The elderly, young people, the homeless and casual workers are just some of the groups that might have a difficult time participating in the economy, the article notes. Some do not have the skills to use digital payments, do not have access to the internet, do not have a credit history or a fixed address:

A dependence on cash can be linked to the digital divide that exists in both rich and poor countries, said Mayada El-Zoghbi, managing director for the Center for Financial Inclusion (CFI), an independent U.S. think tank.

“A move to a cashless society will not benefit all groups equally. The groups that are most likely to be excluded will be women, rural communities, and the elderly,” she said.

Read the full article <a href="https://www.reuters.com/article/us-health-coronavirus-banks-britain-trfn-idUSKBN23X0XE" target="_blank" rel="noopener noreferrer">here</a>.

&nbsp;

Reuters Quotes Mayada El-Zoghbi on Going Cashless During the Pandemic

Europe and Central Asia

United Kingdom

Aging and Older Adults

Underserved Groups

News

&gt; Posted by Elisabeth Rhyne, Managing Director, CFI

The following post was <a href="http://nextbillion.net/blogpost.aspx?blogid=3807" target="_blank" rel="noopener">originally published on Next Billion</a>.

<a href="https://www.flickr.com/photos/cfi_accion/"><img class="alignright wp-image-14527 " style="border: 0;margin-bottom: 15px" alt="" /></a><img class="alignright wp-image-14527" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/04/elisabethrhynefi2020400.jpg" alt="" width="347" height="231" />The Financial Inclusion 2020 Global Forum, in October 2013, was an opportunity for hundreds of leaders to come together and dedicate themselves to quality financial access for all, while at the same time proclaiming that global access is, in fact, within the realm of the possible. The Forum itself generated <a href="http://www.centerforfinancialinclusion.org/fi2020/global-forum/roundup-magazine" target="_blank" rel="noopener">many action ideas</a>, forged new relationships between actors and created a surge in momentum.

Since October, we at the Center for Financial Inclusion have been in a (very welcome) quiet phase, during which we are laying the groundwork for the next big push. Over the past few months we have been busy following up on some of the most fascinating insights that came out of the FI2020 process. I’d like to mention a few here – and describe how these insights can make a difference in the quest for global financial inclusion by 2020.

Aging and Financial Inclusion

One of the biggest “Aha!” insights for us came from our <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/demographic-window" target="_blank" rel="noopener">Mapping the Invisible Market</a> work, which revealed the rapid growth of older population segments, especially among middle-income countries. In these countries, including much of Latin America and Asia, the over-65 age cohort will rise within a decade or two from about 5 percent of the population to about 15 percent, putting great stress on traditional systems for supporting later life.

We are sure that such changes will have big implications for financial inclusion, and so we decided to team up with <a href="http://www.helpage.org/" target="_blank" rel="noopener">HelpAge International</a>, one of the premier global organizations dedicated to aging. When we contacted HelpAge, it had just released its “<a href="http://www.helpage.org/global-agewatch/?gclid=CJmusY79sr0CFe1QOgodUU4ASA" target="_blank" rel="noopener">Global Age Watch Index, 2013</a>,” a ranking of countries on the basis of quality of life for older people. HelpAge has done important analysis on income strategies actually used by people as they age, and it knows that these strategies are more diverse and creative than stereotypes might suggest. CFI and HelpAge will work together to dig deeper into the financial services needs related to aging and preparation for later life. We will also look at the financial barriers older clients face, whether these are physical limitations (related to acquired disabilities), policies (such as arbitrary age cut-offs), or susceptibility to fraud and abuse. We will focus this research in Latin America. We are convinced that the life-course lens on financial inclusion will reveal a wide range of opportunities to advance inclusion.

"On-Ramps" to Inclusion

At the Global Forum we heard the term “on-ramp” from so many directions we got dizzy. Everyone there seemed to have a theory about which product is the best on-ramp to draw people into the financial system. Finding good on-ramps is important for fulfilling one of our core tenets – that genuine inclusion requires active use of a range of financial services. A person starts with an on-ramp product, and moves on to a more complete set of services - in theory, at least. But what we know about the transition from informal to formal financial services suggests that many first products may not lead to second and third products, at least not automatically or immediately. The large number of dormant and low-use bank accounts throughout the world is evidence that this is true. Many people open accounts for a single purpose (often to receive a salary or benefit payment) and cash out all funds immediately, carrying on in the cash economy as before.

So, which entry products are more effective in leading to a range of services? Savings accounts? Mobile money? In-store consumer credit? Bill pay? Government-to-person payments? We’ve heard all of them heralded as on-ramps, but it’s unclear which work best. And how can on-ramps be designed with steps toward second and third products more clearly in mind? We are interested in exploring this question and are hopeful that we will be able to find good quantitative data that helps us lay out the paths people follow toward inclusion.

To read the rest of this post, visit <a href="http://nextbillion.net/blogpost.aspx?blogid=3807" target="_blank" rel="noopener">Next Billion</a>. 

Have you read?

<a href="http://cfi-blog.org/2013/12/12/top-ten-takeaways-from-fi2020-global-forum-roundtables/" target="_blank" rel="noopener">Top Ten Takeaways from FI2020 Global Forum Roundtables</a>

<a href="http://cfi-blog.org/2013/03/01/bill-pay-as-an-on-ramp-to-financial-inclusion/" target="_blank" rel="noopener">Bill Pay as an On-Ramp to Financial Inclusion</a>

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank" rel="noopener">Aging and Financial Services: With and Without Employment</a>

Behind the Scenes at Financial Inclusion 2020: Elisabeth Rhyne Outlines the Next Steps in the Movement to Achieve Global Financial Access

Financial Inclusion 2020

Payments

Blog Post

&gt; Posted by Amanda Yap, Research and Communications, PlaNet Finance

<a href="http://cfi-blog.org/category/investing-in-inclusive-finance/" target="_blank" rel="attachment noopener wp-att-9676"><img class="alignright" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/untitled2.jpg" alt="" width="310" height="54" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/investing-in-inclusive-finance" target="_blank" rel="noopener">Investing in Inclusive Finance</a> program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.

Before the advent of the People’s Bank of China’s county-level pilot program to create microcredit companies (MCCs) and village and township banks (VTBs), there was a large number of unbanked individuals and micro-entrepreneurs whom commercial banks were unwilling to serve. Hence when the pilot program to create MCCs, <a href="http://www.planetfinancechina.org/resource-center/MCCs-VTBs-Guarantees">the product of a financial inclusion plan by the Chinese government</a>, went into action in 2005 the number of MCCs boomed, and in the past few years they have mushroomed to an astounding number of 9,000 as of 2013. The Chinese financial sector has been plagued with corruption in the past few years - for example, the <a href="http://www.marketwatch.com/story/pleas-over-capital-punishment-verdict-in-china-2012-03-06?link=MW_latest_news">Wu Ying private lending network scandal</a> and the <a href="http://english.caijing.com.cn/2012-05-22/111855735.html">Qilu commercial bank forgery</a> in Shandong. To circumvent corruption and maintain control of the increasingly overpopulated sector, regulators enforce strict capital requirements and caps on interest rates. However, these requirements are stifling the operational sustainability of these MCCs. Joe Zhang, author of the book <a href="http://blogs.wsj.com/chinarealtime/2013/06/18/eight-questions-joe-zhang-inside-chinas-shadow-banking/" target="_blank" rel="noopener">Inside China’s Shadow Banking: the New Sub-prime Crisis?</a> writes, “The regulation is killing the dynamism of the sector. Everyone in the sector is working extra hard to make a modest return (after huge expenses and bad debts).”

Should 9,000 MCCs all be painted with the same regulatory brush?

<a href="http://www.microfinancegateway.org/p/site/m/template.rc/1.9.60426/">Some industry leaders believe a rating system for microcredit companies is the answer.</a> Liu Ping, Director General of the Senior Advisors of the People’s Bank of China, believes ratings can be a yardstick to measure the sustainability of microcredit companies and differentiate the good apples from the bad. MCC investors hope that high grades based on credible ratings could move the authorities to loosen restrictions on outlets, so that business costs could be better covered, individual company branches could grow, and the sector could eventually be made more sustainable. Conversely, low rating grades would expose institutions with questionable practices that require operational changes. In addition, a ratings system may change the popular perception that these institutions are “loan sharks”, leading to increased investment, institutional growth, and client outreach.

Rating systems – a staple of the traditional finance sector – play an important role in microfinance globally. Rating agencies select and weigh indicators for both companies issuing debt and the debt instruments, setting benchmarks for the industry and allowing for factors of comparison amongst companies. Rating reports create access to the risk analysis of debt and debt issuers, increasing market transparency and facilitating investors in sourcing investments, performing credit decisions, and supervising risk. For investees, monitoring of issuers of debt instruments encourages issuers to act in the interests of the investor community which leads to best management practices.

Currently, there are seven approved rating companies in China. Two of these companies are joint ventures with international credit rating agencies - Lianhe Credit with Fitch and Chengxin Credit with Moody’s. Chinese rating companies commonly perceive that getting an accurate picture of MCC operations is unfeasible due to the rather unreliable nature of financial reporting amongst Chinese MCCs, rendering traditional rating methods bogus. Currently, no single regulator has all the data needed to form a comprehensive picture of an MCC. Instead, they advocate a market based approach. If markets can ascertain reliable information, then ratings systems can be built around these indicators. Lianhe Credit applies this market-based approach by performing credit investigation instead of ratings. “The main utility for us is to help the provincial-level supervisors construct information systems that can give them a better grasp on the target MCC’s operations,” says Lianhe’s CIO, Shi XX. The Provincial Office of Financial Affairs in each province, which were abruptly tasked with the duty of regulating MCCs in May 2008, are dedicating energy and time to rating systems. Even if policy restrictions aren’t loosened, MCCs and financial affairs offices now have new management and supervision tools to supplement standard reporting and provide greater clarity to investors.

From the outset, there has been heated debate over the methodologies and goals of a microfinance rating system. Ed Wu, Managing Director of PlaNet Finance China suggests that the most common risk factors in determining sustainability are governance, strategy, risk management skills, IT systems, and funding. The importance of effective risk governance is also emphasized in <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/512-governing-banks-mfi-edition-part1" target="_blank" rel="noopener">Governing Banks: MFI Edition</a> by CFI’s Running with Risk project. These risk factors should be taken into account when developing new rating schemas.

When overburdened with companies to regulate, Provincial Offices of Financial Affairs (POFA) may be inclined to use ratings to single out non-compliant MCCs or MCCs with poor risk management in order to revoke business licenses and closely supervise operations. The provinces with the greatest numbers of MCCs urgently need the ability to differentiate among them and are working quickly to establish a ratings infrastructure. Some areas, such as Tianjin, already require a yearly rating report and audit report to be submitted to the local POFA. Additionally, in Jiangsu, Inner Mongolia, and Yunan, POFAs either own state-owned enterprises that do ratings or have internal rating standards and schemes for regulatory purposes.

The concept of ratings for MCCs is taking off and may enable regulators to relax the regulatory noose strangling strong MCCs, whilst reining in MCCs with less than ideal operations. To learn more about this topic, please look out for the joint report by PlaNet Rating and PlaNet Finance coming out in the first quarter of 2014, written with the support of the Credit Suisse microfinance capacity building initiative.

Have you read?

<a href="http://cfi-blog.org/2013/06/27/emerging-risks-on-chinas-path-towards-financial-inclusion/" target="_blank" rel="noopener">Emerging Risks on China's Path Toward Financial Inclusion</a>

<a href="http://cfi-blog.org/2013/02/25/designing-financial-services-for-chinas-marginalized/" target="_blank" rel="noopener">Designing Financial Services for China's Marginalized</a>

<a href="http://cfi-blog.org/2013/07/23/a-journey-to-understanding-risk-as-a-new-board-director-in-governing-banks-mfi-edition/" target="_blank" rel="noopener">A Journey to Understanding Risk as a New Board Director in "Governing Banks MFI Edition"</a>

&nbsp;

Ratings to Loosen the Regulatory Noose on China’s Microcredit Companies

Mapping the Invisible Market

Partnership for Responsible Financial Inclusion

The Smart Campaign

China

East Asia and Pacific

Colombia

Latin America and The Caribbean

Dominican Republic

Ghana

Sub-Saharan Africa

Guatemala

India

South Asia

Mexico

Nigeria

Paraguay

Peru

Tanzania

United States

North America

Zambia

Consumer Protection

Financial Capability

Financial Inclusion Strategy

Enabling Environment

Fintechs

Financial Service Providers

Housing Finance

Credit

Impact Investing

Microfinance

Persons With Disabilities

Policy, Regulation and Government Initiatives

Risk Management

Governance

Saving

Social Performance

Women

Youth

&gt; Posted by Nora Dowd Eisenhower and Naomi Karp, Assistant Director of the Office for Older Americans and Policy Advisor, CFPB

The following post was originally published on the <a href="http://www.consumerfinance.gov/blog/banks-can-help-spot-elder-financial-exploitation-and-abuse/" target="_blank">Consumer Financial Protection Bureau Blog</a>.

<a href="http://exploitation.info/elder-abuse-and-financial-exploitation.html" target="_blank" rel="attachment wp-att-12681"><img class="alignright wp-image-12681" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/10/elder-abuse-and-financial-exploitation.jpg" width="350" /></a>An older Oklahoma resident began receiving sweepstakes offers in the mail after her 90-year-old husband moved into a nursing home. Just send $50, $100, $2000, even $5000 to claim your prize, they promised. When she asked a bank employee to help her send a large amount of cash in the mail, the bank investigated. It turned out the older customer had been writing as many as 90 checks a month to collect promised prizes that never materialized. The bank contacted the Postal Inspection Service to <a href="https://postalinspectors.uspis.gov/radDocs/victim.htm" target="_blank">investigate and the authorities intervened</a>.

A 98-year-old lawyer was <a href="http://www.abajournal.com/news/article/98-year-old_lawyer_scammed_by_friend_who_gave_him_office_space_da_says" target="_blank">scammed by a purported friend</a> who loaned him office space and then accessed financial records stored there. When the older man was hospitalized for hip surgery, the 76-year-old friend drained $330,000 from bank accounts and used the money to pay for a trip to Puerto Rico and purchases at a variety of stores. Ultimately, the victim’s banks alerted authorities because of concerns about unusual activity on the accounts.

As we travel the country, we hear more stories of banks, credit unions, money transmitters, and other financial services providers spotting financial abuse targeted at older adults. Some of these are success stories like the ones we just shared: the financial institution makes a timely report, and authorities can prevent the theft, prosecute the perpetrator, and help the victim.

But sometimes financial institution personnel are confused. They want to help protect the consumer, but are unsure whether privacy laws allow them to share a consumer’s personal information with law enforcement and other authorities that can take action.

That’s why today, along with seven other federal agencies, we released <a href="http://www.consumerfinance.gov/f/201309_cfpb_elder-abuse-guidance.pdf" target="_blank">guidance on this issue for financial institutions</a>. The guidance <a href="http://www.consumerfinance.gov/newsroom/nora-dowd-eisenhower-remarks-at-press-call-on-glba-interagency-guidance/" target="_blank">clarifies </a>for banks and other financial services providers that reporting suspected elder financial exploitation to appropriate authorities does not generally violate the privacy provisions of the Gramm-Leach-Bliley Act, a federal law.

Reporting elder financial abuse is the right thing to do

Financial institutions often spot the red flags for abuse sooner than anyone else. We can only stop the financial exploitation of older adults through coordinated efforts at the community, state, and national levels. Please join us in working to prevent, detect, and respond to this national problem and help prevent a disaster from happening to vulnerable elders across the country and in your community.

Image credit: <a href="http://exploitation.info/elder-abuse-and-financial-exploitation.html" target="_blank">Exploitation.info</a>

Have you read?

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank">Aging and Financial Services: With and Without Employment</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank">Microfinance as a Tool for Active Aging</a>

<a href="http://cfi-blog.org/2013/02/06/from-demographic-burdens-to-dividends-implications-for-financial-inclusion/" target="_blank">From Demographic Burdens to Dividends: Implications for Financial Inclusion</a>

Banks Can Help Spot Elder Financial Exploitation and Abuse

Regulators

&gt; Posted by Meghan Greene and Sonja E. Kelly, Manager and Fellow, CFI

<a href="http://cfi-blog.org/category/financial-inclusion-2020/" target="_blank" rel="noopener"><img class="alignright" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg?w=300&amp;h=66" alt="" width="300" height="66" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

What's in a number? Part of the Center’s Financial Inclusion 2020 work is to think about how global trends affect financial inclusion demand—we’ve been doing so in our <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market" target="_blank" rel="noopener">Mapping the Invisible Market</a> work and in our exploration of the client perspective.

In this work, it can be useful to think in terms of age. In our demographic work we examined how a person’s stage in life might affect his or her demand for financial services. We also discovered that many developing countries have rapidly aging populations. But just how rapidly the populations are aging depends on the definition of old. When calculating dependency ratios (the ratio of those who are dependent to those who are in the working age population), the UN recommends the following definitions:
<ul>
 	<li>“Child” is a person under the age of 15</li>
 	<li>“Youth” is a person aged 15-24</li>
 	<li>“Old age” is age 65 and above</li>
</ul>
[caption id="attachment_11132" align="alignright" width="215"]<img class="size-full wp-image-11132 " style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/05/age-graphs-2.png" alt="Percent of the global population that is elderly, with varying age cutoffs, 2011. Source: UNECE Statistical Database" width="215" height="558" /> Percent of the global population that is elderly, with varying age cutoffs, 2011.[/caption]

These standards are often invoked in country comparisons. But are they really appropriate? If “older adults” are 65 and over, what does that mean in very poor countries, especially in Africa where the <a href="https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html" target="_blank" rel="noopener">life expectancy is under 55 years</a>? If we calculate “older adults” as age 60 and up, then they make up over one-fifth of the global population. If we calculate the same group as 75 and up, they are less than one-tenth of the global population.

Indeed, the age delineations seem to break down when we look at particular contexts. For example, the National Corrections Institute, a U.S. prison research organization, defines “elderly” as 55 or older because an incarcerated person’s body <a href="http://www.cnn.com/2009/CRIME/11/13/aging.inmates/" target="_blank" rel="noopener">ages faster than someone not in prison</a>.

As we look at differentiating by age in our work with financial inclusion (or in any work for that matter), how do we move forward meaningfully? In defining “old,” age is certainly one factor, but so is culture, health, lifecycle stage, income, and a host of other factors.

Tim Nourse, of <a href="http://www.makingcents.com/" target="_blank" rel="noopener">Making Cents International</a>, concurs that broad age groups, while convenient, mask important nuances. That’s why Making Cents (which uses the 15-24 age range for youth as a starting point for discussions) recommends segmenting the market further through market research. One of Making Cents’ <a href="http://www.youtheconomicopportunities.org/resource/741/emerging-guidelines-youth-inclusive-financial-services" target="_blank" rel="noopener">emerging guidelines for youth financial services</a> is:
<blockquote>“Develop products and services that reflect the diversity of youth: The youth market contains sub-segments related to age (legal age), life cycle stage (marital and parental status), gender, education, employment status, and vulnerability. These differences should be taken into consideration in product design and delivery.”</blockquote>
What becomes important, as Tim points out, is not the age that we choose as a dividing line, but rather what the age represents. We have age cutoffs for several reasons. First, and most obviously, there are legal definitions to be considered, especially when it comes to youth and informed consent. Second, however, we choose age as a dividing line based on the major life events that we predict in the lives of individuals. Someone who is considered a “youth” becomes an “adult” at age 25 because on average people are making major life changes at that point: marriage, children, and even the first steps in a career become realities. We use age 65 because this is another major transition point—people in formal employment often shift from earning money to using money they have saved or relying on non-work related sources of income. <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/demographic-window" target="_blank" rel="noopener">Our work on demographics</a> discusses the need to use a lifecycle approach to financial services. If we truly listen to the needs of clients beyond their birth dates, we will be in a better place to develop the financial services that can help them most.

For more information on Financial Inclusion 2020, <a href="http://bit.ly/FI2020signup" target="_blank" rel="noopener">sign up for campaign updates</a>.

Data source for figures: <a href="http://w3.unece.org/pxweb/" target="_blank" rel="noopener">UNECE Statistical Database</a>, compiled from national and international (Eurostat and UNICEF TransMONEE) official sources<a href="http://playmoolah.com/blog/2013/03/sekolah-bisa-indonesia/" target="_blank" rel="noopener">
</a>

Have you read?

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank" rel="noopener">Aging and Financial Services: With and Without Employment</a>

<a href="http://cfi-blog.org/2013/02/04/first-report-from-fi2020s-mapping-the-invisible-market-highlights-implications-for-financial-inclusion-as-worlds-demography-changes/" target="_blank" rel="noopener">First Report from FI2020's Mapping the Invisible Market Highlights Implications for Financial Inclusion as World's Demography Changes</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

Age Ain’t Nothin’ But a Number

&gt; Posted by Danielle Piskadlo, Senior Program Specialist, CFI

<a href="http://www.telegraph.co.uk/finance/personalfinance/8543915/Over-50s-face-longer-in-dole-queue.html" target="_blank" rel="attachment wp-att-10578"><img class="alignright wp-image-10578" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/03/elderly_unemployed_1907892c.jpg" width="350" /></a>Many retirement plans in the United States ask, "What is your number?" Meaning, at which age do you wish to retire? It's a question that implies it will be up to you - that you will decide when the time has come for you to leave the workforce. However, according to <a href="http://www.npr.org/2012/07/06/156378346/options-slim-older-job-seekers-try-starting-fresh" target="_blank">recent reports</a> on National Public Radio (NPR), many older workers, especially in the United States, are being pushed out of the workforce and finding it increasingly hard to find employment. Perhaps retirement plans need to start asking, "At which age will you be forced to retire?"

The Center recently published <a href="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/looking_through_the_demographic_window.pdf" target="_blank">Looking Through the Demographic Window</a>, which highlights that in many middle income countries a demographic window is opening where there will be more workers than dependents, creating an opportunity for economic growth. One of the reasons there will be more people in the workforce is because people are living longer, and therefore, it is expected, working longer.

A recent <a href="http://cfi-blog.org/2013/02/06/from-demographic-burdens-to-dividends-implications-for-financial-inclusion/#more-9696" target="_blank">blog post</a> by Yuwa Hedrick-Wong of MasterCard points out that countries cannot always take advantage of demographic opportunities. He comments that in sub-Saharan Africa, where youth are the dominant demographic group, "without adequate investment in educating and providing health care for the young…all that a society can expect are demographic burdens of mounting youth unemployment and underemployment."

Arguably, the same thing is true when the elderly become the dominant demographic group, especially in developed countries where jobs are becoming more and more specialized and technology focused. People are living longer and therefore are willing and able to work longer, but will they actually be a valued and welcomed segment of the workforce?

It seems that a few other trends may need to be considered when talking about an aging population and workforce, and chief among them are the rapidly increasing pace of technological changes, and the possible "ageism" that might accompany those rapid changes in technology.

As the Center’s publication points out, when we peek through the demographic window, it is going to be increasingly important in middle and upper income countries to talk about retirement savings and other financial plans to prepare people for a longer than expected retirement.

As older workers struggle with unemployment, some combine part-time jobs, some rely on their children, and some use the equity in their homes to support themselves. I expect that we will hear more about reverse mortgages as a financial service in the years to come. Increasingly, and excitingly, many are becoming entrepreneurs, so it was great to read another CFI blog post about <a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank">Microfinance as a Tool for Active Aging</a>. One NPR interviewee said his only chance of getting hired was to hire himself.

Image Credit: <a href="http://www.telegraph.co.uk/finance/personalfinance/8543915/Over-50s-face-longer-in-dole-queue.html" target="_blank">ALAMY</a><a href="http://www.middle-east-online.com/english/?id=54291">
</a>

Have you read?

<a href="http://cfi-blog.org/2013/02/06/from-demographic-burdens-to-dividends-implications-for-financial-inclusion/" target="_blank">From Demographic Burdens to Dividends: Implications for Financial Inclusion</a>

<a href="http://cfi-blog.org/2013/02/04/first-report-from-fi2020s-mapping-the-invisible-market-highlights-implications-for-financial-inclusion-as-worlds-demography-changes/" target="_blank">First Report from FI2020's Mapping the Invisible Market Highlights Implications for Financial Inclusion as World's Demography Changes</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank">Microfinance as a Tool for Active Aging</a>

Aging and Financial Services: With and Without Employment

Mastercard

&gt; Posted by Panthea Lee, Principal, Reboot

<a href="http://cfi-blog.org/category/investing-in-inclusive-finance/" target="_blank" rel="attachment noopener wp-att-9676"><img class="alignright wp-image-9676" style="border: 0;margin-top: 5px;margin-bottom: 5px" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/untitled2.jpg?w=300" alt="" width="310" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/investing-in-inclusive-finance" target="_blank" rel="noopener">Investing in Inclusive Finance</a> program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.

Citizens at the bottom of the economic pyramid in China lack even the most basic means to save for their children's education, make purchases on credit, protect their homes through insurance, and send and receive money. Financial exclusion prevents many of them from realizing their potential and improving their livelihoods.

How can better financial services be designed to meet their needs?

With the support of the <a href="http://www.imtfi.uci.edu/" target="_blank" rel="noopener">Institute of Money, Technology, and Financial Inclusion</a> at the University of California at Irvine, Reboot <a href="http://thereboot.org/china" target="_blank" rel="noopener">undertook a study</a> to understand the daily lives of China’s marginalized and answer this question.

We learned that the issue of financial exclusion in China has come to the fore relatively recently and that informal financial services have proliferated to meet the needs of these populations. We concluded that by understanding informality China could “get it right” in deploying market-based financial services targeting the country’s most vulnerable citizens.

Currently, <a href="http://www.undp.org.cn/modules.php?op=modload&amp;name=News&amp;file=article&amp;catid=0&amp;topic=12&amp;sid=4180" target="_blank" rel="noopener">64 percent</a> of China’s rural population is “unbanked” – i.e. they do not have an account at a formal bank. Over the last five years, China’s “Big Four” banks have <a href="http://www.undp.org.cn/modules.php?op=modload&amp;name=News&amp;file=article&amp;catid=0&amp;topic=12&amp;sid=4180" target="_blank" rel="noopener">closed a combined 30,000 branches</a> in poor and rural regions, as a result of market pressures and an increasing focus on high-margin, low-risk populations. On average, rural residents have <a href="http://www.accenture.com/SiteCollectionDocuments/PDF/PoV-Mobile-Banking-051611-EN.pdf" target="_blank" rel="noopener">0.36 banking outlets per 10,000 people</a>, far below the national average of 1.34. Even in urban areas where banking outlets are numerous, services are designed for middle- and upper-middle class markets, providing low income residents little utility at best and stigmatizing them at worst.

Financial exclusion for these populations is compounded by a weakening of the social safety net. Retirement benefits, which were formerly provided by the state, have declined to a point where many need to supplement them with personal income. Workers who suddenly lose their jobs have a difficult time seeking social subsistence payments.

<a href="http://thereboot.org/china/" target="_blank" rel="attachment noopener wp-att-10011"><img class="alignright size-medium wp-image-10011" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/reboot-china-2.jpg?w=300" alt="" width="300" height="200" /></a>Given the need for financial services to fill the <a href="http://www.umdcipe.org/conferences/policy_exchanges/conf_papers/Papers/gao-evans-garfinkel.pdf" target="_blank" rel="noopener">gaps left by the retreat of government</a>, many have turned to informal service relationships, mostly through existing community connections. Migrant workers, for example, rely on their laobans, or labor bosses, to keep their wages safe and send money home. Others turn to gao li dai, or loan sharks, to meet their financial needs. In the absence of formal loans, these informal alternatives—providing credit based on reputation rather than physical collateral—become a natural solution, even in the face of interest rates far above the official lending rate.

While these informal services may meet needs, they can also be exploitative, insufficient, or overpriced. Citizens with few resources have little choice but to accept these meager offerings. When challenges arrive, they have no reliable channel for redress.

Surely, better options exist.

Globally, there have been widespread efforts to reach the <a href="http://www.cgap.org/sites/default/files/CGAP-Financial-Access-2009.pdf" target="_blank" rel="noopener">2.7 billion people who are unbanked</a>. If Kenya can score a tremendous success through its mobile payment platform <a href="http://www.safaricom.co.ke/?id=257">M-PESA</a>, surely the high mobile penetration rates, extensive agent networks, and an intensive reliance on remittance payments in rural areas suggest that the Chinese market is similarly primed for the deployment of a national, mobile-based remittance system. Analysts believe many of these same characteristics contributed to mobile money success stories like <a href="http://www.tigo.com.gh/Home/Tigo-Cash.aspx" target="_blank" rel="noopener">Tigo Cash</a> in Paraguay and <a href="http://gcash.globe.com.ph/" target="_blank" rel="noopener">GCash</a> in the Philippines.

But the lessons of China’s informal services may also be instructive. Despite their shortcomings, these services are foremost rooted in trust and long-lasting relationships. Built on mutual reliance and born of a vacuum of competitive alternatives, both service provider and user have something to gain. Too often service providers create new offerings with a narrow focus on terms and conditions, cost, or market opportunity. While these factors are important, the most critical—and often neglected—consideration is that adoption may require people to change how they protect, send, and save their hard-earned money. For inclusive financial services to become successful, they must take current practices—as well as the motivations behind them—into careful consideration. New services should recognize and complement existing, informal ones.

In the case of China, this is not simply a moral imperative, but also a significant market opportunity. China’s migrant population alone numbers 250 million and sends an estimated $132 billion across the country each year. Designing inclusive financial services for these populations could quickly transform into a growing and sustainable consumer base for savvy, forward-thinking service providers who can recognize the latent potential and make strides to meet their diverse needs.

By understanding the lives of China’s most vulnerable, and by designing services that align with existing behaviors and networks, millions of Chinese citizens can be lifted into stability.

<a href="http://thereboot.org/blog/person/panthea-lee/" target="_blank" rel="attachment noopener wp-att-10007"><img class=" wp-image-10007 alignleft" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/panthea_thumb1.jpg" alt="" width="180" height="120" /></a><a href="http://thereboot.org/blog/person/panthea-lee/" target="_blank" rel="noopener">Panthea Lee</a>’s work focuses on the practical applications of design and technology in global governance and development. Having designed and deployed programs in over 20 countries, including Afghanistan, China, Egypt, and Sudan, she oversees Reboot’s client engagements and creative work, leading a team of ethnographers, designers, technologists, and subject matter experts to translate field data into effective solutions. Before co-founding Reboot, Panthea was with UNICEF’s innovation practice working on a variety of technology for development initiatives in highly political and sensitive environments.

Image credit: <a href="http://thereboot.org/china/" target="_blank" rel="noopener">Reboot</a><a href="http://yourteenmag.com/2011/01/teens-and-stress-professional-advice/" target="_blank" rel="noopener">
</a>

Have you read? 

<a href="http://cfi-blog.org/2012/07/24/title-the-lucky-three-tailored-products-for-the-rural-poor-in-china/" target="_blank" rel="noopener">The "Lucky Three": Tailored Products for the Rural Poor in China</a>

<a href="http://cfi-blog.org/2013/02/19/post-offices-fill-financial-inclusion-gaps/" target="_blank" rel="noopener">Post Offices Fill Financial Inclusion Gaps</a>

<a href="http://cfi-blog.org/2012/12/28/behavioral-insights-to-advance-financial-inclusion/" target="_blank" rel="noopener">Behavioral Insights to Advance Financial Inclusion</a>

&nbsp;

Designing Financial Services for China’s Marginalized

&gt; Posted by <a href="http://www.cermi.eu/team/associate-researchers#corsi" target="_blank" rel="noopener">Marcella Corsi</a> and <a href="http://www.financite.be/financite/recherche,fr,152.html" target="_blank" rel="noopener">Annika Cayrol</a>, EMN Research Working Group

<a href="http://cfi-blog.org/category/financial-inclusion-2020/" target="_blank" rel="attachment noopener wp-att-8901"><img class="alignright size-medium wp-image-8901" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg?w=300" alt="" width="300" height="66" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

We are increasingly aware of the aging global population thanks to the findings from the Center's Mapping the Invisible Market project, and yet we have been hard-pressed to find many people looking at the changing needs for financial services as people age. We were therefore delighted to learn that the Research Working Group of the European Microfinance Network (<a href="http://www.european-microfinance.org/index2_en.php" target="_blank" rel="noopener">EMN</a>) conducted a debate on "<a href="http://www.european-microfinance.org/documents_en.php?piId=9551" target="_blank" rel="noopener">Microfinance as a Tool of Active Aging</a>" and are pleased to have Marcella Corsi and Annika Cayrol share some of their examples.   

The world is getting older, and the change is happening fast. In 2000, for the first time in history, there were more people over age 60 than children below age 5. The number and proportion of older persons are growing faster than any other age group, with more than <a href="http://www.helpage.org/resources/ageing-data" target="_blank" rel="noopener">1 billion new people over 60 projected in less than 10 years</a>. The older generation, which includes caregivers, teachers, volunteers, entrepreneurs, and more, represents a reservoir of talent and experience that can be tapped to reap a <a href="http://www.youtube.com/watch?feature=player_detailpage&amp;v=4XjsPVjLVNw" target="_blank" rel="noopener">longevity dividend</a>.

The EMN debate focused on projects among European microfinance institutions to promote active aging through microfinance. The programs listed below define the aging population as those 45 years and older.

In France, the <a href="http://www.adie.org/" target="_blank" rel="noopener">Association pour le Droit l’Initiative Economique</a> (ADIE) will shortly pioneer microcredit aimed at supporting seniors. Recent data shows that the older population in France is becoming poorer due to disability, isolation, and low retirement incomes compared to working wages. At least 70 percent of these low-income seniors are women and 62 percent of those are single (including widowed, divorced). Statistics show increasing unemployment among seniors and difficulty finding a new job after the age of 50. The jobs that are available are often part-time or temporary.

[caption id="attachment_9434" align="alignright" width="250"]<a href="http://www.adie.org/decouvrir-ladie/portraits%20?id=1213" target="_blank" rel="attachment noopener wp-att-9434"><img class=" wp-image-9434 " style="border: 0 currentColor" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/01/carre.jpg?w=300" alt="" width="250" height="166" /></a> Microcredit from ADIE targets older entrepreneurs. This client opened a restaurant.[/caption]

Seniors face the same barriers to starting a business that you would expect to find in other populations, such as lack of capital, lack of information about starting a business, and lack of self-confidence. However, the research also identified strong assets for these seniors to create self-employment. Among them are a decrease in expenses after children leave the household, skills and savoir-faire acquired during professional life, and family support systems.

Building on its work in providing financial services to a younger segment (age 18 to 32), ADIE is now launching two new services targeted to clients ages 45 to 65 who are in poverty. “Rebondir” (rebound) will target clients who face unemployment or want to start a business, and “Tremplin” (spring board) will target entrepreneurs who want to strengthen their businesses and integrate them into the mainstream banking system.

In Belgium, the Minister of Social Policy appointed <a href="http://www.credal.be/" target="_blank" rel="noopener">Crédal</a> to start a project aimed at low-income seniors ages 65 years and older in Wallonia. Thanks to partner associations that work with older people and thus know their needs, Crédal will provide microloans for products that allow seniors to stay in their homes, such as walk-in showers, lifts, height-adjustable beds, and reader software for the computer. The success of this project lies in the fact that the partner associations work closely with seniors and therefore have a deep understanding of their needs.

In Romania, <a href="http://opportunity.ro/en" target="_blank" rel="noopener">Opportunity Microcredit Romania</a> (OMRO) supports active aging by providing loans to help older clients maintain better life conditions as they age. About 39 percent of OMRO’s clients are older than 45.

These examples leave many questions about sustainability, impact, and the rationale for treating mature adults as a separate market segment from younger populations. They also do not address the full range of financial services that can benefit seniors, or that can help people prepare for their retirement. And they certainly do not address policy and regulatory issues that can create an enabling environment for older people to gain access to financial services. Nevertheless, we appreciate these pioneering efforts to focus on the fastest growing demographic segment across the globe.

Image credit: <a href="http://www.adie.org/decouvrir-ladie/portraits%20?id=1213" target="_blank" rel="noopener">ADIE</a><a href="http://onyoursidedebtrelief.com/benefits-of-debt-settlemet/" target="_blank" rel="noopener">
</a>

Have you read?

<a href="http://cfi-blog.org/2012/11/07/seven-trends-to-watch-in-the-march-to-achieve-full-financial-inclusion-for-all/" target="_blank" rel="noopener">Seven Trends to Watch in the March to Achieve Full Financial Inclusion for All</a>

<a href="http://cfi-blog.org/2012/11/21/microinsurance-on-the-road-map-to-financial-inclusion/" target="_blank" rel="noopener">Microinsurance on the Roadmap to Financial Inclusion</a>

<a href="http://cfi-blog.org/2012/08/27/five-insights-from-demography-financial-inclusion/" target="_blank" rel="noopener">Five Insights From Demography That Could Change Your Views on Financial Inclusion</a>

Microfinance as a Tool for Active Aging

&gt; Posted by Center Staff
<img class="alignright" title="discard bulb" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/06/discard-bulb.png" alt="" width="144" height="221" /> What makes a great loan officer?
<a href="http://accionambassadors.wordpress.com/about/" target="_blank" rel="noopener">ACCION International Ambassador</a> <a href="http://accionambassadors.wordpress.com/author/weiweipan/" target="_blank" rel="noopener">Wei Wei Pan</a> tackles this topic in a recent post on the Ambassadors <a href="http://accionambassadors.wordpress.com/" target="_blank" rel="noopener">blog</a>, while wrapping up a visit to Chifeng, China and the ACCION Microcredit Company.
Previously, we pointed our readers to insights from Ambassadors <a href="http://accionambassadors.wordpress.com/author/prenmei/" target="_blank" rel="noopener">Pamela Chang</a>, <a href="http://accionambassadors.wordpress.com/author/dfirthbard/" target="_blank" rel="noopener">David Firth Bard</a>, <a href="http://accionambassadors.wordpress.com/author/stephenmatthewlee/" target="_blank" rel="noopener">Stephen Matthew Lee</a>, <a href="http://accionambassadors.wordpress.com/author/jloughnane/" target="_blank" rel="noopener">Jason Loughnane</a>, and <a href="http://accionambassadors.wordpress.com/author/lmv2/" target="_blank" rel="noopener">Leah Vinton</a>. They are among the team of Ambassadors charging around the world, soaking up knowledge "on the ground" in places as far-flung as Paraguay and Tanzania. You can <a href="http://accionambassadors.wordpress.com/" target="_blank" rel="noopener">subscribe</a> directly to the Ambassadors' blog to get a feed of their news.
<a href="http://accionambassadors.wordpress.com/2011/08/10/thoughts-on-chifeng-accion-microcredit-company/" target="_blank" rel="noopener">"Thoughts on Chifeng ACCION Microcredit Company,"</a> which was posted August 10, begins:
During my stay in Chifeng, China over the last two weeks, I have closely observed the work of ACCION Microcredit Company’s (AMC) loan officers and I have also experienced the daily operation of AMC. I am very impressed by the loan officers and the fresh energy AMC injected into Chifeng’s finance industry. Being the first 100% foreign-owned Microcredit Company in China, ACCION has had to overcome many difficulties.
AMC provides micro and small businesses with non-collateralized loans basing their underwriting on ACCION’s proven methodology of cash flow lending. Loan uses are mainly for businesses, such as working capital and purchases of income generating assets. AMC remains focused on the micro market with loan sizes starting at one thousand Yuan (RMB1,000) for a maximum term of 12 months with both principles and interests being paid back in installment monthly.
AMC’s main advantages in the urban market include flexibility of loan guaranty and customized services. Guarantors do not have to be regular salary earners, as long as they have ability to pay back the loans. Loan officers talk closely to applicants about their family and their business, and they also visit their home and businesses to collect first hand information. They also use every channel, such as friends and business partners, to learn more about the clients. Through these, clients’ month income &amp; expenses, cash flows, personal creditworthiness, and other information can be evaluated and cross-checked.
Read the rest of this post, and check out the other Ambassadors' reports, by clicking <a href="http://accionambassadors.wordpress.com/2011/08/10/thoughts-on-chifeng-accion-microcredit-company/" target="_blank" rel="noopener">here</a>.
Image credit: <a href="http://commons.wikimedia.org/wiki/User:Bdesham" target="_blank" rel="noopener">bdesham</a>
Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2010/08/03/dispatch-from-the-field-loan-officer-incentives-%E2%80%93-a-delicate-balancing-act/" target="_blank" rel="noopener">Dispatch from the Field: Loan Officer Incentives – A Delicate Balancing Act</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/02/25/smart-campaign-unveils-e-learning-course-to-boost-client-protection-and-financial-education/" target="_blank" rel="noopener">Smart Campaign Unveils e-Learning Course to Boost Client Protection and Financial Education</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2010/08/19/putting-carrots-to-good-use-in-microfinance/" target="_blank" rel="noopener">Putting Carrots to Good Use in Microfinance</a>

&nbsp;

5 Key Traits of an Excellent Loan Officer - ACCION Ambassadors Blog the World - August 16, 2011

Mayada El-Zoghbi

Managing Director

Christy Stickney

Sonja Kelly

Susy Cheston

Rafe Mazer

Haset Solomon

Apis Partners

Danielle Piskadlo

IFMR LEAD

Elisabeth Rhyne

Bangladesh

Haiti

Rwanda

Pakistan

Kenya

MSME/SME Finance

Pensions and Retirement Saving

Agent Banking

Behavioral Insights

Customer Centricity

Microfinance Institutions

Alternative Data

Agricultural and Rural Finance

Remittances

Transparency

Digital Financial Services

Mobile Banking

Delivery Channels

Trends

Life Insurance

Podcast

Event

Jeffrey Riecke

It is hard to imagine who would scam an older adult over their hard-earned savings. But the reality is that as many as <a href="http://www.consumerfinance.gov/about-us/blog/older-consumers-targeted-by-fraudsters-not-once-but-twice/">17 percent</a> of Americans aged 65 or older report that they have been the victim of financial exploitation. What’s more, only one in 44 of these cases are ever brought to the attention of protective services. In total, billions of dollars are lost each year due to the financial abuse of older Americans. Recently, the Consumer Financial Protection Bureau (CFPB) adopted a <a href="http://www.consumerfinance.gov/about-us/blog/serving-up-hot-meals-with-consumer-education-protect-older-americans-abuse/">novel approach</a> to combatting this trend, intervening with financial education … over a meal.

The CFPB designed a placemat that contains financial education tips on how older adults can avoid scams and maintain their financial wellbeing. The placemat feature advices on navigating lotteries and sweepstakes, phone call offers, and advances from those who are either loved ones or who are purporting to represent loved ones.

To distribute the educational materials the CFPB has teamed up with <a href="http://www.mealsonwheelsamerica.org/">Meals on Wheels</a>, a nonprofit organization that addresses older adult hunger and isolation through the delivery of quality meals as well as friendly visits and safety checks to communities around the country. Over 75,000 placemats will be distributed by the CFPB / Meals on Wheels team.

A printer-friendly version of the placemat is available for <a href="http://files.consumerfinance.gov/f/documents/201605_cfpb_meals-on-wheels-placemat.pdf">download</a>, or you can reach out to the CFPB to be mailed the full-size version. The mats could be incorporated via, along with meal services, assisted living facilities, senior centers, social groups, and other networks that engage older American adults who might be isolated or not have people helping to manage their finances or look out for them.

The CFPB initiative embodies a few of the <a href="https://cfi-blog.org/2016/04/12/a-change-in-behavior-innovations-in-financial-capability/">seven behaviorally-informed practices</a> that show great promise for application in financial capability-building, which were identified in the recent CFI project <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/724">A Change in Behavior: Innovations in Financial Capability</a>:
<ul>
 	<li>Rules of Thumb (Heuristics): The placemat uses mental shortcuts that makes the main messages memorable: never pay to play, take your time, and check with loved ones.</li>
 	<li>Customize It: The placemat tailors financial security information to the older adult population segment, including scenarios like lottery sweepstakes and grandchildren requesting financial help.</li>
 	<li>Make It Social: The placemat is delivered by a person who is tasked with checking in on the older adult, leveraging the human connection that accompanies the message.</li>
</ul>
Low-cost, integrated financial education materials support financial well-being in other contexts, too. In our report with HelpAge International, <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf">Aging and Financial Inclusion: An Opportunity</a>, we discussed the widespread barriers to the financial inclusion of older populations, one of which was a lack of client trust in financial services providers. In our follow-up conversations with key stakeholders following the research, we found that in addition to the provider-side barriers to the financial inclusion of older adults, elder financial exploitation was one of the most concerning trends—and was relevant to people at all income levels in all of the countries we engaged with.

Beyond serving the older adult population, integrated messaging efforts like these help educate on financial scams as well as other financial areas for various demographics around the world. For younger people, financial education messages are often integrated into school curriculum, but could be reinforced in places like lunchrooms and on the backs of cereal boxes. To help young parents consider how to pay for their childrens’ college education, information about education investment accounts could be advertised in parenting magazines and on relevant blogs.

Well done, CFPB, and we look forward to more campaigns like this one.

Have you read?

<a href="https://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="https://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank" rel="noopener">The Opportunity of Pensions Expanding with Life Expectancy</a>

<a href="https://cfi-blog.org/2015/02/17/talking-agefinclusion-meeting-the-financial-needs-of-the-rapidly-growing-older-demographic/">Talking #AgeFinclusion: Meeting the Financial Needs of the Rapidly Growing Older Demographic</a>

Combatting Elder Financial Exploitation…Over Dinner

&gt; Posted by Christy Stickney, Independent Consultant

<img class="alignright wp-image-21603" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/07/thumb_4663dca026224cdc9e1d988473581c36.jpg" width="330" height="220" />"Como tengo ya 57 años, ya no quiero más fuerte." (Since I’m already 57, I don’t want [to work] any harder.) – A market vendor in Lima, commenting on her vision for her business’ growth.

“Tengo tantos planes, pero ya me siento cansado."  (I have so many plans, but I already feel tired.)  --  A 42-year-old owner of a bakery in Guayaquil.

“Después de pagar todo y sacar las hijas de la escuela puedo descansar." (After paying off everything and getting my daughters through school I can rest.)  -- A 37-year-old paint store owner in Lima.

Entrepreneurs work hard—and when it comes to envisioning their older age they want to be able to have the luxury of slowing down. The above were common themes expressed by entrepreneurs in the three countries where I conducted my research as part of a <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-and-accion-research-fellows">CFI fellowship</a>. “I’m tired.”  “I never rest.”  “We don’t take time off.” These are sacrifices associated with running one’s own business, especially among those who have grown their firms from a truly micro size, rising up from poverty and informality into what could be labeled as a “small enterprise” or SME (typically classified as those employing between 5 and 250 workers).

Throughout the developing world, active saving for retirement and participation in formal financial services for older age, like pensions, are minimal. Entrepreneurs of micro-businesses and SMEs face even fewer options than the formally employed, as they tend to operate outside the scope of either private or state-sponsored pension plans. The intention of my research was to learn about the nature of the micro-to-SME entrepreneurs and their businesses, as well as their experiences in growing their enterprises, overcoming hurdles, and utilizing available resources to their benefit. The goal of the research is to inform how to tailor financial services, which are key to enterprise growth, to this client niche. However, in studying these entrepreneurs and their businesses, I also encountered a pervasive alternative being pursued for the financing of one’s later years...

But my first step to finding these entrepreneurs was to identify MFIs’ borrowers with steadily increasing business loan sizes, expecting to expose entrepreneurs with vibrant businesses that were poised for growth. However, the “growth entrepreneurs,” as I’ve named them, represent only about a quarter of the clients I interviewed in low-income neighborhoods of Lima, Quito, Guayaquil, and Santo Domingo. Among the remaining three quarters, there emerged many entrepreneurs that spoke of fatigue and of their desire to slow down and eventually stop working. Clearly, they had worked hard to build up their businesses from scratch, requiring long hours and few breaks. Most of them have raised a family, and along with growing their enterprises have put their kids through school, built a house, and even created jobs or homes for their adult children. Nevertheless, for many of them, their economic futures feel uncertain. Their cash savings are insignificant. As entrepreneurs, they have not invested in a pension, and the majority has not contributed to social security.

Thus, I was both surprised and relieved to discover that among the entrepreneurs that were slowing down, many had invested in rental units as a source of future income. Almost half of the clients interviewed had bought and built rental properties, and quite a few were using their loans to purchase land and build more rentals, repaying these with income from their relatively stable microenterprises. One example is Claude, a Haitian migrant living in Santo Domingo, who has slowly built his second story home and two rental apartments below through microfinance loans that he repays with the meager income from his door-to-door sales business. As in Claude’s case, apartments are often built above or below the microfinance client’s own residence, comprising incremental construction projects that may reach up to four or five stories. Other clients I visited had bought empty lots, after catching wind of a good deal, with future plans of developing these into rental spaces. Former homes and business sites were also rented as owners moved to better locations.

"Tengo que pensar en mi vejez, la enfermedad.... Pensar a tiempo." (I need to think about my [future] old age, and infirmities.... To think in time.) -- A small day-care owner in Santo Domingo, reflecting on her reasons for building rental apartments behind her home.

What I observed is that rental properties are not only an attractive investment strategy for successful microenterprise owners in the cities I visited; rental income has become the de facto pension for much of this population. Undoubtedly, steady urban growth is fueling domestic rental markets, making this a very profitable venture and relatively stable source of future income.

Through reflecting on these observations, which are but a corollary to my study focus, I’m left with more questions than answers.
<ul>
 	<li>How common is this strategy of investing in rental properties to finance retirement among microfinance clients in other contexts?</li>
 	<li>How can financial service providers and the broader microfinance industry better support clients in planning for retirement, whether investing in rentals or other options?</li>
 	<li>And what are lower-income clients’ other options for financing later life? How about offering them alternative investment products, micro-pensions, or specialized savings plans?</li>
</ul>
Perhaps these underscore a next frontier for not only aging micro-entrepreneurs, but also for the maturing microfinance institutions that have been serving them for the past several decades.

Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank">Microfinance as a Tool for Active Aging</a>

<a href="https://cfi-blog.org/2015/09/21/announcing-cfi-and-accions-research-fellows/">Announcing... CFI and Accion's Research Fellows</a>

<a href="https://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/">The Opportunity in Pensions Expanding With Life Expectancy</a>

Rental Properties: A Popular Pension Plan for Aging Entrepreneurs?

China’s economy has experienced tremendous growth in recent years, with a booming micro, small, and medium enterprise (MSME) market. There are over 50 million MSMEs in China that collectively account for over 60% of China’s GDP and over 50% of the government’s tax income. These businesses create 80% of total employment in China’s urban areas.

Despite China’s overall economic growth, the need to foster full financial inclusion is still imperative. In 2010, 38 million MSMEs lacked access to formal financial services, forcing them to borrow informally from friends, family, and moneylenders.

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.

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

<a href="https://www.flickr.com/photos/worldbank/2652377697/in/album-72157601463875207/"><img class="alignright wp-image-20072" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/2652377697_7cd2f08d4e_o.jpg" alt="2652377697_7cd2f08d4e_o" width="349" height="224" /></a>Aging is an issue that we all hope to face personally, if we haven’t already. As we prepare to participate in <a href="http://www.e-mfp.eu/microfinance-week">European Microfinance Week</a>, we are more convinced than ever that this is a critical topic for the financial inclusion community to address. (If you are planning to be at European Microfinance Week too, make sure to <a href="https://event.neimenster.lu/ehome/emw2015/308192/?&amp;">check out our panel</a> on the Sustainable Development Goals and financial inclusion!) In Europe, the aging of the population is well acknowledged. With average life expectancy in Europe among the highest in the world, at 77 years, the proportion of the population reaching older age is naturally growing. About 25 percent of Europe’s population is now over the age of 60, and that percentage is set to rise. The aging of the population is well understood in Europe, but what is less recognized is that the middle and lower-middle income countries of the world – the countries that encompass most of the world’s population – are already beginning to experience the same older age population boom. In most middle income countries, from Mexico to China, over-60s are the fastest growing cohort of the population. Aging is a product of successful development. Increased life expectancy, better family planning mechanisms, and higher quality of life all contribute to growth in the proportion of the population that is older.

Aging is a reality, but can it also represent an opportunity for financial institutions? The smart money is on providers who recognize that the answer is yes, and work to figure out how to respond.

We’ve created a list of activities, some practical and some research-oriented, we think would be valuable to close the gaps in financial inclusion for older people and for younger people who want to prepare for their older age. And, frankly, we would love for you to steal these ideas!

Develop a toolkit for becoming an age-friendly institution. We hear of a few financial institutions—from MFIs to commercial banks—that are using age as a lens through which to segment product offerings. From long-term savings products for people in their primary working years to credit designed for older people, being age-friendly across the life course allows a focus on life transitions and the diverse financial needs that accompany them. Case studies and toolkits would help financial institutions follow proven approaches. As part of becoming an age-friendly institution, there are a few starting points that would make a big impact:
Age-proof channels and technology. Financial institutions recognize that new technology, new channels, and new products must be built with the user experience in mind. There are existing vehicles for testing channels and technology to ensure that they work for older people. As part of vetting channels and technology, financial institutions can leverage older persons’ associations, assuring the technology’s validity for later life.
Ensure that staff members are not discriminating based on age. Financial institutions and support organizations can test the customer experience through mystery shopping in order to better understand how people of different ages are treated when they walk into a branch. An exercise like this could inform market-specific training modules to dispel myths about aging for staff of financial institutions.
Use existing data to create better products. Financial institutions have a wealth of data on clients that goes unused, and age is one data point that is collected because of the way that AML/CFT laws are translated into institutional policy. Financial institutions can use the data they have on clients to better understand how age influences client behavior. From this data, financial institutions have the opportunity to create better products to serve people across their life cycle, and especially into their older age.
Enhance financial security in older age by leveraging G2P and P2G early on. The shift toward electronic government-to-person and person-to-government payments presents an opportunity for creating “on-ramps” to inclusion. Leveraging these products could include automatically diverting funds sent through electronic channels to help people save funds for older age (which is already happening in many parts of the world) or using electronic G2P payments that go to older people as collateral for loans (older people are often seen as higher risk). Financial institutions which provide the accounts through which electronic payments are channeled have the positioning to capitalize on this opportunity.

Raise or eliminate age caps on credit and insurance. Over half of the institutions we <a href="http://cfi-blog.org/2015/09/10/aging-and-financial-inclusion-a-client-protection-issue/">surveyed earlier this year</a> reported that they impose upper age restrictions on their products. Many age caps at microfinance institutions are based on outdated actuarial tables, and are ripe for being challenged or creatively eliminated. Many people who are older may be willing to pay more for credit. And financial institutions could find highly receptive clients if they responsibly raise age caps on credit products. A dedicated loan guarantee fund could help mitigate perceived risk during a pilot phase, accompanied with careful performance monitoring to provide more data about actual risks of lending to older adults.

Enable people to save for their older age. Pension systems were designed for a largely formal labor force, and the current reality of the size of informal markets does not match the intention of pensions systems. More progressive governments have begun to reform their pension systems to account for the more informal labor force, by creating alternative channels for contributions at places like corner stores and through mobile phones. Financial institutions can also play a role, either serving as channels to collect funds for the pension system or by setting up independent long-term savings programs that promise a competitive interest rate.

We are confident that there are a hundred more ideas that are just as good (or better). More importantly, though, we look forward to seeing a world in which age is not a barrier to people having access to a full range of quality financial services.

If you end up stealing one of these ideas, or if you’re already doing something to advance industry thinking on aging, let us know—we would love to champion your work.

Image credit: <a href="https://www.flickr.com/photos/worldbank/2652377697/in/album-72157601463875207/">World Bank</a>

Have you read?

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2015/09/10/aging-and-financial-inclusion-a-client-protection-issue/">Aging and Financial Inclusion: A Client Protection Issue?</a>

&nbsp;

&nbsp;

&nbsp;

&nbsp;

Aging and Financial Inclusion: Steal These Ideas!

&gt; Posted by ideas42

The following post was <a href="http://www.ideas42.org/blog/pathway-better-retirement-mexico/" target="_blank">originally published</a> on the ideas42 blog.

<a href="https://www.flickr.com/photos/worldbank/2652381865/in/album-72157606068898904/"><img class="aligncenter wp-image-20045" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/11/2652381865_b1e561877c_o.jpg" alt="" width="616" height="395" /></a>It’s simply a fact that many products, policies, and services created specifically to benefit everyday people are either under-used or not used at all. Whether it’s helpful savings tools, financial aid for education, or comprehensive health insurance plans, many of us simply never enroll or use them despite intending to do so. So what’s going on?

One major factor is that most of these underutilized programs have been designed according to a "traditional" view of human behavior, in which designers assume that we always take the time to consider all of our options, choose what’s rationally the best option for us, and then act on it.

Behavioral science, however, breaks from this traditional model. We find that in reality, we don’t always carefully compare our options, if we even think about them at all. Likewise, if we do make a good choice, we may not necessarily follow through on it. So in order for solutions to be truly effective, they must be designed for how people really are, rather than how we imagine they should be.

This was one of the main things ideas42 kept in mind when approaching the problem of low retirement contribution rates in Mexico. <a href="http://www.ideas42.org/blog/tackling-low-retirement-savings-mexico/">Regular readers of our blog may remember</a> that under the current pension system, Mexican workers stand to retire on just 40 percent of their current salary, unless they make additional individual contributions—yet the overwhelming majority of Mexicans aren’t taking these crucial steps to improve their savings.

With funding from the MetLife Foundation, we worked with key members of the Mexican retirement system to dive deeper into the behavioral barriers influencing low voluntary contributions. We conducted interviews with stakeholders and account holders across major cities in Mexico, as well as in-depth analyses of administrative materials and data. Based on the <a href="http://www.ideas42.org/blog/tackling-low-retirement-savings-mexico/">insights we uncovered</a>, we designed a variety of behavioral solutions and recommendations for the Mexican pension system:
<ul>
	<li>Create an opt-out system linking accounts to paychecks or bank accounts to make retirement savings automatic and effortless.</li>
	<li>Use visualization exercises, goal-setting activities, and reminders to make retirement feel vivid.</li>
	<li>Tie contributions to actual benefits and re-frame messaging to lessen the feeling of loss associated with saving for the future.</li>
	<li>Make retirement savings visible and commonplace by demonstrating that most community members believe they should save more for a comfortable retirement.</li>
</ul>
These recommendations and potential behavioral solutions make up our new report, <a href="http://www.ideas42.org/wp-content/uploads/2015/11/I42_571_MexicoPensionsReport_ENG_final_digital.pdf">Using Behavioral Science to Increase Retirement Savings</a>. The report, <a href="http://www.ideas42.org/blog/project/increasing-retirement-savings/">available here in English and Spanish</a>, was unveiled this week at an event hosted by CONSAR, MetLife Foundation and ideas42 in Mexico City.

Behavioral solutions like the ones outlined in our <a href="http://www.ideas42.org/blog/project/increasing-retirement-savings/">report</a> have the potential to increase retirement savings for millions of people, but it is crucial to test any solution in the field to evaluate its effectiveness. We’re currently engaging with key members of the pension system to implement various testable interventions in Mexico and Latin America. It is our hope that our report and ongoing work in Mexico over the coming months will inspire others to approach long-term savings from a new perspective—one that better aligns with the realities of human behavior—to improve financial health for millions of people worldwide.

Image credit: <a href="https://www.flickr.com/photos/worldbank/2652381865/in/album-72157606068898904/">World Bank</a>

Have you read?

<a href="http://cfi-blog.org/2015/06/05/tackling-low-retirement-savings-in-mexico/">Tackling Low Retirement Savings in Mexico</a>

<a href="http://cfi-blog.org/2015/05/27/would-you-like-a-pension-with-that/">“Would you like a pension with that?”</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

A Pathway to Better Retirement in Mexico

&gt; Posted by Larry Reed, Director, the Microcredit Summit Campaign, and Jesse Marsden, Research and Operations Manager, the Microcredit Summit Campaign

<a href="https://www.flickr.com/photos/106853342@N04/10666354605/"><img class="alignright wp-image-19542" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/10666354605_d44199b1de_z.jpg" alt="" width="315" height="210" /></a>

In collaboration with the CFI’s process to develop the <a href="http://www.fi2020progressreport.org/">Financial Inclusion 2020 Progress Report</a>, the Microcredit Summit Campaign recently conducted interviews with microfinance leaders* around the world committed to reaching the most excluded. In this post, we share some of the insights from these conversations about how to ensure that the most invisible clients are financially included, directly drawn from the experiences of those who are doing it.

To set the stage, Luis Fernando Sanabria, General Manager of Fundación Paraguaya, made this central point: "Our clients need to be the protagonists of their own development stories. Our products should be the tools they use to meet their needs and empower their aspirations." With that reminder of the purpose of financial inclusion, we begin the discussion by asking who are the most excluded.

In each country, people living in extreme poverty (below US$1.25 a day) make up the largest segment of those excluded from the financial system. We spoke with leaders from organizations that make intentional efforts to reach this large excluded market: Fundación Paraguaya; Pro Mujer; Fonkoze; Plan Paraguay; Equitas; Grama Vidiyal; and TMSS. These organizations not only address poverty, but also a host of other dimensions that lead to exclusion, including literacy, race, gender, physical disabilities, and age. Less frequently-discussed reasons for exclusion include sexual orientation, language barriers (especially among indigenous populations), and mental or emotional health issues. In India and Bangladesh, for example, those interviewed noted that the lack of personal identification often drove exclusion, especially among women, persons with disabilities, and the socially excluded, such as transgender individuals.

In order to reach the most excluded, you have to know who they are. “Often the poorest families are invisible in their own communities,” said Steve Werlin of Fonkoze in Haiti. “When we do the wealth rankings in a community, they aren’t even mentioned.” Fonkoze takes steps to make sure that all households get included in their surveys so that the community can see who they have left out. Creating this visibility is essential. On a wider scale, in government statistics on economic activity, data on people over 65 is simply discarded or never collected.

Everyone, and every client, is unique. One of the messages of the FI2020 Progress Report is that the base of the pyramid (BoP) is not a monolithic bloc. Arjun Muralidharan of Grama Vidiyal in India noted that “You need to have a particular and unique strategy to seek out and serve these groups. This begins with deciding who you are going after. Different populations have very different problems.”

Two key elements for including the most excluded populations are building trust and overcoming prejudice. Not only do the financially excluded need to become confident in their services providers’ ability to responsibly manage their money, but they often have to become comfortable participating in a society that has regularly closed its doors to them. “Working with disenfranchised groups is hard. We need to provide extra training and services to help overcome their self-exclusion,” said Muralidharan. Grama Vidiyal provides health services and legal rights training to members of the Dalit group (formerly known as untouchables) before including them in savings and lending groups. On the other side of the equation are financial services staff attitudes. “In order to include people with disabilities, we need to train our staff first, to get them to overcome their prejudice,” said John Alex of Equitas in India. Equitas provides disability awareness training for its staff and clients and encourages them to find people with disabilities in their communities to include in the institution’s borrowing groups. Equitas also adapted its training and application systems to be accessible for people who are blind, deaf, mute, or face other physical limitations.

Excluded groups may have financial needs that do not fit the typical cash flows of other clients. TMSS asked rural farmers in northern Bangladesh what programs the farmers felt would be best to introduce. This client-first approach led to new programs that combined loans and savings in sync with the growing season. TMSS also changed its policies and products to meet the needs of an aging population - eliminating its age limit for borrowers. The institution also provides savings services for these clients and training for the next generation of family members to make sure they will be cared for as they age.

Those excluded from financial services often face many other types of exclusion as well, leaving them with a range of constraints that they need to address:
<ul>
 	<li>Both Fonkoze and Plan Paraguay employ the <a href="http://tup.brac.net/">Ultra Poor Graduation Model</a> developed by BRAC that provides a combination of cash transfers, training, savings, an asset, mentoring, and access to credit.</li>
 	<li>Equitas works with homeless people and provides housing and financial capacity training before providing loans.</li>
 	<li>TMSS provides health services, financial capability training, and vocational training.</li>
</ul>
These organizations often partner with the government and others to make sure their clients have access to the range of services they need. Fundación Paraguaya uses its <a href="http://www.fundacionparaguaya.org.py/?page_id=490">Poverty Stoplight</a> monitoring system to assess its clients on a checklist of 50 items related to poverty, health, education, and employment. It uses this data to bring in government services for common areas of need. Equitas partners with local hospitals, and Grama Vidiyal works with the government health insurance system to provide for the health needs of clients.

Achieving financial inclusion requires consistent energy to attain, maintain, and measure progress. Fundación Paraguaya uses its Stoplight system to enable clients to define and measure their own achievements over time, and provides incentives to its staff based on these clients’ achievements. Equitas provides incentives to its account officers for including persons with disabilities and measures the progress of its clients along consumption and health indicators. Plan Paraguay and Fonkoze measure the success of their Ultra Poor Graduation programs based on the numbers of clients who “graduate,” having met a comprehensive set of indicators related to food security, income security, asset ownership, school enrollment, housing quality, etc. and having reached a level at which they can use unsubsidized financial services.

Financial inclusion has always been about going where others wouldn’t go, addressing the needs of people who were excluded because it was too hard to serve them, or too risky, or too unsustainable. The people we spoke with represent the many financial pioneers who use innovation to expand the boundaries of inclusion, reaching those assumed to be impossible to reach.

For more on addressing client needs, check out the interactive <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a>.

Persons interviewed for this post: Luis Fernando Sanabria, Fundación Paraguaya; Carmen Velasco, co-founder of Pro Mujer; Steve Werlin, Fonkoze, Haiti; Mariella Greco, Plan Paraguay; John Alex, Equitas, India; Arjun Muralidharan, Grama Vidiyal, India; Munnawar Reza, TMSS, Bangladesh.

Image credit: <a href="https://www.flickr.com/photos/106853342@N04/10666354605/">Department of Foreign Affairs and Trade</a>; Anowara Begoum (pictured) lives in Kazipara village in Bangladesh, and is a participant in BRAC's Special Targeting Ultra Poor Program.

Have you read?

<a href="http://cfi-blog.org/2015/09/28/fi2020-progress-report-launches-in-three-days/">FI2020 Progress Report Launches in Three Days!</a>

<a href="http://cfi-blog.org/2015/07/21/the-supply-centricity-of-customer-centricity/">The Supply-Centricity of Customer-Centricity</a>

<a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/">The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part One</a>

Addressing the Financial Needs of the Most Excluded

&gt; Posted by Sonja E. Kelly and Misha Dave, CFI

[caption id="attachment_19480" align="alignright" width="350"]<img class="wp-image-19480" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/equitas_pwd_dhanalakshmi-e1442518477325.png" alt="" width="350" height="215" /> Dhanalakshmi (far right), client at Equitas[/caption]

If there is one thing we have learned from working on disability and age inclusion in financial services, it is that including these populations in financial services is in some ways easier than practitioners expect it to be but, in other ways, harder than it looks.

In our research on aging and financial inclusion, one of the key insights was that financial service providers of all sizes often apply age caps on credit products. However, many institutions we talked with did not know exactly where these standards came from. Some attributed them to concerns about life expectancy of older clients, some to institutional history (“that’s just the way we do it”), some to the increase of credit portfolio insurance it would incur, and some to a perception of older people as economically dormant.

Many of these concerns can be mitigated by better research and dispelling myths about the creditworthiness of older people. Easy, right? In fact, there are some institutions that apply creative ideas to providing credit to older people. Group guarantees and automatic withdrawal payments on loans from publicly administered pensions through government partnerships are both examples of this.

However, such institutions providing credit to older people seem to be the exception rather than the rule. Worse, convincing institutions to care about this population is not easy. One institution we spoke with in India was baffled by the idea of providing credit to people over the age of 55. “But [the older people] could die and wouldn’t pay the loan,” the product developers insisted. Doing the research and <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/aging-financial-inclusion" target="_blank" rel="noopener">articulating the issue</a> was the easy part — now the hard work begins of advocating on behalf of older people.

Similar attitudinal barriers exist in financial institutions for serving persons with disabilities. Let’s take stock: over one billion people around the world — 1 in 7 of us — have a disability and four-fifths live in developing countries like India. Despite this and the fact that many microfinance institutions (MFIs) claim to be dedicated to “serving the world’s financially excluded people,” less than 1 percent of their clients are persons with disabilities.

In India, disabled persons have limited or no access to formal credit and other financial products for education, housing, skills development, business, and such. In addition, insurance companies in India do not cover assistive technology like wheel chairs and hearing aids that disabled persons need to be mobile, avoid further injury to themselves, and work and live full lives. The gap between demand and supply is enormous, and this creates a dangerous hotbed for informal credit and loan sharks to exploit an already vulnerable and marginalized population, dragging them further into poverty.

Disabled persons and older people have similar physical challenges (mobility, visual, and hearing impairment) and misperceptions about their capabilities to work and run businesses. Therefore, helping to financially include one group will serve to make positive changes for the other. Whether it be through changing attitudes and perceptions or implementing universal design principles in their operations, financial institutions can better serve all clients with physical challenges by becoming disability inclusive and friendly.

Through financial inclusion of disabled persons in India, we see a compelling story of social inclusion at the community level. Leveraging the group-based model in microfinance, disabled persons, mostly women, receive community support and social acceptance from other group members. Dhanalakshmi, an Equitas client, exemplifies this.

Dhanalakshmi was not born blind. She was badly burnt and lost her vision 23 years ago when her husband poured acid over her, her two sisters, and mother. While her sisters recovered with minor injuries, got married, and have families of their own, Dhanalakshmi lost her vision and sustained major burns on her right-hand side. Constrained by her disability, she confined herself to her home for many years.

Four years ago, Dhanalakshmi joined Equitas as a member. She took out a small loan and started her garments business, buying clothes from the wholesaler and selling them door-to-door. Dhanalakshmi’s group has fully included her by using very simple accommodation measures like reciting the MFI pledge aloud and taking turns to assist her in attending meetings. This has given her the confidence and the ability to support herself and her mother financially. Along with economic independence, she has also been socially accepted by people around her.

Group members often help support disabled persons in their businesses, as well. For example, they may purchase raw materials, sell/distribute products, and collect and repay loans on behalf of the disabled client. This inclusion is creating role models by empowering disabled persons to be economically self-sufficient while also empowering communities to break down social stigmas and attitudinal barriers on what a disabled person can and cannot do.

To help further financial inclusion for persons with disabilities, CFI’s <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/pwd" target="_blank" rel="noopener">Disability Financial Inclusion Program</a> in India has provided trainings and resources to sensitize and equip microfinance institutions to serve this marginalized and underserved population. The program provides disability awareness and sensitization trainings, inclusion assessments, and recommendations to make operations and processes more disability inclusive and friendly.

In the past two and a half years, the program has helped sensitized three microfinance partners (Equitas, ESAF, and Annapurna Microfinance) in three states (Kerala, Tamil Nadu, and Orissa). These three MFIs have financially included more than 30,000 low-income disabled persons, including over 2,000 visually impaired individuals, a severely excluded disability segment. Last year, the program won an award for its innovation in promoting accessibility and universal design to “ensure a life of equality and dignity for disabled persons.”

This year, we are expanding to three more financial partners in four new Indian states (Karnataka, West Bengal, Jharkhand, and Uttar Pradesh). One partner organization has a network of 33 sub-partners providing social and as well as financial support, spreading the seed of inclusion across India. We are also developing strategies to expand disability inclusion with our partners and other stakeholders through advocacy and awareness. We are facilitating partnerships between the financial industry and disability organizations in India, many of which provide livelihoods training, skills development, and other social supports to disabled clients. In sum, we are helping provide a strong ecosystem for sustainable financial inclusion for persons with disabilities.

We remain convinced of the value of including persons with disabilities and older people in financial services outreach. Indeed, financial inclusion is a valuable instrument to equip people with the tools they need to manage and grow their income. As we continue to pursue this goal — despite how challenging it can be at times — we eagerly look forward to the day when <a href="http://www.centerforfinancialinclusion.org/our-definition-of-financial-inclusion" target="_blank" rel="noopener">all people who can use financial services have access to a broad range of quality financial tools</a>.

This post was also published on the Microcredit Summit Campaign's <a href="http://100millionideas.org/2015/09/18/how-to-be-disability-inclusive-and-age-friendly/">100 Million Ideas blog</a>. Almost a year ago, CFI launched two <a href="http://www.microcreditsummit.org/commitment-makers.html" target="_blank" rel="noopener">Campaign Commitments</a> for further research and action on the inclusion of persons with disabilities and older people in financial services.

Have you read?

<a href="http://cfi-blog.org/2015/09/10/aging-and-financial-inclusion-a-client-protection-issue/">Aging and Financial Inclusion: A Client Protection Issue?</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

<a href="http://cfi-blog.org/2015/08/31/four-interventions-to-help-victims-of-trauma-find-hope-and-dignity/">Four Interventions to Help Victims of Trauma Find Hope and Dignity</a>

How to Be Disability Inclusive and Age Friendly

&gt; Posted by Haset Solomon, Associate, the Smart Campaign, and Sonja E. Kelly, Fellow, CFI

[caption id="attachment_19309" align="alignright" width="250"]<a href="https://infogr.am/copy_aging_and_financial_inclusion"><img class="wp-image-19309" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/infographic-aging.png" alt="" width="250" height="416" /></a> Click for complete and full-size infographic[/caption]

Earlier this year we <a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/">shared</a> a puzzle: microfinance institutions reported that they had age caps on credit products, but we couldn’t figure out what data or rationale was backing them. Leveraging the Smart Campaign’s <a href="http://smartcampaign.org/about/campaign-endorsers">endorser network</a> of over 2,000 microfinance institutions, we set out to get to the bottom of this puzzle. What we found in our survey surprised us.

Consistent with our research in the Financial Inclusion 2020 (FI2020) publication <a href="https://www.metlife.com/assets/cao/foundation/Aging_and_Financial_Inclusion_an_Opportunity.pdf">Aging and Financial Inclusion: An Opportunity</a>, 61 percent of respondents indicated that they have age caps at their microfinance institutions. Indeed, it is common-place for institutions to place age caps on their credit products. The practice is not limited to one country or region - respondents to the survey came from 45 different countries across every region. As we analyzed the survey, we figured there is either a global phenomenon of discrimination against older people or everyone has a very good reason for their actions that we have been missing.

When asked what the age cut-off is at each respondent’s institution, the responses ranged between 55-80 years, and the average age was 65. Our research earlier this year, however, found that this age cut-off is not always consistently applied within each institution. New customers may have an earlier age cut-off, whereas customers with an existing relationship with an institution may be given an additional few years to apply for a new loan.

So, why do institutions impose these age caps on credit products? We received two competing answers:

<ul>
 	<li>“Older people have diminishing health and life expectancy, and this has implications for their income flows.” We heard variations on this theme from about half of those responding to this question. Some were motivated by the national retirement age, with the assumption that after retirement people are not likely to have a steady, dependable, and adequate income to pay back a loan. Others were concerned about older people’s ability to work, thinking that if they were entrepreneurs they may not be as motivated as younger people.</li>
 	<li>“Portfolio insurance does not cover loans to older people, and we refuse to lend to people for whom our insurance is not valid.” Most microfinance institutions take out portfolio insurance that covers their credit portfolio in case of massive default or other major problems. About half of the respondents mentioned insurance as the reason they don’t lend to older people, pointing to the country-level actuarial tables or other data on which insurance companies base their information. Though respondents indicated these resources are outdated in determining an accurate risk profile at particular points in the life course.</li>
</ul>
[caption id="attachment_19312" align="alignright" width="301"]<img class="wp-image-19312" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/word-cloud1.png" alt="Word cloud based on survey responses to the question &quot;Why does your institution have upper-age credit limits in place?&quot;" width="301" height="169" /> Word cloud based on survey responses to the question "Why does your institution have upper-age credit limits in place?"[/caption]

The most surprising finding, however, was one that came out of asking respondents what their personal opinion was on the topic. We asked all survey respondents to voice whether they thought there should be upper-age limits to credit products. The response? Over half of respondents personally disagreed with the practice. Their explanations were enlightening:

“Each person has the right to make a living without any discrimination due to age or disability.”

“Because we can design products for the older-age population.”

“The decision to grant a loan should depend on the appraisal or risk assessment of the client, not his/her age.” 

Smart Campaign endorsers, on average, seem to think that age caps are not ideal or necessary. Older people, just like any other segment of the population, need credit products suited to their needs. We hope this helps to continue the conversation about legitimate assessment of credit risks and credit discrimination of older adults, which is among the fastest growing of any segment of the population.

Have you read?

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

Aging and Financial Inclusion: A Client Protection Issue?

&gt; Posted by Tyler Aveni, Positive Planet China

[getty src="179628484?et=GgCaq6CEQdlJs64RSN4CFA&amp;viewMoreLink=on&amp;sig=pvS2qjiVTWBxLnLM0IeaSV7Yv2XmXBmACDzG6Frnxjw=" width="594" height="396"]

In an industry that is constantly evolving due to new technology and abundant knowledge-sharing opportunities, practitioners of socially-driven microfinance and inclusive financial services are also helping to drive new innovation. Accompanying research critically assists this process, especially in evaluating the impact of these new methods and initiatives. This presents a problem for countries like China where a dearth of credible (or existing) data resources makes a critical review of practices far harder to manage. As such, researchers interested in the world’s second-largest economy often must settle with statistics that may suffice but rarely meet higher standards found elsewhere.

The work of Li Gan, a Texas A&amp;M professor who also heads the Survey and Research Center for Household Finance at Southwestern University of Finance &amp; Economics (SWUFE) in Chengdu, China, is helping to address the problem. Professor Li has spent much of the last four years spearheading an effort to gather more data on the financial condition of Chinese households and businesses. Through generous funding by SWUFE and support from the PBOC, China’s central bank, Professor Li has set into motion two key multi-year surveys: The China Household Finance Survey (CHFS) and the “ChinaPnR-SWUFE SME Index” which looks at small enterprises.

Prior to the household survey, the main source of data available on household finance in China came from the National Bureau of Statistics (NBS), a government-sponsored research department. These reported statistics, while comprehensive, are sometimes met with a certain degree of skepticism. Researchers question the integrity of the data collection methods, and some analysts raise concerns about number-tinkering. Any alternative, private surveys were collected on a much smaller scale.

The CHFS is filling the void. Results of the CHFS first began being published in 2012 and are now becoming an increasingly rich and pliable resource for research as additional years of data capture shifts in China’s social and financial landscape. The CHFS started with more than 8,000 households from across mainland China (Tibet and Xinjiang AR excluded) and has been gradually expanded every year. In 2013, some 1,600 SWUFE students were hired and trained to conduct surveys, with the number expected to grow to more than 2,500 for the 2015 survey. Nearly 28,000 households (or 100,000 individuals) are expected to be included in this year’s survey.

Out of approximately 3,000 counties in China, 260 are randomly selected. This selection is then controlled to insure that the sample is both nationally and provincially representative of the population. Within each of these 260 counties, 4 neighborhoods (consisting of villages and communities) are randomly selected. Among the households in the 1,000-plus neighborhoods, between 20 and 50 are randomly selected to be interviewed. The ChinaPnR-SWUFE SME Index works on a very similar system wherein counties and neighborhoods are randomly selected; neighborhood businesses are recorded and then some are randomly selected to participate in the survey.

According to Li Gan, households could be very reluctant to participate but to avoid bias, persistence (i.e. many returned trips) with the support of the local governments and neighborhood committees, has given the CHFS the tools necessary to collect accurate mass-market results. High participation levels (only 11 percent refused to participate in the survey after repeated visits) attest to this earnestness.

Li Gan’s data have shown that wealth is far more concentrated at the top of the socioeconomic pyramid than the NBS figures suggest. It also illustrates that the big picture savings figures are skewed since most of the total dollar amount comes from high income savers.

Interestingly, the survey may also hint at changes in the role of China’s small businesses, since micro-businesses and household finances are often intertwined. In fact, this subset of interest inspired Li Gan and his team of researchers to create the new micro, small, and medium-sized enterprise (MSME) index  in collaboration with a Chinese technology payment services company, ChinaPnR Limited. Used to capture information about China’s roughly 60 million small unlisted companies, data from the ChinaPnR-SWUFE SME Index has now been collected for more than a year. Government and research bodies have strongly encouraged the program, because, as Li Gan points out, any existing lists on these organizations that are currently available are completely outdated. Mass movements of migrant workers to cities and changing economic conditions have relentlessly re-shaped businesses. New shops crop up daily, and turnover is high.

Li Gan sees both the household and microenterprise survey as crucial for microfinance both directly and indirectly. In his view, policies related to microenterprises or small enterprises could even be affected by the survey results. The data keeps relevant information updated by addressing many important questions like: What is the current demand for loans? How much debt can micro and small businesses afford? What financing channels are currently available? Why do micro-entrepreneurs start their businesses? Do they use internet? How knowledgeable are they with internet technology and other innovation?

Answers to these questions may hold implications for what microfinance institutions offer clients and how they deliver services. In addition to researchers digging into past changes and effects, practitioners and organizations may find that the data hold new insights. In recent years there has been a move to holistically evaluate client needs and rethink product and services design to become more appealing for new and existing clients, which in turn, also benefits the institution. This approach, coined “human center design” (HCD) stands to benefit from data, such as the CHFS and SME indexes, which may serve as a broad platform to improve practices and their core offerings.

As of a July 1 update on the CHFS research center’s website (which oversees both surveys), results of the MSME index were officially <a href="http://www.chfsdata.org/detail-26,28-109.html">released</a> last month on June 26. Updates and new results will be published quarterly, with plans made for at least an additional 5-10 years of data collection for both the MSME and household finance indices. As is the case with the CHFS, this data is planned to be made freely available as a public asset for the research community.

Have you read?

<a href="http://cfi-blog.org/2014/01/07/ratings-to-loosen-the-regulatory-noose-on-chinas-microcredit-companies/" target="_blank" rel="noopener">Ratings to Loosen the Regulatory Noose on China’s Microcredit Companies</a>

<a href="http://cfi-blog.org/2015/01/06/the-role-of-microfinance-ratings-in-the-sustainable-development-of-chinas-financial-inclusion-sector/">The Role of Microfinance Ratings in the Sustainable Development of China's Financial Inclusion Sector</a>

<a href="http://cfi-blog.org/2014/10/27/gender-dynamics-in-rural-china-illuminate-the-need-for-financial-education/" target="_blank" rel="noopener">Gender Dynamics in Rural China Illuminate the Need for Financial Education</a>

&nbsp;

New Surveys Fill Data Void in China’s Microfinance Industry

&gt; Posted by Center Staff

<a href="http://newsfeed.financialinclusion2020.org/"><img class="aligncenter wp-image-18655" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/fi2020-issue-five.png" alt="fi2020 issue five" width="614" height="329" /></a>

Good afternoon! Freshly published is this week’s Financial Inclusion 2020 News Feed, sharing the big news in banking the unbanked. Among its stories are a new partnership between MetLife Foundation and Opportunity International to expand financing and skills training in rural China, the launch of a World Food Programme initiative that integrates climate risk reduction with financial services, and the release of the first annual Consumer Banking PACE Index, which gauges bank performance to consumer expectations. Here are a few more details:
<ul>
 	<li>MetLife Foundation and Opportunity International have embarked on a three-year partnership to support thousands of small businesses in rural China with financial services and business development training via banks, mobile vans, and rural service centers.</li>
 	<li>The World Food Programme launched the R4 Rural Resilience Initiative, which helps smallholder famers in Zambia navigate environmental demands using index-based agricultural insurance, improved natural resource management, credit, savings, and productive safety nets.</li>
 	<li>The new Consumer Banking PACE Index, drawing on input from over 9,000 consumers, examines bank performance in a handful of countries around the world to conclude that, among other findings, fair and transparent pricing falls below consumer expectations, and trust in banks remains an issue.</li>
</ul>
For more information on these and other stories, read the fifth issue of the FI2020 News Feed <a href="http://newsfeed.financialinclusion2020.org/">here</a>, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to us at <a href="mailto:ezuehlke@accion.org">ezuehlke@accion.org</a>.

&nbsp;

Rural Finance in China, Climate Risk Reduction, Meeting Consumer Expectations – the Latest FI2020 News Feed

Within 15 years, there will be 1.3 billion people over age 60 in the world, a reality that presents challenges but also opportunities for financial inclusion. Recently, the Center for Financial Inclusion at Accion and HelpAge International, with the support of the MetLife Foundation, released Aging and Financial Inclusion: An Opportunity, a report that examines the unmet financial needs of the global aging population. In this interview, Elisabeth Rhyne, Managing Director for the Center for Financial Inclusion; Eppu Mikkonen-Jeanneret, Head of Policy at HelpAge International; and Evelyn Stark, Assistant Vice President, Financial Inclusion lead at MetLife Foundation discuss this issue and research with Eric Zuehlke from the Center for Financial Inclusion.

Podcast: Aging And Financial Inclusion - An Interview on Unmet Financial Needs and Opportunities

&gt; Posted by Center Staff

<a href="http://newsfeed.financialinclusion2020.org/"><img class="aligncenter wp-image-18544" style="border: 1px solid #000000;margin-bottom: 3px" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/06/fi2020-news-feed-three.png" alt="" width="614" height="326" /></a>

Hot off the press! We published the third issue of the Financial Inclusion 2020 News Feed, our new weekly online magazine on the big news in financial inclusion. What’s been happening in the world of banking the unbanked?

Among its stories, the new issue of the FI2020 News Feed spotlights the following:
<ul>
 	<li>The State Bank of Pakistan ordered all commercial banks in the country to create a new account category, Asaan Account, which targets the base of the pyramid by simplifying account opening requirements</li>
 	<li>Mybank, a new online bank in China, was launched by Ant Financial, utilizing transaction records on Alibaba to extend credit to individuals and small businesses</li>
 	<li>In Tanzania, agent and mobile phone-based banking continues to grow steadily in both the volume and value of transactions</li>
</ul>
For more details on these and other stories, read the third issue <a href="http://newsfeed.financialinclusion2020.org/">here</a>, and make sure to subscribe by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to us at <a href="mailto:ezuehlke@accion.org">ezuehlke@accion.org</a>.

&nbsp;

Pakistan’s New Asaan Account, the Alibaba-Enabled Mybank, Mobile Progress in Tanzania – the Third Issue of the FI2020 News Feed

My proudest moments as a parent are when my 2-year-old son finds change lying around the house and runs excitedly to put it in his piggy bank. We never consciously did anything to encourage this behavior. I like to think it is due to some small part of my DNA shining through.

The recent CFI and HelpAge report, <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf">Aging and Financial Inclusion: An Opportunity</a>, highlights that most people expect to use accumulated savings and assets to fund their retirement, but in reality end up relying primarily on support from family, friends, and the government.

I’ve <a href="http://cfi-blog.org/2013/09/13/could-you-access-two-thousand-dollars-in-a-month/">blogged</a> in the past about how much trouble people have with saving. And it seems financial intuitions for their part use every imaginable mechanism to make it easy (<a href="http://cfi-blog.org/2015/05/27/would-you-like-a-pension-with-that/">pension contributions at 7/11</a>, <a href="https://www.standard.com/pensions/publications/behavioral_finance_15219_7_10.pdf">behavioral nudges</a> for opting employees into retirement plans), fun (<a href="http://www.d2dfund.org/prize_linked_savings">prize-linked savings</a>, lotteries, and games), or obligatory (compulsory savings as a loan requirement) for their clients to save.

I have always believed that the ability to save is a key piece of financial security, and that building the financial capability to save at a young age has a profound impact on financial security throughout a person’s life, even into the retirement years. <a href="http://cfed.org/blog/inclusiveeconomy/recent_research_illustrates_how_children_build_financial_capability_from_early_age/">Recent research</a> undertaken by CFED to “deepen our understanding of youth financial capability and explore the behaviors, types of knowledge and personality characteristics that help children and youth achieve financial well-being in adulthood” supports that belief. The research included an extensive literature review of consumer science, developmental psychology, and related fields to explore the factors that comprise youth financial capability, as well as how and when these abilities are developed.

The CFED report highlights that at a young age kids begin to develop the financial skills needed to successfully navigate financial matters as adults. Specifically, the report identifies three critical processes for building financial capability in childhood:
<ol>
 	<li>Developing the executive function in early childhood that allows kids to delay gratification while planning for the future. This function also plays a critical role in the development of personality traits such as perseverance, self-regulation, and future orientation, which are likely to contribute to an individual’s ability to achieve and maintain financial well-being in adulthood.</li>
 	<li>Developing a “financial common sense” in middle childhood, which shapes the financial attitudes, habits, and rules of thumb that help youth navigate their day-to-day financial lives.</li>
 	<li>Building financial skills and deliberate decision-making strategies in adolescence and young adulthood.</li>
</ol>
This new research finds that building youth financial capability and instilling savings behavior involves foundational learning and development that begins in early childhood. Also, that the skills, attitudes, and habits that make up youth financial capability are defined by developmental processes that build on one another, and change over time as kids encounter experiences and environments that require new or different behaviors.

As a parent trying to prepare my son for a financially capable and secure life, I wonder what the future of financial services looks like, given how quickly financial products change. As a teenager, I filled out a savings book as babysitting money racked up, as a young adult, I was amazed to find out how easily I could get “cash back” using a debit card, and, just yesterday, I made my first <a href="https://venmo.com/">Venmo</a> payment.

My son’s piggybank is cute, but I have no idea how to prepare him for whatever financial mechanism he will actually be using as an adult. By then, my future grandkids might roll their eyes at the totally outdated Venmo birthday payments I send them, which could be the future equivalent of checks from grandma. Regardless of the mechanism, I hope to instill now the executive function that will allow my son to delay gratification, self-regulate, and plan for his future and retirement.

Have you read?

<a href="http://cfi-blog.org/2014/10/17/credit-suisse-sponsored-event-focuses-on-financial-capability-and-the-policy-and-business-case-for-youth-financial-inclusion/">Credit Suisse-Sponsored Event Focuses on Financial Capability and the Policy and Business Case for Youth Financial Inclusion</a>

<a href="http://cfi-blog.org/2013/11/18/riding-financial-inclusion-disruption-are-youth-savers-the-surfers-or-the-wave/">Riding Financial Inclusion Disruption: Are Youth Savers the Surfers or the Wave?</a>

<a href="http://cfi-blog.org/2014/03/14/a-week-of-global-action-for-child-and-youth-finance/">A Week of Global Action for Child and Youth Finance</a>

To Develop Savings Skills, Start ‘Em Young!

Last year, to increase voluntary savings in Mexico’s pension system, the pension regulator teamed up with 7/11 retail stores and <a href="http://www.telecomm.net.mx/">Telecomm</a> to create channels for people to contribute to pensions, whether they receive an income within the formal labor market or not. The system added about 3,600 new contribution locations for the 53 million people in Mexico who have a public pension.

Imagine walking into your local convenience store to buy a pack of gum (or chips, or beer, or a newspaper) and deciding to contribute as little as $3 to your pension, just like you would top-up your mobile phone or buy a lottery ticket. You would give the cashier your citizen ID number (twice, just to make sure), and the cashier would give you a receipt for the transaction. The funds would travel to a centralized switch which holds the national database called Procesar and then be directed to one of 11 pension fund administrators. The funds would enjoy a 10 percent return over three years—a higher rate than savings accounts in Mexico offer—enabling them to double within 20 years.

The new system was created by the pensions regulator, CONSAR, in response to the problem of low contribution rates among existing accounts and the recognition that many, if not most people in Mexico are financially unprepared for later life. Anyone who has ever been a part of the formal labor system has a pension in Mexico (even, say, those with a short-term construction job), though many people are unaware of it. Currently, the system includes 53 million people, slightly under half of Mexico’s total population. However, an estimated 58 percent of Mexicans are informally employed and therefore without a constant connection to the pension system. CONSAR’s goal is to increase the number enrolled in the system, the number who make voluntary contributions, and the frequency with which they make them in order to provide a dignified pension to all Mexican citizens. The scale of the problem is enormous. Of the 53 million contributory pension accounts, only 58,000 received voluntary accounts in 2014 (less than 1 percent).

While pension reform to increase automatic contributions for the formally employed is being considered in Mexico’s Congress, such a bill would not cover the informally employed labor force, and would help very little of those who either have infrequent and intermittent work or workers who are paid in part through cash and under-declare their income.

CONSAR’s policy designers are betting that they can increase both enrollment and participation by creating convenient channels to contribute to pensions. There are two major challenges. The first is the complexity of the pension system. The pension funds in Mexico are held in 11 privately operated funds. They pass through a switch between the retail contribution collector and Telecomm that allows the individuals’ money to be directed to the correct fund. Procesar plays a big role in streamlining contributions to ensure that despite a complex system money is properly directed and can be confirmed. This challenge has already been addressed.

The second challenge remains outstanding, and it is that people are not yet participating in the system in a way that will make a major dent in their preparedness for later life. CONSAR is considering ways to analyze the behavior of clients as they interact with their long-term savings to create better incentives, ways to diversify the channels for contributions, ways to educate people on their pensions, and ways to nudge people to contribute, like having cashiers ask customers if they would like to contribute to their pension when they pay. This challenge is much more daunting than the first, although initial results show promise, as 88 percent of contributions through these retail chains were done by people who had not made voluntary contributions towards their pension before.

CONSAR is looking forward to keeping those interested in financial inclusion updated on their progress—so if you have any comments or questions please comment on this post below. And if you know someone who has ever worked in Mexico, make sure you tell them they can make a contribution to their pension through their local 7/11!

Have you read?

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank" rel="noopener">The Opportunity in Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank" rel="noopener">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

<a href="http://cfi-blog.org/2014/10/28/new-platform-to-gift-a-pension-in-india/" target="_blank" rel="noopener">New Platform to Gift a Pension in India</a>

“Would you like a pension with that?”

&gt; Posted by the Access to Finance Unit, Multilateral Investment Fund, Inter-American Development Bank

<a href="https://www.flickr.com/photos/worldbank/4680565800/in/set-72157601463875207"><img class="aligncenter wp-image-18068" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/04/4680565800_aaa2dc3c73_b.jpg" alt="" width="610" height="407" /></a>With fertility rates falling and life expectancy on the rise, the world’s population is aging rapidly. And though increasing longevity can be considered a triumph of development, for Latin America and the Caribbean, this rapid aging presents a serious challenge: the population is not financially prepared to support itself during old age.

According to the <a href="http://www.iadb.org">Inter-American Development Bank</a>’s (IDB’s) book <a href="http://publications.iadb.org/handle/11319/462?locale-attribute=en">Better Pensions, Better Jobs</a>, by the year 2050 there will be three times as many people over the age of 65 as there are today in the region. However, if trends continue, by this date only one in two seniors will have saved for a pension. This means that about 130 million workers are not saving for their pension.

In response, several countries have taken efforts towards increasing pension coverage to lower-income and vulnerable segments through non-contributory pension schemes. From 1990 to 2013, 13 countries in the region implemented programs aimed at expanding non-contributory pensions. Still, even those that receive pensions are finding their value, generally less than US$10 per day, insufficient to cover their basic needs. This means that current and future generations of seniors will have to rely on alternative sources of income to complement their pensions.

Now when it comes to contributory pension schemes, despite significant structural pension reforms during the early 1990’s, the level of contributions has not altered much. This is particularly true among people operating in the informal sector, in which less than two out of every ten independent workers are saving towards a pension. And if we consider that 47 percent of the region’s active population is informal, and that among the lowest-income quintile this figure climbs to 74 percent, one can grasp just how vulnerable this segment is to entering or returning to a state of poverty during old age.

For over 20 years the IDB’s Multilateral Investment Fund (MIF) has been committed to supporting economic growth and poverty reduction in the region through private sector-led development projects. In recent years the MIF has executed regional technical cooperation programs such as <a href="http://www.pro-savings.org">Prosavings</a> and <a href="http://www.remittancesandsavings.org">Remittances and Savings</a> in order to increase the access and use of adapted savings products that are tailored to the needs of the lower-income population in several countries throughout the region.

The MIF has also sought to promote a goal-oriented approach to savings in some of its projects, mainly through commitment savings products. These types of products allow clients to establish a savings goal and fix a regular savings amount that aligns with the client’s income reality and can be achieved in a set period of time. Several observations on commitment savings products point towards their capacity to reduce vulnerability and engage clients in financial planning. Similarly, we at the MIF believe that through further innovation, commitment savings can serve as the basis for adapted retirement savings products. Thus, the MIF is currently exploring new ways to further expand long-term savings among informal sector workers that can be used to support them during old age.

Be sure to follow new developments in this field during the course of the year <a href="http://www.fomin.org">here</a>.

Image credit: <a href="https://www.flickr.com/photos/worldbank/4680565800/in/set-72157601463875207" target="_blank" rel="noopener">Charlotte Kesl / World Bank</a>

Have you read?

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2015/01/05/five-lessons-for-building-savings-in-latin-american-microfinance/">Five Lessons for Building Savings in Latin American Microfinance</a>

Aging in Latin America and the Caribbean: Challenge Meets Opportunity

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.

&gt; Posted by Nelly Agyemang-Gyamfi, Program Coordinator, CFI

<img class="aligncenter wp-image-18030" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/04/hbs_yes.png" alt="" width="620" height="374" />On the 6th of April, 68 financial inclusion stakeholders from 23 countries across the globe arrived in (a thankfully snowless) Boston to commence the 10th annual <a href="http://www.centerforfinancialinclusion.org/collaborators-a-sponsors/harvard-business-school-accion">HBS-Accion Program on Strategic Leadership in Inclusive Finance</a>. Over the past decade, the deeply immersive, week-long program has trained over 660 high-level executives from more than 250 organizations spanning 90 countries. As in past years, this year’s program was held on the beautiful campus of the Harvard Business School and led by world-renowned HBS professors Michael Chu and V. Kasturi Rangan. As a Center for Financial Inclusion staff member who helped organize the course, I was privileged to take part, and I offer these reflections on what I saw and learned.

Participants were exposed to a wide range of issues pertinent to inclusive finance, from managing political uncertainty to impact investing and measurement. This year, reflecting the changing landscape of inclusive finance, the course included seven new sessions including cases on China’s <a href="http://english.creditease.cn/">CreditEase</a>, Massachusetts’ <a href="http://payforsuccess.org/">Pay-for-Success</a>, and Peru’s <a href="http://www.edyficar.com.pe/">Edyficar</a>.

To be an observer of all the happenings was exhilarating. Discussions were extremely lively with points and counterpoints that reflected the unique perspectives of the various industries represented – microfinance providers, technology companies, regulators, investors, and so forth. For me, one of the best parts was when lessons learned from cases that seemed far from financial inclusion were applied in tangible terms to the industry.

From my humble point of view, four of the main takeaways from the week were:
<ol>
 	<li>Make sure you are addressing your customers’ pain points. Do not just offer them products YOU think they need. In the session on mobile banking, for example, what Kenya’s population wanted was a way to transfer money to the rural areas to support their families. M-Pesa met this need and a study conducted showed that M-Pesa users were twice as likely to have had a bank account and be wealthier than non-users.</li>
 	<li>Addressing your customers’ pain points can lead to increased sustainability as your customer becomes your advocate. Such was the case with the Manila Water Company where members of the community showed up to a regulatory committee hearing to support the company’s request to increase its rates.</li>
 	<li>There is a need to boil down financial inclusion into a manageable piece for your organization. Decide on what you want to achieve and focus on it. Not every organization can effectively tackle all the dimensions of financial inclusion (e.g. offering not just savings, but also credit and insurance and so on). This was illustrated in the healthcare context through the <a href="http://en.wikipedia.org/wiki/Aravind_Eye_Hospital">Aravind Eye Hospital</a>. The hospital determined that their expertise in the fight against blindness in India was curing the problem as opposed to preventing it. Now, the hospital system has seen upwards of 32 million patients and conducted nearly 4 million cataract surgeries.</li>
 	<li>Once you decide what you want to achieve, do not be afraid to explore other avenues within that focus. Stretch your mission but do not drift from it. At the Aravind Eye Hospital, having decided that their expertise in the fight against blindness was providing cures, leaders decided to expand by offering optometry services in addition to cataract surgeries.</li>
</ol>
If you are interested in experiencing the HBS-Accion Program for yourself, look out for announcements about the 2016 application period which opens in November.

Have you read?

<a href="http://cfi-blog.org/2014/05/16/seventy-global-leaders-convene-for-hbs-accion-program-on-strategic-leadership-in-inclusive-finance/" target="_blank" rel="noopener">Seventy Global Leaders Convene for HBS-Accion Program on Strategic Leadership in Inclusive Finance</a>

<a href="http://cfi-blog.org/2010/04/08/1427/">Dispatch from Harvard Business School — Relating Social and Financial Value</a>

<a href="http://cfi-blog.org/2009/04/24/optimism-in-the-wake-of-crisis-a-week-at-hbs-accion-program/" target="_blank" rel="noopener">Optimism in the Wake of Crisis: A Week at the HBS-Accion Program</a>

&nbsp;

Celebrating 10 Years! Dispatch from the 2015 HBS-Accion Program on Strategic Leadership in Inclusive Finance

<a href="http://www.centerforfinancialinclusion.org/microscope"><img class="alignright wp-image-16543 size-medium" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/microscope.png?w=238" alt="" width="238" height="300" /></a>

The following post was <a href="http://mastercardcenter.org/insights/calling-countries-get-policies-right/" target="_blank" rel="noopener">originally published</a> on the MasterCard Center for Inclusive Growth blog.

Reaching full financial inclusion by 2020 will require supportive policies in every country around the globe. The Economist Intelligence Unit’s “<a href="http://www.centerforfinancialinclusion.org/microscope">Global Microscope on Financial Inclusion, 2014</a>” assesses the policy environment for financial inclusion in 55 countries. The Microscope examines 12 policy dimensions essential for creating an inclusion-friendly regulatory and institutional framework. The rigorous model incorporates input from hundreds of policy makers and participants in the financial sector and a review of existing policies and implementation. The resulting rankings represent the best readily available source for judging the state of financial inclusion policy around the world.

What’s surprising about the 2014 Microscope results is their wide range. Out of a possible 100 points, the top scorer (Peru) received 87 while the lowest (Haiti) earned only 16. If full inclusion requires good policies, it is disappointing to learn that the median score across all countries was a mediocre 46.

Why do some countries score so much better than others? The best-scoring countries, led by Peru, Colombia, and the Philippines, boast capable financial sector regulators who have exerted sustained effort over years. They issue, test, and revise their rules as the market evolves. Many of the worst-scoring countries (notably in the Middle East) have recently suffered political instability. However, in the vast middle group, regulators have worked on some aspects of financial inclusion policy leaving major gaps in others. Most countries have the regulatory basics down – like prudential supervision and regulation of deposit-taking – but fewer have mastered areas important for reaching lower-income customers, especially electronic payments, supervising smaller financial service providers, and protecting consumers.

When new <a href="http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTFINRES/EXTGLOBALFIN/0,,contentMDK:23147627~pagePK:64168176~piPK:64168140~theSitePK:8519639,00.html">Global Findex</a> results come out this month, we will learn more about how good policies contribute to progress toward inclusion. And in the next few years we hope to see advances, especially in the biggest countries covered in the Microscope – China, India, Indonesia, Brazil, Pakistan, Nigeria, and Bangladesh. These giants’ policies are better than average, reflecting their capability as large economies and their priorities as high population countries. But not by much. Average score? 51.

Have you read?

<a href="http://cfi-blog.org/2014/11/10/the-global-microscope-2014-results-and-surprises/" target="_blank" rel="noopener">The 'Global Microscope 2014': Results and Surprises</a>

<a href="http://cfi-blog.org/2014/09/25/the-political-economy-of-financial-inclusion-policy/" target="_blank" rel="noopener">The Political Economy of Financial Inclusion Policy</a>

<a href="http://cfi-blog.org/2014/12/12/asias-top-country-on-financial-inclusion-policy-the-philippines-strengthens-its-microfinance-market/" target="_blank" rel="noopener">Asia's Top Country on Financial Inclusion Policy, the Philippines, Strengthens Its Microfinance Market</a>

&nbsp;

Calling All Countries to Get Policies Right

[caption id="attachment_17447" align="alignright" width="125"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/demographic_infographic_web.jpg"><img class="wp-image-17447" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/demographic_infographic_web.jpg?w=297" alt="" width="125" height="431" /></a> (click to enlarge)[/caption]

&gt; Posted by Sonja Kelly, Fellow, CFI

Since the release of our paper, <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/aging-financial-inclusion">Aging and Financial Inclusion: An Opportunity</a>, I have been considering the challenge of market segmentation using the life course. This is not unexplored terrain at the Center for Financial Inclusion. Beth Rhyne articulated a life course approach during our <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/demographic-window">Looking Through the Demographic Window project</a>, which we have captured in the infographic embedded at right. I have been hearing from microfinance institutions that some efforts are underway to segment clients by their life stage, though this remains a relatively untouched area in the industry. For a great example of segmentation, however, I only had to look to the spam filter on my email.

Most of the emails that get caught in my spam filter are about body image. I receive messages advertising dieting pills, on the one quick fix to reduce belly fat (you won’t believe which celebrities use it!), and how to get toned abs within a week. This makes sense—I work out regularly, and I (try to) watch what I eat. The emails are tailored to me.

In chatting with my colleagues, I find that they also receive targeted emails. Some women in our office who are older than me receive emails for walk-in tubs. Singles get emails that point them to dating websites. Some of the younger men in our office get emails that refer to “satisfying” their girlfriends. And the spam filters of older men in our office collect emails about (ahem) performance-enhancing pills.

These are, of course, gross generalizations—the life course cannot possibly be reduced to dieting, walk-in tubs, and bedroom performance. But why is it that the email caught in my spam filter is more skilled at customer segmentation using the life course than my financial institution’s product line? Even more than being successful at segmenting a potential client base, spam marketers are successful at moving this potential client base to action, according to <a href="http://blog.mailchimp.com/what-good-marketers-can-learn-from-v1agr-spammers/">MailChimp</a>. They have a simple message and a call to action. Their “click rates,” or the rate at which people click on links, are higher than average.

What if financial institutions were able to take a page out of a spammer’s playbook and use it to get people in their 20s to participate in long-term savings for the future, or to save for emergencies in their 40s so that they have a cushion when their spouse gets sick, or to put aside some money for insurance in their 50s so that if their house is decimated it does not wipe out their only major asset?

Data on customer age is something that financial institutions already have given “know your customer” rules within institutions. In an online global survey of providers we conducted last year, we learned that 81 percent of financial institutions do keep track of the ages of their customers over time. In addition, 63 percent of the same sample reported that they store this information within their MIS or IT system. However, most of these institutions are not using age as a way to create suitable products for clients.

Age-appropriate products are something that customers do want. Monique Cohen related a story at <a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">our meeting last week</a> in New York about a group of middle-aged women from SEWA, a microfinance institution in India. These women approached the institution’s leadership and asked for life insurance on their husbands, recognizing that their husbands were older and that they would likely have a significant number of years without them. When the microfinance institution replied by telling them they would not be able to afford the product, they replied with, “Create the product, and let us worry about whether we can afford it.” The institution created the product, and the women bought it.

In the last decade there has been major growth in services for youth. We’ve seen, for example, credit for school fees, training-linked credit to teach entrepreneurship to young people, and savings accounts to teach younger people the value of putting away funds for the future. These examples—of middle-aged women in India and products built for youth—are exceptions in terms of age-based customer segmentation.

While customer segmentation using age is not very common, the industry has segmented customers by income brackets for years. Lower-income customers, for example, are given accounts with fewer features and add-on services. Higher-income customers are given accounts that allow them additional services—more face time, higher interest rates on savings, higher overdraft protection.

Most financial institutions have a long way to go to be able to offer appropriately tailored financial services for each stage in the life course. And I’m not totally serious about taking lessons from spammers. But, given the age-based messages that people already get, the financial system needs to catch up—and indeed it can capitalize on this opportunity, recognizing that people have different financial needs at different life stages.

Have you read?

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/" target="_blank" rel="noopener">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

Lessons on Age-Based Client Segmentation… From My Spam Filter

February 12, 10:00 - 11:00 AM ET, Online

Demographic analysis reveals the rapid aging of the population in low and middle income countries. In many countries, over-65 is the fastest growing population age bracket. This unprecedented shift will require revision in how we organize societies to ensure that the needs of older people are met; and financial services is an important arena in which adjustments are needed. This webinar will feature key findings and new data from a year of research—both primary and secondary source—funded by the MetLife Foundation and executed by CFI and HelpAge International. It follows the February 10th release of an in-depth report of the issue. The research has a focus on Latin America, but draws on and offers lessons for middle income countries around the world. The research also follows up the findings from the CFI’s paper, Looking through the Demographic Window, and HelpAge International’s Global AgeWatch Index Insight Report. Join the webinar to hear from Beth Rhyne, the Managing Director of The Center for Financial Inclusion, and Eppu Mikkonen-Jeanneret, the Head of Policy for the UK-based organization HelpAge International on this important issue. Register<a href="https://attendee.gotowebinar.com/register/5150999035049814530"> here</a>.

&nbsp;

&nbsp;