access to a digital account increases household resilience and the potential for mobile money to increase farmers’ access to financing (think loans for inputs) and markets (think connections to more buyers and the ability to lock in better prices).
<h3>Three Ways to Improve Mobile Money Adoption</h3>
Often, the assumption is that we should start by digitizing payments from buyers to farmers. These are large, bulk payments that can be transitioned from cash to electronic fairly easily, from a technology standpoint. This would get money into the farmer’s mobile wallet so that they start to become familiar with the concept.

However, in select value chains in Uganda, USAID and our partners are finding that this is not necessarily the best way to encourage adoption. While some agribusinesses and farmers are signing on enthusiastically, we’re not yet seeing the type of scale that is necessary to really start building out a rural digital financial ecosystem.

Based on this experience, I see three keys shifts underway that can help:

<strong>1. We need to ask <em>what the farmer actually wants. </em> </strong>

The payments first approach to digitizing the value chain fails to start with an understanding of the farmer’s interest in transitioning to mobile money, as we start to understand when we consider the idea of transitioning our own salary to Bitcoin.  The farmer, who may not have a mobile phone, who may rarely leave her farm and may never have been to bank, is often perfectly happy with cash.

So, we have to ask, what does the farmer need?  Access to credit for inputs, on-demand production and marketing services, access to household solar through a digital pay-as-you-go plan, and an easy way to pay for school fees are all products that are based on real constraints that many farmers in Uganda face.

To better understand what makes mobile money attractive to a farmer, United Nations Capital Development Fund (UNCDF) and <a href="http://www.cgap.org/about"> </a><a href="http://www.cgap.org/about">CGAP</a> are undertaking a <a href="http://mm4p.uncdf.org/tags/value-proposition-mapping">Value Proposition Mapping</a>, which will help the private sector tailor products accordingly.

<strong>2. We need to <em>expand our idea of the user.</em></strong>

When we talk about being user-centered, we often think immediately of the individual.  However, within a value chain, we need to think of the incentives and capacities for a wide variety of users, including the farmer, other members of the farmer’s household, the agribusiness, the cooperative, the community savings group, and the mobile money provider.

For example, we’re finding that agribusinesses may need significant system upgrades and process changes to transition away from paper based processes.

<strong>3. We need to <em>reassess the starting point. </em></strong>

As we’re finding through Digital Development for Feed the Future, a three-year collaboration between the Global Development Lab and the Bureau for Food Security within USAID, improving data collection and data usability underpins all of our efforts to improve agricultural results through digital tools.

For example, our partner in Uganda, <a href="http://akorion.com/">Akorion</a>, is facilitating input loans to farmers with digital farmer profiles that provide banks with detailed information on which they can base creditworthiness. Through its market system digitization platform and Ezy-Agric, Akorion bridges the information and service delivery gap for farmers and agribusinesses.

These three suggestions are based on our experience to-date in Uganda, as well as the experience of USAID’s partners, including <a href="http://www.siaedge.com/">Strategic Impact Advisors</a> and <a href="http://mm4p.uncdf.org/">UNCDF</a>’s program in Uganda.  However, these suggestions all need to be tested and may change or need to be modified quickly.

The key takeaway?  Remember to challenge your assumptions by always taking a minute to imagine yourself in a similar situation.  How would you feel?

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Do Farmers Really Want to Be Paid in Mobile Money?

<em>&gt; Posted by Dan Salazar, Vice President, Product Development and Innovation, Acceptance and Solutions, Mastercard</em>

<img class="aligncenter wp-image-25400" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/04/technology_amfb_2014-1.jpg" alt="" width="615" height="410" />Ten years ago, 85 percent of the world’s transactions were in cash and checks, and 2.5 billion people were unbanked. Since then, we’ve all been working hard as an industry to develop technology that will give the unbanked access to the world of digital payments. Mastercard has connected more than 360 million people to formal financial services – more than half-way to our commitment of reaching 500 million people by 2020. And the company has set a goal of connecting 40 million micro and small merchants to our payments network by 2021.

While more and more people and businesses are becoming “financially included,” there are still 2 billion people today who don’t have bank accounts, and over the last 10 years we’ve only managed to reduce cash usage by <a href="http://money.cnn.com/2017/11/20/news/economy/cash-circulation-payment/index.html">2 percent</a>. Up to now, we’ve been operating on the assumption that if we displace cash and simultaneously provide access to electronic payments, the unbanked will come. But, at this rate, financial inclusion for those remaining 2 billion people will take 200 years.

One thing is clear: we need to broaden our focus beyond simply increasing access to financial accounts to aggressively driving adoption and usage of those services. In fact, dormancy in newly-opened accounts is low-hanging fruit that must be addressed in order to further inclusion.

At Mastercard, we believe that merchant acceptance is the key. Enabling more merchants serving low-income populations in developing countries to accept electronic payments for everyday purchases can vastly broaden financial inclusion.

<img class="alignright wp-image-25397" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/04/dc-workshop-3-2.jpg" alt="" width="331" height="248" />We recently brought together key stakeholders for a workshop in Washington D.C., where we discussed ways to advance payment acceptance at the base of the pyramid. Narrowing the access-usage gap is a primary concern of financial inclusion practitioners – many of whom were gathered in the room – including the World Bank, IFC, USAID, BTCA, CGAP, and Accion.

These industry experts agreed with the framework developed in our <a href="https://newsroom.mastercard.com/documents/report-building-electronic-payment-acceptance-at-the-base-of-the-pyramid-to-advance-financial-inclusion/">recent report</a>, which highlights solutions, business models and partnerships as key opportunities to advance acceptance. But not everyone shares the same opinion on how to address the barriers. For example, on the solution side, reducing POI (Point of Interaction) costs and using payment data in lending were identified as key topics. The discussion also highlighted the need to address consumer demand, as well as a holistic view of merchant cash flows.

New business models need to satisfy the underlying economics of acceptance. This includes making merchant acceptance more attractive through incremental revenues and reduced costs. For example, push payments offer instant and irreversible payments, resulting in fewer disputes and exception items. Another new approach is to facilitate distribution through aggregators and fast-moving consumer goods companies.

On the partnerships front, governments could play a key role in advancing acceptance as part of the broader ecosystem to support digital payments. Government intervention can help enable critical mass by providing incentives to accept payments and by removing disincentives, such as higher taxes for merchants.

Over the next 18 months, Mastercard will focus on three critical objectives:
<ul>
 	<li>First, implementing initiatives that test the efficacy of various approaches in advancing merchant acceptance at the base of the pyramid;</li>
 	<li>Second, developing learnings from these efforts in order to refine and bring precision to our focus;</li>
 	<li>And third, deepening our collaboration and partnerships, to advance our mutual understanding and have greater collective impact.</li>
</ul>
Collaboration with our public, private and NGO partners is critical to scaling our efforts and achieving full financial inclusion. As the African proverb says: “If you want to go fast, go alone. If you want to go far, go together.” We look forward to continuing these types of dialogues, so that we can keep moving the needle on financial inclusion, together.

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/01/the-smart-campaign-and-the-mastercard-foundation-team-up-to-tackle-the-next-wave-of-consumer-protection-challenges-in-financial-services/">The Smart Campaign and The Mastercard Foundation Team-Up to Tackle the Next Wave of Consumer Protection Challenges in Financial Services</a>

<a href="https://cfi-blog.org/2017/10/31/how-financial-inclusion-can-move-people-out-of-poverty/">How Financial Inclusion Can Move People Out of Poverty</a>

<a href="https://cfi-blog.org/2016/08/22/the-myth-of-the-middle-class-in-india/">The Myth of the Middle Class in India</a>



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Making Payment Acceptance a Driver for Financial Inclusion

Mayada El-Zoghbi

Managing Director

Tess Johnson

Alreena  Pinto

Amit  Arora

Jacqueline Foelster

Nika Naghavi

Amin Khairy

Alexandra Rizzi

Lauren Hendricks

Jenny  Frydrych

Djitaba Sackho-Patel

Nancy Kiarie

Dan Salazar

Miriam Freeman

Shreya Chatterjee

Misha Sharma

Elisabeth Rhyne

Iftin Fatah

Jeremy Gray

Cambodia

East Asia and Pacific

India

Kenya

Philippines

South Asia

Sub-Saharan Africa

Tanzania

Rwanda

South Sudan

Uganda

Congo, Dem. Rep.

Myanmar

Pakistan

Iran, Islamic Rep.

Malaysia

Middle East and North Africa

Saudi Arabia

Turkey

Madagascar

Zimbabwe

Agent Banking

Alternative Data

Challenges and Crises

Delivery Channels

Enabling Environment

Financial Service Providers

Financial Technology

Fintechs

Health Insurance

Inclusive insurance

Insurance

Underserved Groups

Women

Human Touch

Credit

Mobile Banking

MSME/SME Finance

Payments

Banks

Data Analytics

Partnerships

Rural Populations

Telcos

Appropriate Product Design and Delivery

Client Treatment

Complaint Resolution

Consumer Protection

Credit Provision

Digital Credit

Digital Financial Services

Privacy

Refugees and Migrants

Blockchain and Cryptocurrency

Smallholder Farmers

Trends

Policy, Regulation and Government Initiatives

Payday Loans

Impact Investing

Insurance Companies

Pensions and Retirement Saving

Behavioral Insights

Brief

Blog Post

Report

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.

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

<em>&gt; Posted by Nadia van de Walle, Charles Wanga, and Ridhi Sahai, Financial Inclusion Insights, Intermedia</em>

The number of adults who are considered financially included in Nigeria has not improved since 2014, according to InterMedia’s Financial Inclusion Insights (FII) 2016 Annual Report and Survey Data. The survey defines financial inclusion as adults with a registered account at a full-service financial institution. Financial inclusion in Nigeria dropped slightly from 37 percent in 2015 to 35 percent in 2016 (Figure 1), lagging behind the three other African countries surveyed as part of the FII program. In 2016, FII data showed 69 percent of Kenyans, 54 percent of Tanzanians, and 40 percent of Ugandans were financially included.

InterMedia recently completed and published the <a href="http://finclusion.org/uploads/file/reports/Nigeria%20Wave%204%20Report_23-Jun-2017.pdf">2016 Annual Report and Survey Data</a> on the status of financial inclusion in Nigeria. The report, based on a nationally-representative survey of over 6,000 Nigerian adults, provides insight into Nigerians’ financial lives while tracking trends in attitudes, access, use and demand for financial services.

[caption id="attachment_25369" align="aligncenter" width="614"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-1.png"><img class="wp-image-25369" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-1.png" alt="" width="614" height="344" /></a> (click to enlarge)[/caption]

With an economy that is large enough to account for <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/AEO_2017_Report_Full_English.pdf">almost a third</a> of Africa’s total GDP, why might Nigeria be lagging its peers?



<strong>1. More than half of Nigerian adults do not have access to financial services</strong>. The 2016 FII data found access to any formal financial service remained constant compared to 2015 at only 42 percent. Although awareness of mobile money providers showed an increase from 12 percent in 2015 to 20 percent in 2016, most Nigerians did not know of a mobile money point of service within a bus ride of where they live. In addition, even when Nigerians can access financial services, they face infrastructure issues. Thirty-seven percent of registered bank users cited nonworking ATMs as a challenge.

<strong>2. FII data suggest that even when they have access, many Nigerians lack the basic resources and key skills that facilitate financial inclusion. </strong>Key factors that enable ease of account registration such as financial literacy are low (16 percent of adults) and necessary requirements for opening a full-service account, such as holding a valid identification and owning a SIM card, are not improving. Only 79 percent of Nigerian adults have the necessary identification documents for registering a mobile money or bank account. The percentage of adults who owned a SIM card in 2016 decreased to 79 percent compared to 86 percent in 2015.

<strong>3. In 2016, decreases in bank account ownership drove an overall drop in financial inclusion, </strong>despite a small increase in the number of adults with registered mobile money accounts. While historically, access in Nigeria has been led by banks (see Figure 2), FII data points to several factors that may have contributed to the slowdown in bank account ownership and use:
<ul>
 	<li>In 2014 <a href="http://www.trlplaw.com/wp-content/uploads/2015/04/CBN_introduces_bank_verification_numbers-1.pdf">the government began requiring</a> bank account holders to obtain biometric bank verification numbers (BVNs). As a result, some accounts were closed due to noncompliance and some customers have faced difficulties linking their BVN to their accounts.</li>
 	<li>A federal government regulation enacted in March 2016 increased transaction costs associated with bank-based financial services. For example, the regulation imposed a stamp duty of N50 (USD 0.20) on bank customers for money received into their accounts, and added charges on cash withdrawals, debit card issuances and online transfers. The rise in costs may have lowered the appeal of banks.</li>
 	<li>Nigeria slipped into a recession in 2016, as a result of deepening economic challenges related to a drop in global oil prices and security problems caused by the Boko Haram insurgency in the country’s northeast and Delta regions. <a href="https://tradingeconomics.com/nigeria/inflation-cpi">Rising inflation rates in 2016</a> reached 18.5 percent in November 2016, causing Nigerians to spend more on their daily needs and save less. FII data showed a steep decline in savings-to-debt and income-to-expenditure ratios from 2014 to 2016, with a more than 20 percentage point decrease in both indicators. In addition, these changes may have impacted their ability to meet banks' minimum savings requirements. For instance, per FII data, the proportion of economically vulnerable adults rose significantly from 42 percent in 2015 to 60 percent in 2016.</li>
</ul>
[caption id="attachment_25370" align="aligncenter" width="615"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-2.png"><img class="wp-image-25370" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-2.png" alt="" width="615" height="357" /></a> (click to enlarge)[/caption]

<strong>4. In Nigeria, cash is still king.</strong> The population continues to work in the cash-based informal sector. In fact, per FII data, 47 percent of Nigerians generated income solely through irregular informal sector employment in 2016. To draw these cash holders away from informal money management, formal financial services must better match their typical transaction sizes and needs, and make the case for their unique value-add. FII 2016 data showed that nonusers of banks reported not having enough money to make transactions with the service and lacking knowledge about the service as the key reasons for not registering for a bank account. In terms of interventions, institutions could focus on products tied to agriculture given that the latest FII data shows that agriculture is the largest sector of the economy employing two in 10 Nigerian adults. Additionally, interventions could focus on closely evaluating the needs of the specific market segments that are more likely to be excluded – as illustrated in Figure 3 - to inform product design and marketing.

[caption id="attachment_25371" align="alignright" width="315"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-3.png"><img class="wp-image-25371" src="https://centerforfinancialinclusionblog.files.wordpress.com/2018/03/figure-3.png" alt="" width="315" height="282" /></a> (click to enlarge)[/caption]

The FII team will continue to examine how these challenges can be addressed and how factors such as SIM card ownership, KYC requirements, marketing and financial education, and better product design can advance Nigerians along the customer journey from access to advanced, active use of financial services.

<em>For more information regarding the FII team’s research in Nigeria, read the <a href="http://finclusion.org/uploads/file/reports/Nigeria%20Wave%204%20Report_23-Jun-2017.pdf">2016 Nigeria Annual Report</a>, or contact <a href="mailto:wangac@intermedia.org">Charles Wanga</a>, Research Manager, Financial Inclusion Insights. If you are interested in seeing additional information about the factors that affect financial inclusion in Nigeria, we encourage you to visit the <a href="http://finclusion.org/data_fiinder/">Data Fiinder at finclusion.org</a></em><em>.</em>

<a href="http://www.finclusion.org/"><em>Financial Inclusion Insights</em></a><em> is a research program funded by the Bill &amp; Melinda Gates Foundation and designed to build meaningful knowledge about how the financial landscape is changing across eight countries (Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Tanzania and Uganda).</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/16/what-does-indias-demonetization-experiment-mean-for-financial-inclusion/">India’s Demonetization: One Year Later, What Was the Impact on Financial Inclusion?</a>

<a href="https://cfi-blog.org/2017/09/15/how-to-accelerate-financial-inclusion-in-pakistan-lessons-from-the-new-financial-inclusion-insights-data/">How to Accelerate Financial Inclusion in Pakistan: Lessons from the New Financial Inclusion Insights Data</a>

<a href="https://cfi-blog.org/2018/02/08/in-kenya-financial-inclusion-shifts-from-access-to-advanced-use/">In Kenya, Financial Inclusion Shifts from Access to Advanced Use</a>

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Why Is Financial Inclusion in Nigeria Lagging Compared to Its African Peers?

In Colombia, where institutional factors favor technology as a tool for development, fintech has proven helpful in promoting financial inclusion, but only through a narrow definition of inclusion—more access. If we broaden our definition of financial inclusion, the country’s progress in leveraging fintech is less substantial. What can the business community and policymakers do to advance fintech for financial inclusion in Colombia?

First, let’s take a step back. In terms of financial inclusion broadly, how does Colombia measure up?


<h3>Financial Inclusion in Colombia</h3>
Colombia has a favorable environment for doing business in this space. The country <a href="http://www.eiu.com/public/thankyou_download.aspx?activity=download&amp;campaignid=Microscope2016">ranks high</a> on the Global Microscope’s assessment of enabling environments for financial inclusion and fintech. In part, this ranking <a href="http://www.cgap.org/publications/going-mobile-conditional-cash-transfers">reflects favorable regulation</a>, robust agent banking infrastructure, and the availability of simplified savings accounts. Importantly, <a href="https://www.superfinanciera.gov.co/jsp/10087980">a 2015 regulatory reform</a> created financial licenses for non-banks, enabling mobile money business models to participate in the industry.

By the traditional metric of financial product ownership, Colombians have become more included, with almost 80 percent having at least one product. Yet while the number of adults with at least one financial product has continued to increase, new metrics conducted by Colombia’s chief financial regulator <a href="http://bancadelasoportunidades.gov.co/es/reportes/%2A">show</a> that the evolution of active users is not nearly as inspiring.

Financial services are still expensive in Colombia. According to one statistic, <a href="http://dx.doi.org/10.18235/0000722#sthash.2syZsDn5.dpuf">90 percent</a> of Colombians prefer to pay in cash in large part because of the financial transaction tax, which can be avoided by not documenting transactions and remaining informal. There is an <a href="http://dx.doi.org/10.18235/0000722#sthash.2syZsDn5.dpuf">important perception</a> that non-cash payments are more expensive, both because formal financial products are seen as expensive and because they preclude the opportunity to negotiate on prices.

One of the major barriers is a <a href="http://www.cgap.org/blog/papayas-and-digital-finance-emerging-consumer-risks-colombia">lack of trust</a>, which can be overcome by a user-friendly experience. For example, Bancolombia has three related products with promising customer-centricity implications—Ahorro a la Mano, a simplified savings account; Crédito a la Mano, which uses cash flow analysis from the simplified savings account to offer small loans to account users; and <a href="http://juntosglobal.com/emilia-bancolombias-financial-advice-chatbot-inspired-by-juntos/">Emilia the robot</a>, a chatbot developed with Silicon Valley fintech start-up Juntos that provides friendly financial advice to users. While there are many promising examples, most have yet to prove themselves at scale.
<h3>Recommendations for the Path Forward</h3>
<h4>For Banks...</h4>
<strong>There is ample room to grow in person-to-government (P2G), person-to-business (P2B), and person-to-person (P2P) transactions.</strong> The government has led the push for cash-less transactions, and payments <em>from</em> the government are <a href="http://dx.doi.org/10.18235/0000722#sthash.2syZsDn5.dpuf">now almost entirely electronic</a>, but there is substantial room for progress in payments <em>to</em> the government. P2G, P2B, and P2P are where banks should look to expand their service offerings, keeping in mind the principles of affordability and customer-centricity.

<strong>Organize for innovation.</strong> Juan Carlos Rojas Serrano, DaviPlata’s former Executive Director, <a href="http://www.managementexchange.com/story/daviplata-financial-inclusion-all-using-self-service-transactional-product-going-kyc-kyc-know-">writes</a> that it has been characteristics of the company’s DNA that have been fundamental to its success. These include medium-to-long-term focus, innovative culture, and belief in its employees—regardless of position—to create solutions. Changing corporate culture is arguably more challenging than developing new products, but it may be key to successful innovation for some institutions.
<h4>For Fintechs...</h4>
<strong>Partner for success.</strong> There is growing consensus, according to a<a href="https://cfi-blog.org/2017/11/03/a-team-sport%e2%80%8a-%e2%80%8athree-reasons-why-mobile-telcos-and-financial-institutions-will-drive-financial-inclusion-together/"> joint-report</a> from CFI and the Institute of International Finance, that collaboration between fintechs and traditional players will be key to combining the best of tech and finance. This is the driver behind <a href="https://cfi-blog.org/2017/03/10/finconecta-building-bridges-between-financial-institutions-and-fintechs/">Finconecta</a>, a partnership of the IDB’s Multilateral Investment Fund (FOMIN) and Above and Beyond to select and accelerate fintechs in collaborating sandbox-style with financial institutions to implement innovative solutions. The creation of the Colombia Fintech Association, which supports fintechs in collaborating and adopting best practices from each other, is another promising development.

<strong>“Find a use case which really solves a customer problem... which really removes the pain point of solving a financial services issue.”</strong> Fintechs would be wise to heed this advice <a href="https://twitter.com/SherezadeR/status/925393713173549056">offered by Sopnendu Mohanty</a>, Chief Fintech Officer of the Monetary Authority of Singapore. With all the hype around fintech and the explosion of new services and products, fintechs should not lose sight of the fact that their ability to meet customer needs is their best competitive advantage.
<h4>For Telcos...</h4>
<strong>Leverage infrastructure.</strong> With an entrepreneurial culture and a focus on profits through high-volume, low-value transactions, <a href="https://doi.org/10.1162/itgg.2007.2.1-2.63">research suggests</a> that telcos are better positioned than banks to run mobile money services. Affordability is a key sticking point for Colombian customers, yet mobile customers are accustomed to topping up with agents in stores, on the street, and even online. Telcos can use this already-established infrastructure to add value and grow.

<strong>Focus on customer-centricity.</strong> The <a href="https://www.gsma.com/latinamerica/es/country-overview-colombia-2017">number one challenge</a> for mobile internet in Colombia is safety and security. While government industry-wide efforts, like <a href="https://www.gsma.com/services/gsma-imei/about-gsma-tac-check/">coordination with the GSMA Device Database</a> have aimed to tackle this, the results have been mixed from a user perspective. Consequences such as account deactivation without warning, unclear privacy protections, and agents’ inability to resolve customer problems create frictions for users. Telcos will need to develop a more customer-centric culture to build a product customers can trust.

<strong>Improve affordability.</strong> Affordability is still a barrier to mobile internet usage for more than half of non-users, according to a recent <a href="https://www.gsma.com/latinamerica/es/country-overview-colombia-2017">GSMA survey</a>. As infrastructure improves, telcos can pass these savings on to their customers and help achieve more comprehensive inclusion, while at the same time gaining new and more profitable customers.
<h4>For Government...</h4>
<strong>Lead on interoperability.</strong> As more services develop, the government should take a more active role to ensure these services are compatible and consumers can transact freely between them, which supports a larger, more vibrant electronic financial ecosystem. Interoperability and API sharing also helps to de-risk innovation, as innovators can build on what already exists and test solutions, and consumers do not have to commit to one network or another.

<strong>Reduce reliance on cash.</strong> Tax reform, although always challenging, could go a long way in promoting digital financial inclusion. Exceptions to the tax on financial transactions have been made for small accounts, but the tax serves as a major disincentive for Colombians to store cash in digital platforms. This is a principle complaint of the banking industry. Additionally, government collaboration on electronic payment mechanisms for public transportation, utilities, and taxes is <a href="http://www.asobancaria.com/proyecto-f">fundamental to achieving the goal</a> of reducing the reliance on cash.

<strong>Focus on education and rural development to bolster inclusion.</strong> It is noteworthy, but perhaps not surprising, that financial product knowledge and preferences <a href="http://www.asobancaria.com/wp-content/uploads/2016/04/Semana-Econ%C3%B3mica-1039-Asobancaria.pdf">vary considerably</a> by income and education level, with the lowest income brackets preferring cash 96 percent of the time, compared to 56 percent for the highest socioeconomic class. Mobile coverage is generally high, but rural coverage is <a href="http://dx.doi.org/10.18235/0000722#sthash.2syZsDn5.dpuf">just above 50 percent</a>; thus a focus on rural development can have the largest impact.

While Colombia has the digital and financial infrastructure in place, the tasks of adoption and affordability are more challenging. Research and conversations with various stakeholders in Colombia indicate there is incredible momentum around fintech, financial inclusion, and the intersection of the two. We will have to wait and see the effects of fintech for financial inclusion in Colombia, but at this rate, the next few years will almost undoubtedly be a time of growth and inclusion for the country.

<em>Miriam Freeman is a Master of International Business candidate at The Fletcher School at Tufts University. This blog is based on her capstone project, “Fintech for Financial Inclusion: The Case of Colombia” (December 2017).</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/08/23/juntos-harnesses-artificial-intelligence-to-improve-customer-engagement-for-bbva-bancomer-and-bancolombia/">Juntos Harnesses Artificial Intelligence to Improve Customer Engagement for BBVA Bancomer and Bancolombia</a>

<a href="https://cfi-blog.org/2017/08/18/colombia-revamps-its-financial-education-strategy/">Colombia Revamps Its Financial Education Strategy</a>

<a href="https://cfi-blog.org/2017/08/28/catalyst-fund-lessons-on-getting-early-stage-fintech-startups-investment-ready/">Catalyst Fund: Lessons on Getting Early-Stage Fintech Startups Investments-Ready</a>

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Fintech for Financial Inclusion: The Path Forward for Colombia

<a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/781"><img class="wp-image-24797 alignright" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/agents-of-change.png" alt="" width="280" height="361" /></a>India’s financial services industry is poised for a digital revolution. From payment banks to India Stack to the recent expansion of mobile financial services, policy makers and financial service providers are energetically pursuing digitization of financial services. But the country still has a tremendous way to go. <a href="http://finclusion.org/country/asia/india.html">Roughly half the population</a> has low digital literacy, and adoption of digital financial services (DFS) is skewed towards higher income population segments. For example, only <a href="http://www.pewglobal.org/respondents/india/">9 percent</a> of those with lower education levels are online, as compared to 38 percent for those with higher education levels.

As <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program">CFI Fellows</a>, we explored how frontline banking agents can advance the adoption of DFS by helping first-time DFS users become comfortable transacting in new ways. We evaluated the factors currently shaping the adoption of DFS by emerging consumers in India and assessed how well agents are playing their crucial role in helping customers successfully transition to digital platforms.

In the <a href="https://cfi-blog.org/2017/01/18/what-does-effective-human-touch-look-like-in-indias-digital-age/">blog post</a> we wrote at the outset of our project, we pointed out that there are benefits and drawbacks to deploying human touch in digital financial services, and that an optimal mix of human and technology-enabled customer touchpoints needs to be achieved. Over-reliance on banking agents could cause overdependence on the part of customers, possibly eliminating potential cost savings unlocked by technology. But banking agents may also present great benefits, including in assisting with product adoption, facilitating transactions, resolving problems, building trust, and supporting customers’ transitions to more advanced services.

However, not all agent banking services are created equal, and in India we observe a wide range of models in action. In our research we studied three types of agents, each with a different profile and relationship to their parent organization. We wanted to answer these questions:

<ul>
 	<li>Do agents have sufficient technical, financial and administrative resources?</li>
 	<li>Do agents have awareness and knowledge about the range of products and services offered in the digital financial space?</li>
 	<li>Are agents motivated (via monetary compensation or otherwise) to spend the time needed to promote awareness of DFS among customers and assist them in their DFS transition?</li>
</ul>
<strong>Commercial Banks and Business Correspondents</strong>: Since 2006, commercial banks have been allowed to use third-party, non-bank individuals, known as business correspondents (BCs), to extend financial services. BCs perform a variety of functions on behalf of banks, such as opening accounts, facilitating withdrawals and deposits, introducing the customer to financial products, and providing other payment services. BCs enable banks to provide services in remote locations at a low cost.

<strong>Payment Banks and Payment Bank Agents: </strong>The Reserve Bank of India (RBI) issued the first “payment bank” licenses in February 2015. Payment banks function like any other bank, except that they do not advance loans, and therefore they operate free of credit risk. They can, however, accept deposits of up to US$1,500 per customer, offer remittance services, issue debit cards and mobile banking services, and facilitate transfers and purchases. Payment banks provide their services through third-party individuals, referred to as payment bank agents (PBAs). PBAs are not direct employees of payment banks and receive commissions based on the number of bank accounts opened and transactions made.

<strong>Microfinance Institutions and Credit Officers:</strong> The Indian microfinance industry has evolved dramatically since its inception, with microfinance institutions (MFIs) maturing and broadening their range of services. Despite this evolution, most MFIs across India still transact with customers in cash and are only gradually integrating digital platforms. MFIs typically employ credit officers (COs) on a full-time basis to connect them with their clients, paying them a fixed salary. COs perform a variety of tasks, ranging from on-boarding and orienting customers, to performing services such as opening bank accounts, fielding customer queries, and collecting repayments. These staff members were included in our research because of their potential role in assisting customers with the transition to DFS.

[caption id="attachment_24808" align="aligncenter" width="510"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/table-11.png"><img class="wp-image-24808" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/table-11.png" alt="" width="510" height="530" /></a> (click to enlarge)[/caption]

We studied one payment bank, one business correspondent company and two MFIs. Across these parameters and banking agent models, here’s what our investigation uncovered.<b>
</b>

<b>The technical resources are available, but support from the parent company varies</b>

We found that business correspondents and payment bank agents have adequate access to the means to conduct their transactions, but encounter technical issues during facilitation of digital transactions. BCs receive moderate support from their aggregators and financial institutions but complain of a lack of attention during busy times, such as the beginning of the month when withdrawals are typically high. The PBAs we spoke with received little to no support from their parent institution, thereby heavily affecting agents’ awareness of products, which consequently hinders customer demand. Similarly, in terms of financial resources, BCs and PBAs report struggling with financial liquidity. (Credit officers associated with MFIs do not use digital platforms at this time, but reported being well-supported by their employer.)
<h4>They know but they don’t necessarily share</h4>
We found that PBAs had high levels of awareness about the DFS market in India, followed by BCs and COs. However, PBAs are weak in passing on information to their customers. BCs and COs are in a position to share their knowledge about DFS with their customers but lack incentives to do so. In terms of levels of digital literacy, we saw that PBAs have good knowledge and skills and are adept at using smartphones and other technical devices. They could help compensate for customers’ poor digital literacy skills. BCs are less knowledgeable on this front, while COs ranked the lowest. BCs and COs seemed to enjoy high levels of trust among their customers, while PBAs did not.
<h4>Compensation matters for motivation</h4>
We saw that the least motivated agents were also the most poorly compensated. BCs were more adequately incentivized compared to COs and PBAs. For CO and PBA agents, orienting new customers to use DFS was hardly worth the effort.
<h4>What Can FSPs Do Better?</h4>
The more we talked with agents during our research, the more we became convinced that agents are an enormous and necessary resource for bringing about India’s transition to digitally-based financial inclusion. Agents are the bridge between FSPs and last mile customers, not only in a practical sense as transaction facilitators, but through their human touch. Our discussions with agents, branch managers, and senior executives of financial organizations revealed important insights into the opportunities and challenges that exist for each type of financial service provider in building effective agent networks.

[caption id="attachment_24801" align="aligncenter" width="510"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/table-2.png"><img class="wp-image-24801" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/12/table-2.png" alt="" width="510" height="701" /></a> (click to enlarge)[/caption]

In summary, we found that commercial banks working with business correspondents could increase their support to agents by maintaining regular contact with them, helping them troubleshoot technical problems and strengthening the financial incentives for better outcomes for both banks and last mile consumers. For payment banks, given the novelty of their product, it is important for them to find their unique selling proposition and carve out a niche for themselves where they can sustainably provide value-added services in the era of cut-throat competition from several new age fintech providers. To increase their outreach, we found that payment banks have to substantially increase their product marketing to increase awareness and demand among their customers. Lastly, microfinance institutions can gradually start shifting their customers onto digital platforms by taking small steps at a time, such as digitizing the process of loan disbursement and repayment. In this context, credit officers can act as key nodes of influencers among the institutions’ customers.

<em>For more, read the new report, </em><a href="http://www.centerforfinancialinclusion.org/storage/Agents_of_Change_India_FINAL.pdf"><em>Agents of Change: How the Human Touch Is Bringing Digital Financial Services to New Customers in India</em></a><em>.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/08/11/exploring-responsible-agent-management-in-india/">Exploring Responsible Agent Management in India</a>

<a href="https://cfi-blog.org/2016/09/12/digitizing-self-help-groups-in-india/">Digitizing Self-Help Groups in India</a>

<a href="https://cfi-blog.org/2016/06/13/indian-microfinance-gets-serious-about-grievance-redressal/">Indian Microfinance Gets Serious about Grievance Redressal</a>

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How Successful Are Banking Agents in Bringing Digital Financial Services to New Customers in India?

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<img class="aligncenter wp-image-24663" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/cashnetusa1.png" alt="" width="614" height="298" />I recently browsed the website of <a href="https://www.cashnetusa.com/">CashNetUSA</a>, a company that offers payday loans and related products in 38 states across the United States. The website was easy to read and presented the application process and the (very high) charges simply and clearly. But I wanted to know more. Is this company legitimate? Does it live up to its promises? Will I experience any problems along the way? More broadly, how can a consumer tell whether an online payday lender is trustworthy?

I had no peer or family member to ask about this, so I turned to online credit provider reviews and began a Google-based armchair investigation.

The first review site that popped up was <a href="https://www.consumeraffairs.com/">ConsumerAffairs</a> (not to be confused with the better-known <a href="https://www.consumerreports.org/cro/index.htm">Consumer Reports</a>*). Companies pay to be reviewed on ConsumerAffairs, and CashNetUSA had over 1,500 reviews on the site. CashNetUSA slides a few of the most favorable reviews directly onto its own website, like these:
<p style="padding-left: 30px"><em>Customer service is always perfect and always goes out of their way to help me! CashNetUSA is in my opinion the very best company with the best prices when you need a little extra help. I will recommend CashNetUSA to all my friends and family who need a little extra help, and need fast friendly service. (Rock Creek, Ohio)</em></p>
This review suspiciously resembled advertising copy. The next one sounded a bit more like a real person, with a couple of mistakes included.
<p style="padding-left: 30px"><em>Today is a good day. Thanks CashNet USA. All your representatives even the online chat did a good job in helping me pay off my old loan and re applying for another. GREAT JOB Team. Thank you for information and help you provided with a Good Altitude (sic). (Mesquite, Texas)</em></p>
Since the overwhelming majority of the 1,500 raters gave CashNetUSA 5 stars, I began to believe that actual people who have used the service appreciate its speed, simplicity and customer service quality. But what about the much smaller number of 3-star ratings, from people who are neither satisfied nor particularly angry? Many of these folks liked dealing with the company but complained about the high interest rates. The 1-star ratings were generally rants from people so angry they spluttered all over my computer screen. Clearly their reviews were a chance to vent and get a small bit of revenge. But these were a very small minority: the overall score was over 9 out of 10.

A very similar site is <a href="https://www.trustpilot.com/">Trustpilot</a>, with over 2,000 reviews of CashNetUSA, giving it an overall rating of 8.7. One wonders whether some of these reviews are provided by bots – though the site assures us that’s not happening.
<p style="padding-left: 30px"><em>Excellent customer service given by Alonda today at CashNetUSA! Thanks!!! (Johnny Kuhn)</em></p>
All these positive reviews started getting boring, to tell the truth. I spent more time reading negative ones:
<p style="padding-left: 30px"><em>CASH NET USA, IS A RIP OFF, I SUGGEST YOU DO YOUR RESEARCH AND PLEASE TAKE THE TIME TO READ YOUR CONTRACT BEFORE SIGNING, A TOTAL DISAPPOINTMENT. (Connie Head Newman)</em></p>
Another site, <a href="https://www.highya.com/">HighYa</a>, only had a few ratings, but it was curious that HighYa’s CashNetUSA score was a low 1.8 out of 10, the opposite of the high ratings on Trustpilot and ConsumerAffairs. But HighYa offered an explanation. It explained that CashNetUSA is plagued by scammers who pose as the lender. A common tactic is to request applicants to send bank account details (to “test” a transaction) before approving a loan. Examining the experiences described by the 1-start ratings on all the sites, I concluded that a great many of the low raters had been scammed.

The next few sites I checked featured reviews written by the staff of the site, rather than consumer reviews. For example, <a href="http://www.toptenreviews.com">Top Ten Reviews</a> explained the service and praised CashNetUSA for ease of use. The big buttons allowing readers to click straight through to the CashNetUSA website revealed that the site is pretty cozy with the companies it reviews. However, at the same time, the site posted a warning to consumers to avoid use of payday loans whenever possible.

<a href="https://www.supermoney.com/">SuperMoney</a> only had three customer reviews of CashNetUSA, with a mediocre 3 star rating. But this site helpfully informed that CashNetUSA is a brand of Chicago-based Enova International, which also operates in Europe and South America.

The last site I checked was <a href="http://www.simplethriftyliving.com">Simple. Thrifty. Living.</a>, which summed up the picture I was beginning to get about CashNetUSA:
<p style="padding-left: 30px"><em>In general, among payday loan lenders, CashNetUSA fares pretty well when it comes to reviews. They are generally at or near the top of any payday loan rankings, mostly because of their organized business practices, easy availability and history in the payday loans field. To some, that may seem like saying a certain restaurant is the best of the restaurants with health code violations, but for someone who truly needs a payday loan, knowing which is the best and not a complete scam can be very helpful. </em></p>
Or, as SuperMoney said, more succinctly:
<p style="padding-left: 30px"><em>The APRs are high, but it's hard to beat as a fast source of cash in an emergency. </em></p>
This exploration of the review sites satisfied my curiosity about CashNetUSA, but it was only by visiting several sites that I got the full scoop. I’d like to know more about the business models behind these sites – and how their sources of income influence the ratings they display. The reviews from individual consumers on the bigger sites convinced me of the legitimacy and service quality of CashNetUSA, but I discounted those results somewhat, knowing that companies pay to be listed and encourage customers to place positive reviews, or place such reviews surreptitiously themselves. The staff-written reviews provided helpful information about the company that helped me draw my own conclusions – including that very important insight about the scamming problem. But without corroboration from the consumer reviews, I probably would have discounted them, too. Only by consulting both consumer and staff reviews could I piece together what seemed like a reliable picture.

I wonder how many people in search of a quick cash loan actually take the trouble to scan these reviews. With so much information at our fingertips, but without much ability to verify its sources, it makes perfect sense to fall back on the old reliable method: word of mouth from people we trust.

<em>For more on how consumers try to verify the legitimacy of financial service offerings, see the report from CFI Fellow Alexis Beggs Olsen, <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/782"><u>Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers, Evidence from Kenya</u></a>.</em>

<em>*Consumer Reports, possibly alone among organizations offering reviews, does not accept payment from any company it reviews, but instead operates through subscriptions from consumers. With no subscription, I was not able to access its information.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/11/16/watch-out-unicorns-centaurs-are-the-future-of-financial-inclusion/">Watch out Unicorns: Centaurs Are the Future of Financial Inclusion</a>

<a href="https://cfi-blog.org/2017/10/26/tiny-loans-big-questions-client-protection-in-mobile-consumer-credit/">Tiny Loans, Big Questions: Client Protection in Mobile Consumer Credit</a>

<a href="https://cfi-blog.org/2017/10/03/how-mobile-money-is-closing-the-agricultural-finance-gap-for-women-in-kenya/">How Mobile Money Is Closing the Agricultural Finance Gap for Women in Kenya</a>

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Choosing a Payday Lender: Can Online Reviews Help?

<em>For Telenor Group, the key to fostering inclusive digital finance is collaboration and open technologies.</em>

<em>&gt; Posted by <a href="https://twitter.com/jostemb">Johanna Stemberger</a>, Telenor Financial Services</em>

The digitization of the financial services industry is in full swing. Seamless in-app payments enable smartphone users to pay for rides, tickets, food, etc. with just one click.
<img class=" size-medium wp-image-24565 alignright" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/telenor-ezytic.jpg?w=600" alt="Pay with Wave Money Ad" width="300" height="150" />In emerging markets, where most of the world’s 2 billion adults without bank accounts live, basic financial services have improved over the last decade: mobile operators and banks enable customers to store and transfer funds using their mobile phones. Still, developers and digital innovators struggle to reach users in these cash-based markets.
How can we foster innovation in financial technology for low-income consumers through products and services that promote digital financial inclusion? Telenor Group believes the answer to this question is to collaborate and open up. We’re going to discuss two examples below.

<h3><strong>Accelerating the Pace of Financial Innovation With Open APIs</strong></h3>
Telenor Group joined the mobile financial services industry in 2009, when we launched the mobile money service Easypaisa in Pakistan together with Tameer Bank (now Telenor Microfinance Bank). In 2016, <a href="https://www.wavemoney.com.mm">Wave Money</a> – a joint venture between Telenor, Yoma Bank and First Myanmar Investment – entered Myanmar as its first licensed mobile money operator. Today, Telenor serves more than 20 million mobile money customers in Pakistan, Myanmar, Bangladesh and Malaysia. And now we are giving fintechs and innovators access to our mobile financial services platforms in Pakistan and Myanmar via open APIs. “The local startup scenes in Pakistan and Myanmar bring great solutions with the potential to improve people’s lives. Many local fintechs have already experienced complex integration processes with large providers, and we were no exception. But when they use our open APIs, they can reduce their effort and cost of integrating as well as accelerate the pace of innovation,” explained Roar Bjærum, Head of Telenor Financial Services. “Everyone benefits,” he continued. “Innovators can monetize and scale their products, and our customers can access digital services they previously could not.”

APIs allow two software programs to communicate with each other. In the case of mobile money, the API defines the way a developer should write a program that successfully requests services from the mobile money platform. For example, this would allow an application like Uber or Amazon to link directly to a mobile wallet instead of a credit card or bank account.
<h3><strong>Wave Money Developer Portal –Myanmar </strong></h3>
[caption id="attachment_24571" align="alignright" width="300"]<img class="alignnone size-medium wp-image-24571" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/telenor-wave-money-developer-portal.jpg?w=600" alt="Wave Money's Developer Portal sign up screen" width="300" height="241" /> Wave Money's Developer Portal[/caption]

Wave Money, Myanmar’s leading mobile financial services provider, enables its customers to send and receive money and buy airtime via a smartphone app or at one of the 12,500 Wave shops.

In a country where more than 80 percent of the population does not have a bank account and payments are done almost exclusively with cash, the growing e-commerce and digital services scene was quickly interested in linking to Wave’s system.

As a first step, Wave launched “Pay with Wave Money,” a product enabling e-commerce players to plug in payment functionality to their websites and apps. However, the integration process was manual and therefore hard to scale. They then came up with the idea to build the Developer Portal as the <a href="http://fintechnews.sg/13434/myanmar/wave-money-first-fintech-company-myanmar-launch-open-api-linking-merchants-customers/">first fintech open API in Myanmar</a><u>.</u> Merchants can integrate themselves by entering specific information and uploading the necessary documents. By availing the open API, hundreds more merchants can access this payment functionality far more quickly and easily—a significant step towards building a cashless economy in Myanmar.
<h3><strong>First Asian Mobile Money Hackathon – Pakistan </strong></h3>
<a href="https://www.telenorbank.pk/index.html">Telenor Microfinance Bank</a>, which runs Pakistan’s leading mobile money service Easypaisa, has also opened up access to its platform, using the harmonized set of mobile money APIs designed by industry stakeholders around the globe. This October, together with the <a href="https://www.gsma.com/mobilefordevelopment/programme/mobile-money/mobile-money-hackathon-coming-karachi">GSMA</a>, JazzCash and Karandaaz, Telenor Microfinance Bank invited developers to participate at a mobile money hackathon, a weekend challenge of testing and building solutions connected to merchant and bill payments.

13 teams participated and presented their ideas, ranging from e-challan (electronic statutory payments) to pay-bots for Facebook Messenger. The winning team proposed a solution geared towards families and the educational sector: it enables parents to directly pay school fees with their mobile phones, to pay for meals at school cantinas, to monitor food consumption to ensure a healthy diet, and to communicate directly with teachers.

[caption id="attachment_24575" align="aligncenter" width="548"]<img class="alignnone size-full wp-image-24575" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/telenor-winning-team.jpg" alt="Shahid Mustafa, President and CEO, Telenor Microfinance Bank, with the winning team." width="548" height="335" /> Shahid Mustafa, President and CEO, Telenor Microfinance Bank, with the winning team. Source: Telenor[/caption]

It is too early to know the impact of such third party services on the overall levels of financial inclusion in Pakistan and Myanmar. The significant interest and motivation that both Wave Money and Telenor Microfinance Bank experienced during their first interactions with the digital community indicates that soon, consumers in emerging markets may have access to a broad set of innovative, inclusive digital services.
<p style="text-align: center">****</p>
<em>Telenor is participating in <a href="http://www.financialinclusionweek.org">Financial Inclusion Week 2017</a>, where organizations around the globe join the global conversation on the most important steps to advance financial inclusion. J</em><em>oin the discussion on Twitter using #FinclusionWeek.</em>

Telenor Opens Mobile Money APIs for Third Party Developers

<em>&gt; Posted by Iftin Fatah, Investment Officer, Overseas Private Investment Corporation</em>

The <a href="https://thegiin.org/knowledge/publication/annualsurvey2017">2017 Annual Impact Investor Survey from the GIIN</a> showed that respondents, which make up a diverse and active group of impact investors, committed more than $21 billion to impact investments in 2016 and planned to commit 17 percent more capital than that in 2017. Geographically, however, the Middle East and North Africa (MENA) only makes up 2 percent of assets under management.

Islamic finance is largely concentrated in three markets – Iran, Malaysia, and Saudi Arabia – but it spans nearly every part of the world, including MENA, Asia, and sub-Saharan Africa. For its part, Islamic finance has grown over the past two decades, with total assets reportedly totaling roughly <a href="http://sunnewsonline.com/islamic-finance-assets-leaps-to-2-trillion/">$2 trillion</a>. Despite this growth, Islamic finance still makes up a small share of the global financial market. These two areas of Islamic finance and impact investing are ripe for potential collaboration. Out of the 1.6 billion Muslims in the world, <a href="https://www.cgap.org/publications/trends-sharia-compliant-financial-inclusion">650 million</a> are living on less than 2 dollars a day.

For starters, for those who aren’t familiar, let’s quickly go over how Islamic finance works. Islamic finance is derived from principles rooted in the rulings of Sharia law. The key principles of Islamic finance include: prohibition of interest, profit and loss sharing, and prohibition of<em> gharar </em>(excessive uncertainty, deception and risk). At its core, Islamic finance is centered around mutual well-being for banks and clients. The most notable difference between Islamic finance and Western finance is that interest or <em>riba</em> is forbidden. Rather, banks sustain themselves by sharing in the risk of their financial services with clients, operating on a profit-loss basis. For example, one of the most common Islamic finance products is <em>murabaha</em>, which is a cost-plus-mark-up (non-interest-bearing) loan. Financers bear the cost of the loan, and instead of charging clients interest, clients are charged a mark-up. Accordingly, banks act as investors rather than creditors.

Globally there are largely untapped markets that show immense potential for Islamic finance, such as sub-Saharan Africa, which is the world’s fastest-growing population and has a large Muslim contingent. According to a 2015 Economist Intelligence Unit (EIU) report entitled <a href="https://www.eiuperspectives.economist.com/sites/default/files/MappingAfricasIslamicEconomy.pdf">Mapping Africa’s Islamic Economy</a>, to date, Islamic finance has a presence in 21 African countries. Perhaps counter-intuitively, the EIU report notes that while Sharia-compliant goods and services appeal to the values of Muslims, majority Muslim populations are not essential for a vibrant Islamic economy sector.

In the case of sub-Saharan Africa, one of the primary drivers of the region’s Islamic economy is the need for quality infrastructure. An inadequate supply of roads, railways and ports, and insufficient energy supplies and housing shortages are among the challenges facing the continent. Further, an urbanizing population will drive demand for even more infrastructure. <em>Sukuk</em>, Islamic bonds structured in such a way to generate returns to investors without infringing upon Islamic law, are of growing interest to governments trying to raise capital for such projects. For example, the Nigerian government, <a href="https://www.premiumtimesng.com/business/business-news/243336-nigeria-starts-sale-n100-billion-sukuk.html">recently announced</a> the sale of a N100 billion ($326 million) debt sovereign sukuk on the local market, meant to fund road infrastructure in the country.

The <a href="http://www.undp.org/content/undp/en/home.html">United Nations Development Programme</a> (UNDP) rightly recognizes the potential of this untapped market and in May 2017 collaborated with the <a href="http://www.irti.org/English/Pages/default.aspx">Islamic Research and Training Institute</a> (a member of the <a href="https://www.isdb-pilot.org/">Islamic Development Bank Group</a>) and the <a href="http://www.iicpsd.undp.org/">Istanbul International Center for Private Sector in Development</a> in producing a joint report entitled <a href="http://www.iicpsd.undp.org/content/dam/istanbul/docs/IslamicFinance_BroWEB.pdf">I for Impact</a>. The report focuses on recommendations for growing Islamic impact investing. Among these recommendations include creating an environment that promotes Islamic finance alongside the larger ecosystems of inclusive finance and responsible investing. Support should be offered to the creation and functioning of an effective capital market system for Islamic finance impact investing, including supporting existing and new actors in this space.

To further these recommendations, UNDP and the IDB established the Global Islamic Finance and Impact Investing Platform (GIFIIP) in 2016. The GIFIIP serves as a hub for Islamic finance impact investing actors. The aim of the GIFIIP is to be a collaborative working space that: supports the development of Sharia-compliant impact investing tools; serves as a forum for knowledge-sharing, policy dialogue and advocacy; and functions as a marketplace for deal sourcing and matchmaking. The GIFIIP strives to position Islamic finance impact investing as one of the leading enablers of Sustainable Development Goals implementation around the world, through private sector engagement.

With their rigorous moral and social criteria and emphasis on business-society relations, the principles of Islamic finance and impact investing have many areas of overlap. Bridging the two sectors and leveraging their ideological similarities is a natural response to the growing challenges related to development financing, particularly in Muslim-majority countries. Islamic finance can be a strong and virtually untapped source to finance sustainable development in many areas around the world.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2013/04/26/sharia-and-savings-islamic-microfinance/">Sharia and Savings: Islamic Microfinance</a>

<a href="https://cfi-blog.org/2013/01/15/continuing-the-conversation-on-inclusion-in-the-arab-world/" target="_blank" rel="noopener">Continuing the Conversation on Inclusion in the Arab World</a>

<a href="https://cfi-blog.org/2016/11/08/islamic-microfinance-advances-and-converges-with-fintech/">Islamic Finance Advances and Converges with Fintech</a>

Bridging Islamic Finance and Impact Investing

<em> </em>

<img class="aligncenter wp-image-24227" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/10/fi-week_cropped.png" alt="" width="616" height="273" />With Financial Inclusion Week 2017 less than two weeks away, we’re excited to share a full <a href="http://financialinclusionweek.org/calendar17/">calendar of events</a> and specifically, 11 webinars or online events that you can join from wherever you are. Topics include micro pensions, IndiaStack, interactive voice response technology, and more. Don’t pass up an opportunity to hear from organizations and experts from around the world – register today!
<h4><span style="color: #ff6600"><strong>Monday, October 30</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/5232828010844793347">Digital Fireside Chat: How Are New Products and New Partnerships Unlocking Access to Insurance?</a></strong>
<em>Hosting Organizations: <a href="https://us.axa.com/home.html">AXA</a>, <a href="http://www.centerforfinancialinclusion.org/">Center for Financial Inclusion at Accion</a></em>
To kick of Financial Inclusion Week 2017, Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion at Accion will join Garance Wattez-Richard, Head of AXA Emerging Customers for a digital fireside chat. During the webinar, Rhyne and Wattez-Richard will discuss how new products and partnerships are opening up new potential in the inclusive insurance space. They will take a specific look at how AXA is working to reach emerging customers.

<strong><a href="https://www.facebook.com/Thitsaworks/">Technology-Enabled Financial Inclusion in Myanmar</a></strong>
<em>Hosting Organizations: <a href="https://www.thitsaworks.com/">ThitsaWorks</a>, <a href="https://www.magzter.com/MM/Information-Matrix/Myanmar-Internet-Journal/Computer-&amp;-Mobile/">Internet Journal</a>
</em>ThitsaWorks and Internet Journal will host a Facebook Live conversation on the impact of digital services on financial inclusion in Myanmar, where mobile phone ownership has grown rapidly from 5 to 90 percent between 2011 and 2017.


<h4><span style="color: #ff6600"><strong>Tuesday, October 31</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/8455245903222706945">The Digital Landscape of Financial Inclusion: Trends, Challenges and Opportunities</a></strong>
<em>Hosting Organization: <a href="https://responsiblefinancialinclusion.org/">The Partnership for Responsible Financial Inclusion</a> (formerly MCWG)
</em>The Partnership for Responsible Financial Inclusion (formerly the Microfinance CEO Working Group) and their senior staff who work in digital financial services and fintech will present on the trends, challenges, and opportunities for sector-wide collaboration in digital financial inclusion. Join the discussion and share your thoughts on the technology and innovations that are shaping the inclusive finance landscape.
<h4><span style="color: #ff6600"><strong>Wednesday, November 1</strong></span></h4>
<strong><a href="https://mix.webex.com/mw3200/mywebex/default.do?nomenu=true&amp;siteurl=mix&amp;service=6&amp;rnd=0.9052351292117116&amp;main_url=https://mix.webex.com/ec3200/eventcenter/event/eventAction.do%3FtheAction%3Ddetail%26%26%26EMK%3D4832534b00000004931da127582115b1d0736ecfcb3b55bac591f4f402a78992b74709dd5584d48a%26siteurl%3Dmix%26confViewID%3D75612919730059323%26encryptTicket%3DSDJTSwAAAAR8kbqDsowOMB0HcHiCIxdYCb3-Oq_N6uyieiCBtymWFA2%26">Voice of the Client: Using Mobile Phones and IVR Technology to Understand Client Satisfaction in Cambodia</a></strong>
<em>Hosting Organization: <a href="https://www.themix.org/">MIX</a></em>
MIX’s webinar is focused on their <a href="http://www.themix.org/mixmarket/publications/voice-client-cambodia">Voice of the Client</a> project, a pilot developed for financial services providers (FSPs) to leverage mobile technologies as a means to analyze client satisfaction. MIX will share research findings from Cambodia and offer insight on how to best use interactive voice response (IVR) technology to gather client-level data for decision-making.

<strong><a href="https://www.eventbrite.co.uk/e/uncdf-and-visionfund-present-whats-next-for-microfinance-in-myanmar-tickets-39003624892">UNCDF and VisionFund Present: What's Next for Microfinance in Myanmar?</a></strong>
<em>Hosting Organizations: <a href="http://www.uncdf.org/">UNCDF</a>, <a href="http://www.visionfund.org/">VisionFund</a></em>
Isolated for decades, Myanmar has only recently opened up to the global economy. This has brought a lot of discussion about the Southeast Asian country being the 'last frontier' of financial inclusion. Microfinance legislation was passed in late 2011, but what has happened since? And what does the future look like?
<h4><span style="color: #ff6600"><strong>Thursday, November 2</strong></span></h4>
<strong><a href="https://bfaglobal.zoom.us/webinar/register/WN_pQVJ6I9gTOOpO2ylEI5gBA">A Fintech Approach to Financial Inclusion</a></strong>
<em>Hosting Organization: <a href="http://bfaglobal.com/">BFA</a></em>
BFA will host a webinar focused on the benefits and challenges of fintech approaches to financial inclusion. The webinar will highlight key findings from three of BFA’s global programs: Catalyst Fund, FIBR and OPTIX.

<strong><a href="http://bit.ly/MIXvoc2">Voice of the Client: Using Mobile Phones and IVR Technology to Understand Client Satisfaction in Peru (Spanish)</a></strong>
<em>Hosting Organization: <a href="https://www.themix.org/">MIX</a></em>
This webinar presentation will be the same as the preceding Voice of the Client webinar, expect it will be in Spanish and it will share project research findings from Peru instead of Cambodia.

<strong><a href="https://successfulmicropensiondesign.clickmeeting.com/financial-inclusion-week-webinar-bpps">Successful Micro Pension Design</a></strong>
<em>Hosting Organization: <a href="http://www.blueprintpensionservices.com/">BluePrint Pension Services</a></em>
BluePrint Pension Services is hosting a webinar on designing successful micro pension schemes as a solution to mitigate the risk of old age poverty for men and women working in the informal sector.

<strong><a href="https://attendee.gotowebinar.com/register/1959278429738133251">What We Learned from Micro Pensions So Far: Case Studies from India and Ghana</a></strong>
<em>Hosting Organization: <a href="http://www.enviu.org/">Enviu</a></em>
In this one-hour interactive discussion, Ashish Aggarwal of Invest India Micro Pension Services and Samuel Waterberg of People’s Pension Trust Ghana will share their experiences and perspectives on setting up micro pension products in India and Ghana.

<strong><a href="https://attendee.gotowebinar.com/register/4179631111385479170">IndiaStack - The Change Catalyst</a></strong>
<em>Hosting Organization: <a href="http://www.accion.org/">Accion</a></em>
Accion will be hosting a webinar to discuss the ways that IndiaStack – a combination of complimentary financial technologies – is catalyzing change in financial inclusion in India. The webinar will highlight the risks and rewards of IndiaStack and the considerations FSPs should take before integrating with this system of APIs.
<h4><span style="color: #ff6600"><strong>Friday, November 3</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/845125705152860161">How Financial Institutions and Fintechs Are Partnering for Inclusion</a></strong>
<em>Hosting Organizations: Center for Financial Inclusion at Accion, <a href="https://www.iif.com/">Institute of International Finance</a>
</em>Contrary to the popular narrative, financial institutions view fintechs as partners in innovation, not threats to their core business. By offering better, less expensive, and more innovative products, financial institutions can assert their continued relevance as customer-facing institutions with help from fintech partnerships. This webinar will explore how partnerships between mainstream financial institutions (e.g., banks, insurers, and payment companies) and fintechs are addressing financial inclusion challenges and expanding access to the formal financial economy for underserved segments of the global population, particularly in emerging markets.

<em>For more on Financial inclusion Week 2017, head to <a href="http://financialinclusionweek.org/">the Financial Inclusion Week website</a>.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/17/financial-inclusion-week-roundup-e-magazine-keeping-clients-first-in-a-digital-world/">Financial Inclusion Week Roundup E-Magazine: Keeping Clients First in a Digital World</a>

<a href="https://cfi-blog.org/2017/04/11/save-the-date-financial-inclusion-week-2017/">Save the Date: Financial Inclusion Week 2017</a>

<a href="https://cfi-blog.org/2017/10/12/have-you-marked-your-calendars-for-financial-inclusion-week-2017/">Have You Marked Your Calendars for Financial Inclusion Week 2017?</a>

Webinars for #FinclusionWeek -- Register Today

Why is it that <a href="http://datatopics.worldbank.org/financialinclusion/">80 percent</a> of bank account holders in Madagascar only use their accounts once a month or less?

What makes the parents of a child requiring unforeseen medical treatment in the DRC choose to approach their <a href="http://cenfri.org/blog/ive-got-your-back">mutualitée</a> (a local form of informal mutual aid society) for a loan despite access to a microfinance institution or local bank?

If a Zimbabwean has a mobile money account, why does he ask a family member to send him money in the care of a bus driver rather than through that mobile account?

The gap between uptake and usage is well documented in financial inclusion. But while these insights are important evidence of the gap, they tell us very little about <em>why </em>this gap exists. The result is that we know there is a problem, but without understanding why, we can do very little to change the problem.

To help us better understand the why, we at <a href="http://www.i2ifacility.org">insight2impact</a> (i2i) have been <a href="http://access.i2ifacility.org/Publications/i2i%20MFW%20Note%203%20-%20Financial%20services%20usage_Digital.pdf">exploring the factors that affect usage</a>. In doing so we have incorporated insights from across multiple fields on human decision-making and applied the most relevant aspects of existing models and understanding to the field of financial inclusion.

Decision-making is important for both financial service providers (FSPs) and policymakers to understand, but it isn’t simple, and, typically, our decisions are not based on one single factor. Furthermore, psychology and behavioral economics have illustrated that in some cases we are not even cognitively aware of many of the important factors that influence our decisions.

Some of these factors appear straightforward at first. For example, in the case of mobile money use in Zimbabwe, although the bus drivers do not carry the money free of charge, they charge the sender and the recipient does not pay a fee.

However, if you unpack this further, you may find that there are other factors that influence the decision. As one mobile money user explained, “It took me a long time to start using it [mobile money account], maybe because I didn’t trust it. I didn’t trust the services … I wasn’t sure how it was going to be working out."

Addressing or removing the barriers to usage does not mean people will automatically make use of specific products, nor does initial uptake (even voluntary uptake) imply sustained use. There is a trigger that results in uptake and first-time use, but this is often followed by a significant drop-off in activity. This is often evident in mobile money, where <a href="http://cenfri.org/documents/MAP/2015/Malawi/MAP%20Malawi%20Diagnostic%20Report.pdf">promotions for free airtime lead to spikes in uptake</a>, but low usage is observed over time, and consumers continue to rely on cash.

So, what are the factors that affect financial decision-making (the drivers of usage)? In our understanding, there are a range of factors, but they largely fall into three categories:

• <strong>Functional:</strong> Fundamentally, positive relative value is required for a person to continue using a device (although perceived value rather than actual value drives decisions). These functional drivers are the most obvious and visible component of decision-making. In the example cited above the respondent asked that money be delivered via a bus driver to avoid paying transaction fees.

It may be tempting to just stop here. However, we know that what influences our decisions goes beyond the basic dollars and cents:

• <strong>Relational:</strong> Relational factors like trust have been explored in detail by other researchers, but we want to delve deeper to understand what constitutes trust in the use of financial services and how this manifests. In our example, the individual in Zimbabwe signed up for a mobile money account but delayed using it until a level of trust had been established. Other relational drivers, like belonging, have not been explored as deeply, yet still appear to play an important role in decision-making.

• <strong>Behavioral:</strong> Individuals may be unaware of some of the factors that influence their thinking and the way they respond to things, but a better grasp of these behavioral drivers (and the way these are affected through specific interventions) will be useful for FSPs attempting to drive usage of specific products and for policymakers keen to deliver impact through financial inclusion policies. One example is hyperbolic discounting – the fact that people prioritize present value over future value and choose smaller rewards now over larger rewards at a later time – which influences the way that people perceive relative value and cost for short and long-term products/needs.

Individuals make decisions within a context and that context has an influence on the outcome of their decision. We call these structural factors.

• <strong>Structural:</strong> We define these as the contextual considerations (for example, gender, level of urbanization, and so forth) that influence the drivers identified above and therefore affect uptake and usage, but which the individual, policymaker or FSP will have no or very little control over.

Of course, given the complexity of human decision-making, many of these factors resist our attempts at simple, neat classification. As an example, trust in financial services is often the outcome of number of experiences, and even a composite of other drivers. It can be affected by behavioral factors like an intrinsic bias (for example, certain providers are “out to get me”) or social factors like having viewed negative comments about a specific provider on social media.

Through a closer examination of the drivers mentioned above, i2i hopes to understand what the most critical drivers of financial product usage are and how they interact and influence each other.

The drivers of usage don’t only explain why or whether people opt to (continually) use a financial service, but which device they use and which provider they turn to – including whether these are formal providers or informal providers like savings groups or friends and family. These insights are likely to be valuable to FSPs, policymakers and development organizations alike.

The objective with this work is not to build an exhaustive model of all the individual factors that influence consumers’ decisions to use financial products, but rather to offer a framework that simplifies reality in that it encompasses all the key factors of customer decision-making in digestible form. Better understanding the range of, and the most important, factors that influence use will aid policymakers and providers to design policy approaches and products that target sustained use rather than merely uptake.

We would love to hear from you if you think we have omitted a category of drivers, or if you have previously conducted research in the field. Email <a href="mailto:jeremy@cenfri.org">jeremy@cenfri.org</a> to contribute to this analysis of the drivers of financial services usage.

<em>In addition to this desktop research on drivers of usage, insight2impact will be piloting demand-side surveys in select countries to better understand people’s financial needs and how they go about meeting these needs in different environments. The insights from our desktop research and these pilots will enable us to refine <a href="http://i2ifacility.org/news/measuring-impact-in-the-financial-sector">our measurement frameworks</a> and contribute to a richer understanding of financial inclusion.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2015/06/09/considerations-for-the-pursuit-of-financial-inclusion/">Considerations for the Pursuit of Financial Inclusion - Beyond Account Access</a>

<a href="https://cfi-blog.org/2016/10/25/building-trust-and-growing-digital-financial-services-a-look-at-jumo/">Building Trust and Growing Digital Financial Services: A Look at JUMO</a>

<a href="https://cfi-blog.org/2017/09/27/financial-inclusion-from-a-consumer-perspective/">Financial Inclusion from a Consumer Perspective</a>

Closing the Gap between Uptake and Usage of Financial Products