<h1>Why Consumer Rights and Responsibilities?</h1>
The <a href="https://www.smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">Client Protection Principles</a> provide a common framework for financial service providers (FSPs), policymakers, and clients to better understand and discuss consumer protection issues. While much of the Center for Financial Inclusion’s (CFI) work with the financial inclusion industry has focused on providers and regulators, there is a third crucial constituency: clients.

Client awareness and capability is a critical component of effective financial consumer protection. Clients have the right to demand fair treatment and lodge complaints with government authorities, but these rights mean little if they don’t know what constitutes lawful treatment or how to access complaints channels. Similarly, clients play a role in protecting themselves by practicing behaviors to maintain their privacy and safety. While FSPs can institute protective processes and regulators can craft policy safeguards, improving client awareness of their rights and responsibilities helps consumers play their part to support a sustainable financial system.

This report provides lessons learned from initiatives in Ghana, Uganda, and Benin to raise consumer protection awareness among clients through multimedia campaigns, digital tools and other outreach strategies. It covers country-specific consumer protection issues and the individualized campaigns to address these issues. We also offer five key takeaways to help inform future client protection and empowerment awareness building activities.

Clients Deserve to Know: Using Radio to Educate and Empower Consumers in Africa

Digital credit has emerged as a new and profitable service offering that has great potential to increase financial inclusion. Yet, if not carefully managed, digital credit also runs the risk of excluding, over-charging, and over-extending customers.

Seven years since the first digital credit product launched, the market in Kenya has grown exponentially and hosts a diverse ecosystem with more than 50 supply-side actors. The phenomenal expansion of digital credit in Kenya serves as a test-bed for the product and offers lessons for digital credit suppliers and regulators around the world.

SPTF and the <a href="/about/what-we-do/the-smart-campaign">Smart Campaign</a> commissioned MicroSave Consulting (MSC) to study the dynamics of the digital credit sector on both demand and supply sides. The output of the study was a comprehensive report on the current state of digital credit in Kenya. It looked at the evolving challenges in digital credit and made recommendations for a more responsible and customer-centric delivery of the product.

With participation from Smart Campaign Senior Director <a href="/bio/alexandra-rizzi">Alexandra Rizzi</a>, this webinar will:
<ul>
 	<li>Help participants understand the digital credit landscape in Kenya</li>
 	<li>Assess the progress and challenges around making digital credit responsible and inclusive</li>
 	<li>Recommend steps towards a more responsible delivery of digital credit</li>
</ul>
We hope you can join us!

<img class="alignnone size-large wp-image-36766" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2019/09/MSC_Webinar-1-1024x683.jpg" alt="Infographic describing webinar schedule" width="1024" height="683" />

Webinar: Making Digital Credit Truly Responsible

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

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

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

Client Voices: Rwandans Speak on Digital Financial Services

In this session, we spoke with our incoming CFI Research Fellows, Dan Kleinbaum and Larry Reed, who will be exploring research questions over the coming months that we think are especially important to the financial inclusion space today.
<ul>
 	<li>How do financial institutions use mass APIs, open APIs, custom APIs and bespoke partnerships to partner effectively with fintechs to reach the underserved?</li>
 	<li>How can banks and other financial institutions provide a set of accounts and services for G2P recipients in a profitable way?</li>
</ul>

Webinar: Meet the 2019 CFI Research Fellows

The Smart Campaign is participating in the 2018 Microfinance Centre European Microfinance Week Annual Conference 2018 in Bilbao, Spain. Check out Leah Wardle, accreditation manager, The Smart Campaign, is speaking on the panel below:

Maintaining the Social Promise of Financial Inclusion in a Competitive Marketplace

October 4th, 4:15pm

Speakers:
<ul>
 	<li>Leah Wardle, <a href="https://content.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign/">The Smart Campaign</a></li>
 	<li>Cameron Goldie-Scot, Musoni Systems</li>
 	<li style="text-align: left;">Joris Crisa, MicroFinanza Rating</li>
</ul>
Description: How can existing microfinance providers best compete in the digital era? How will the social promise of microfinance continue to thrive as the industry digitizes? This workshop will explore the important roles for traditional players in the digital area—namely, to stay relevant by reaching financially excluded people with a mix of “tech and touch.” Participants will discuss how to blend customer-centricity with technology in order to reach excluded clients and maintain a strong market position.

&nbsp;

&nbsp;

&nbsp;

MCF-EMN Annual Conference

&gt; Posted by Maha Khan and Marissa Dean, <a href="http://www.financedigitalafrica.org/about/">FiDA Partnership</a>

Big data is a big buzzword in the digital finance community. As more people weave digital technology into their lives, financial service providers (FSPs) can use the data generated from these digital interactions (e.g., mobile money transactions, SMS messages, mobile app activity, etc.) to create more tailored financial products and to attract new customers previously excluded from formal financial services. <a href="https://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/1030-accelerating-financial-inclusion-with-new-data">Accelerating Financial Inclusion with New Data</a>, a joint report from the Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance (IIF), discusses the types of data sources and tools that FSPs can use to better understand and serve low-income and hard-to-reach clients.

To understand how FSPs—ranging from banks and mobile network operators (MNOs) to Fintechs—use (or don’t use) big data analytics, the Mastercard Foundation <a href="http://www.financedigitalafrica.org/about/">Partnership for Finance in a Digital Africa</a> (FiDA) conducted <a href="http://www.financedigitalafrica.org/research/2018/03/can-big-data-shape-financial-services-in-east-africa/">research in East Africa</a> in late 2017. Interviews with a range of organizations suggest that these companies have been relying on analytics of traditional or big datasets, but there is a slow (but steady) uptake of big data and analytics. As a result, there has been an expansion of products and services leveraging alternative data sources. According to the interviews, four factors constrain rapid growth in this sector:
<ul>
 	<li>Lenders have a limited use case for third-party data</li>
 	<li>Organizations are pursuing partnership models in lieu of transactional relationships</li>
 	<li>Most of the organizations interviewed are still testing, refining and experimenting with which datasets are most predictive, as well as validating their analytical models</li>
 	<li>Most banks and fintechs believe a business case that is strategy- and leadership-led is essential to the uptake of big data and analytics.</li>
</ul>
Nevertheless, there are companies in sub-Saharan Africa that are leveraging big data analytics to grant small amounts of credit to customers via a mobile wallet or airtime account. For instance, M-Shwari, a combined savings and loan product, was one of the first to experiment with developing algorithms based on mobile behavior data in order to offer low-value credit to customers in 2013. In December 2017, M-Shwari announced that they will segment customers who repay their loans on time and have positive savings behavior.

However, FiDA’s interviews with financial services providers found that <a href="http://www.financedigitalafrica.org/blog/2018/06/virtue-and-value-in-mobile-operator-big-data/">mobile behavior data has significant limitations</a> as the data does not give a holistic picture of an individual’s spending or device behavior. But more specifically, MNOs don’t share behavior data freely, and for good reasons. Their perception of regulation on data sharing is that MNOs cannot give individualized information to third parties without consent from the customer and the regulator. Additionally, and perhaps most importantly, MNOs believe that selling raw customer data would erode their hard earned customer trust.

Moreover, as algorithms based on behavioral data become more prevalent, providers will find themselves constantly playing a game of cat and mouse with fraudsters who want to take advantage of the all-digital nature of these products in order to scale successful fraud schemes to high volume. This is the flip side of big data, which is normally thought of as a way to scale successful products to high volume.

[caption id="attachment_25859" align="alignright" width="317"]<img class=" wp-image-25859 alignright" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/harvesting-inc-mapped-cropland-e1534776447996.png" alt="harvesting-inc-mapped-cropland" width="317" height="254" /> Cropland in Maharashtra, India, mapped from satellite imagery. (Credit: Harvesting Inc.)[/caption]

The absence of a marketplace to profitably exchange big data—for example, between fintechs and FSPs—could indicate that it’s too early for big data exchanges or transactions. Nevertheless, progress will come gradually, and partnerships among mobile network operators, banks, and fintechs will be crucial to success. At the end of the day, organizations will need to weigh the value of being a pioneer against the current market challenges. In fact, FiDA recently published a <a href="http://www.financedigitalafrica.org/research/2018/07/launching-into-space-using-satellite-imagery-in-financial-services/">case study on satellite imagery in financial services</a>, and will be publishing a second one (on psychometric assessments in lending) that presents the journeys of fintechs that have integrated big data in their business and product offerings, and how they have partnered with financial institutions to implement these analytics. FiDA is excited to see CFI and IIF explore the potential of big data and analytics in financial services and will keenly watch this space.

&nbsp;

Why Big Data Is a Big Can of Worms

This post was originally published on the <a href="http://www.cgap.org/blog/financial-inclusion-glass-half-empty-or-half-full?utm_source=CGAP+Reader+%2808.06.18%29&amp;utm_campaign=CGAP+Reader+%2808.06.18%29&amp;utm_medium=email">CGAP Blog</a> and is re-published here with permission.

We can choose to see a glass as half empty or half full. And our perspective often has a lot to do with our initial assumptions.

Beth Rhyne and Sonja Kelly of the Center for Financial Inclusion (CFI) have generated discussion in the financial inclusion community with their paper exploring the latest <a href="https://globalfindex.worldbank.org/">Findex </a>data, titled “<a href="https://www.centerforfinancialinclusion.org/financial-inclusion-hype-vs-reality-deconstructing-the-2017-findex-results-2">Financial Inclusion Hype Versus Reality</a>.” In the paper, Rhyne and Kelly express concern that the rate of access to new accounts slowed between 2014 and 2017 and that the usage gap for those accounts appears to be growing. They also highlight stagnation in the growth of credit and a decline in savings, but an increase in the use of payments. While I have very little to disagree with in their paper, I think the financial inclusion community has a lot more cause for optimism than it makes out.

Let me state up front that it has never been my expectation that we would reach full financial inclusion by 2020. Or even that 79 percent of adults in developing countries would have an account by 2020, a prediction made by Rhyne and Kelly in their previous paper, “<a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/by-the-numbers">By the Numbers: Benchmarking Progress Toward Financial Inclusion</a>,” published after the release of the last Findex data set in 2015. The World Bank’s access goal is aspirational and meant to inspire action, which it clearly has. But as Rhyne and Kelly quite correctly point out, accounts are largely meaningless if people are not using them. The point of the Findex data is to help us measure progress against the overall access goal and to understand the levers that will take us to the next level. And there is plenty of food for thought on what the key levers might be in this year’s Findex.

Over the course of two blogs, I would like to offer a few reasons why I believe we have done better than Beth and Sonja think, starting with access.

While I would describe this year’s CFI report as overly pessimistic, I would say the 2015 paper was overly optimistic. The 2015 report assumed straight line increases in access, based on the rate of growth achieved between only two data points: the 2011 and 2014 Findex. While the report acknowledges that this was done to present a scenario for discussion, the net effect was to create an overly optimistic strawman. It seems obvious in hindsight that the pace of change achieved between 2011 and 2014 was not likely to be repeated. Why? Because progress doesn’t move in straight lines. New gains at the margin will be harder to reach than previous gains. This holds true at the country level and for important segments within countries.

At the country level, there is an implicit assumption in “By the Numbers” that all countries have equivalent regulations and providers willing to serve the poor. But all regulatory frameworks are not created equal, and not every provider has the same ability to serve the poor. One has only to look at the data for Sub-Saharan Africa to see this at work. Countries like Kenya, Ghana, Uganda, Tanzania and the West African Economic and Monetary Union (WAEMU) region put enabling regulatory frameworks in place and on average enjoyed a 2.5x increase in the rate of account access between 2011 and 2017, far outstripping the 43 percent increase for developing markets as a whole.

<img class=" size-full wp-image-25811 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/graph-greta-bull-cgap.png" alt="graph Greta Bull CGAP" width="624" height="245" />

Africa also demonstrates that providers and regulations matter. The continent is full of mobile network operators (MNOs) trying to mimic the success of M-PESA in Kenya. Although this did not happen overnight, MNOs have by now clearly demonstrated that they are making a measurable difference in multiple African markets. In the 2014 Findex, there were only 11 countries globally that had more than a 5 percentage point differential between access to any account (including mobile money) and access to a financial institution account only. And the gap between these two numbers in Sub-Saharan Africa was 5 percentage points. By this year’s Findex, this had grown to 28 markets, all but two of which were in Sub-Saharan Africa, and the gap grew to 10 percentage points. This differential is almost entirely attributable to the work of MNOs. According to GSMA's 2017 <a href="https://www.gsma.com/mobilefordevelopment/sotir/">State of the Industry Report on Mobile Money</a>, MNOs have added 338 million accounts in Sub-Saharan Africa, of which 122 million are active (this is corroborated by the Findex estimate of 124 million active mobile money accounts in the region). It is safe to say that MNOs have been responsible for adding the better part of 141 million accounts in Sub-Saharan Africa since 2011, representing 10 percent of new accounts globally. Given that Findex counts only active mobile money accounts, this quite significantly understates the level of new account addition in Africa compared to other regions.

But restrictive regulatory and competitive frameworks meant MNOs did not have the same opportunity everywhere. Nigeria, the continent’s largest market, has been a subject of great interest from MNOs for the past 10 years. But Nigeria has a regulatory framework that restricts the ability of MNOs to operate independently of banks, and this has had an impact on access. In contrast to the 2.5x growth in account access in the cohort of countries above, Nigeria experienced growth of only 33 percent in access to accounts from 2011 to 2017, and there is no appreciable difference between access to a financial institution account and access to any account. In the 10-country cohort, the average delta between any account and a financial institution account had grown from zero in 2011 to 21 percentage points in 2017. What’s more, the increasingly visible success of mobile money encouraged banks to expand their service offerings to the mass market. In these 10 countries, access to accounts in a financial institution grew by 52 percent, outperforming Nigeria, which grew financial institution accounts by only 30 percent. Providers and regulations clearly matter.

An additional challenge as we add accounts at the margin is delivering financial services to difficult segments. Women and rural households are particularly challenging, albeit for different reasons: women because of cultural and legal norms inhibiting access, and rural households because they are difficult and expensive for commercial providers to reach.

The gender gap remains stubbornly persistent at 9 percent in developing countries and is particularly challenging in the Middle East and North Africa region and parts of Sub-Saharan Africa and South Asia. The World Bank calculates that, of the remaining 1.7 billion unbanked, nearly half come from just seven countries: Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan. Bangladesh, Pakistan and Nigeria all have substantial gender gaps: 29, 28 and 24 percentage points, respectively. If in these three markets alone, access for women had grown at a rate equivalent to that experienced by men, the access numbers for 2017 would have increased by nearly 50 million, representing a 9.5 percent boost on the 515 million new account holders added in the three previous years.

For rural populations, the picture is a bit brighter. Access for rural households grew from 44 percent to 66 percent globally from 2011 to 2017, largely driven by rapid change in China and India. But Africa has maintained a stubborn 4 percent gap between access for the rural population and access for the population at large. If we could lift the roughly 61 percent of Africans who live in rural areas up to just the regional average, it would add another 20 million new accounts. If we brought them to the same level as urban Africans, it would add roughly 50 million new accounts.

Regulatory change that opens markets to increased competition and a sustained focus on equal inclusion for women and rural communities would do a lot to move us in the direction of full financial access.

For me, the glass is still half full. Meaningful financial inclusion is hard, involving a complex interplay of factors: regulatory change, viable business models and significant behavior change by new account holders. And for certain segments, cultural and legal norms and distance represent significant barriers. We have to be realistic about how long this will take. When I read the CFI report, it took me back to a time when everyone was disappointed that a new M-PESA had not emerged overnight. It didn’t. But we now have a whole slew of providers that are beginning to look like M-PESA did five years ago, sometimes in surprising places. Progress happens, just not according to our wishful time frames. On access, we have already harvested the low-hanging fruit — now the hard work truly begins.

What do you think? Do the Findex data present an overly rosy picture of the state of financial inclusion, or should we remain optimistic? Leave your comments below. 

&nbsp;

&nbsp;

Financial Inclusion: Is the Glass Half Empty or Half Full? (Part 1)

Together, the mobile industry and the financial services community have the power, and the opportunity, to put billions of people on the path to financial inclusion. Steve Polsky of Juvo talks here about getting the the how, the why and the when in place.

&gt; Posted by Steve Polsky, Founder and CEO, Juvo

[caption id="attachment_24443" align="alignright" width="490"]<img class="wp-image-24443 size-large" title="Juvo" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/juvo-be-bold-for-change.png?w=490" alt="Juvo Be Bold for Change Report Cover" width="490" height="276" /> During the Mobile World Congress Americas in September 2017, Juvo held its inaugural Be Bold for a Change event with mobile and fintech leaders in San Francisco. Photo credit: Juvo[/caption]

Thanks to World Bank, we all know the numbers: two billion unbanked people around the world, excluded from formal financial services. Thanks to the United Nations, we have a global rallying cry with the Sustainable Development Goal and that financial inclusion is the enabler for seven of the 17 Sustainable Development Goals. And thanks to the Center for Financial Inclusion at Accion’s initiative <a href="http://financialinclusionweek.org/">Financial Inclusion Week</a>, we also know that dozens of companies are committed to improving the lives of billions of people around the world.

But in the same way that no man (or company) is an island, no single industry can financially include billions of people. Financial institutions have the technology and services to change the way people borrow, save, insure, send and lend money in emerging markets; however, even an industry of the scale of the financial system doesn’t have the reach to change the world as quickly as the UN Sustainable Development Goals demand.

The only industry with that reach is the mobile industry. And as mobile operators around the world begin to embrace the maxim “doing good is good for business,” likewise they’re becoming cognizant that while they may have the reach, they may not have the technology and services to drive sustainable financial inclusion.



In September, <a href="https://juvo.com/">Juvo</a>, redoubled its efforts to bring mobile and fintech together for good. We held our inaugural event:  Be Bold for A Change  focused on How Fintech and Mobile Can Deliver Financial Inclusion for All. I joined  <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fronsuber%2F">Ron Suber</a>, the “Mayor of Fintech”, <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fjamesmcelvanna%2F">James McElvanna,</a> VP of Product at Cable &amp; Wireless  and Chris Berry, co-author of McKinsey’s<a href="https://medium.com/r/?url=https%3A%2F%2Fwww.mckinsey.com%2Fglobal-themes%2Femployment-and-growth%2Fhow-digital-finance-could-boost-growth-in-emerging-economies"> Digital finance for all: Powering inclusive growth in emerging economies</a>  to discuss how, why and when telcos and financial services companies should work together. Three things shone through:
<h3>1) The How: Meeting Customers Where They Are</h3>
Around 80 percent of all mobile users globally use prepaid services. At the same time, only one in 10 unbanked people with a mobile phone are using mobile money services.

One of the biggest obstacles to financial inclusion is building trust with the customer. Some individuals don’t understand or trust financial products. They need education that puts mobile services into context and explain how they work. This is best achieved with a stepping stone approach, something we are doing with Cable &amp; Wireless in the Caribbean.

James McElvanna explained that a few years ago, Cable &amp; Wireless decided it wanted to build a better picture of these customers. James and his colleagues started by “meeting customers where they are” with tangible benefits, like helping when they’ve run out of airtime. In that moment, extending a small airtime credit loan, with zero fees and interest, helps the customer fix an immediate problem. It lays the foundation for a trusting relationship, which is deepened as more loans are taken and repaid.

And it’s the start of a new story, the creation of a credit history. In a short time, Cable &amp; Wireless and Juvo can build financial identities for financially excluded customers. Starting with simple credit extensions, we can understand which customers will make reliable clients for more sophisticated financial services offered by financial institutions. And, critically, it can take them on that journey leveraging the trust they’ve built together.
<h3>2) The Why: Enabling Financial Resilience</h3>
[caption id="attachment_24445" align="alignright" width="273"]<img class=" wp-image-24445" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/juvo-hurricane-levels.jpg" alt="Hurricane storm surge elevations pole" width="273" height="416" /> Hurricane Irma made landfall in Anguilla as a Category 5 hurricane on September 5, 2017. Photo credit: Mr.TinDC (CC BY-NC-ND 2.0)[/caption]

Financial resilience helps people meet unexpected financial demands and mitigate financial shocks. It’s one important difference between the haves and the have nots. With access to more sophisticated financial services, the unbanked can build this resilience — securely saving, with the ability to move money and have access to credit when it’s needed.

Mobile operators provide the channel to reach these individuals when more traditional communication channels are unavailable. For example, during Hurricane Irma, Cable &amp; Wireless provided access to airtime loans via mobile to allow their customers to stay connected when catastrophe struck. Getting service — for up to a month of data and voice usage — was frictionless. Users didn’t have to visit a retailer or an agent, which would have been difficult or impossible at the time. As a result, borrowing spiked significantly and customers experienced resilience.

This is just the start. With a financial identity and a convenient channel that works in even the most dire circumstances, the opportunity to support financial resilience is a giant leap towards financial inclusion.
<h3>3) The When: The Time Is Right Now</h3>
Ron Suber pointed to the 50-year innovation cycle, an interesting concept that has been observed for TV, cars, radio and now mobile devices. Fintech started in 1998 with PayPal. A decade ago, companies like Lending Club and Prosper gave people reasons to borrow and lend online. We’re now 17 years into the fintech innovation cycle, and we’re heading into the <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.crowdfundinsider.com%2F2017%2F10%2F123244-ron-suber-golden-age-fintech%2F">“golden years.”</a> Banks, fintechs and telcos are all figuring out how to more effectively engage with customers–for growth, retention, higher customer lifetime value and social good. The major opportunity, Ron believes, is that fintech can provide access to sophisticated banking services for the underbanked with convenience, and at a far lower cost.

Incumbents are now partnering with tech companies in this new era because of global needs. Ron predicts that a whole new group of companies passionately focused on financial inclusion will emerge in the near future, some with the capability to bridge industries and make them more than the sum of their parts. This, he argues, could not have happened three, five or 10 years ago. It’s a unique moment in time — a moment when industries can come together like never before.

[caption id="attachment_24447" align="aligncenter" width="490"]<img class="size-large wp-image-24447" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/juvo-steve-ron-james.jpg?w=490" alt="Steve Polsky, Ron Suber, James McElvanna at Be Bold for Change 2017." width="490" height="326" /> Steve Polsky, Ron Suber, James McElvanna at Be Bold for Change 2017. Photo credit: Juvo[/caption]

The mobile industry has demonstrated the reach to change the lives of billions of people around the world. But it’s only by working with the financial services community that the industry can contribute to achievement of UN’s Sustainable Development Goals through financial inclusion. Our two industries have the power, and the opportunity, to put billions of people on the path to financial inclusion. With the how, the why and the when in place, it’s time to be bold for change.

Juvo is a San Francisco-based fintech company working to enable hundreds of millions of consumers around the world to build financial identities, starting with their everyday use of their prepaid mobile phone. Republished with permission.

A Team Sport — Three Reasons Why Mobile Telcos and Financial Institutions Will Drive Financial Inclusion Together

Very small instant consumer loans have ballooned from 11 deployments in 2011, to 52 in 2016, with a particular concentration in East Africa. In just a few years, through models such as M-Shwari, M-Pawa, Tala and Airtel Money, tens of millions of people have borrowed tiny amounts over their phones. These services represent an enormous increase in formal financial inclusion. They address a fundamental consumer need previously unavailable to lower income people from the formal financial system: the need for very short term money management tools to cope with income and expense volatility. While they are in many ways a boon, they also contain, and in some cases heighten, risks for their users.

This Brief enumerates and discusses emerging consumer risks posed by these products, using the Client Protection Principles as an organizing framework. We hope this lens will assist the mobile financial sector to articulate and build a consensus about responsible practices in mobile finance.

&nbsp;

Tiny Loans Big Questions: Client Protection in Mobile Consumer Credit

Malacci Ohrt

Alexandra (Alex) Rizzi

Alex Kessler

Jacqueline Foelster

Amin Khairy

Elisabeth Rhyne

Eric Noggle

Larry Reed

Dan Kleinbaum

Maha Khan

Greta Bull

Isabelle Barrès

Tess Johnson

Leon Perlman

Sonja Kelly

Andrew Fixler

Benin

Ghana

Uganda

Kenya

Sub-Saharan Africa

Rwanda

Greece

Jordan

Lebanon

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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.

Despite <a href="https://www.nytimes.com/2017/05/09/opinion/in-kenya-phones-replace-bank-tellers.html?_r=0">the excitement</a> about moving mobile financial services (MFS) to a richer smartphone-based environment, we still have a long way to go before many customers at the base of the pyramid can reap the full benefits of these technologies. <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/763">CFI Fellow Leon Perlman</a> diligently identified many of the key obstacles for more inclusive MFS, including the lack of infrastructure to support the higher-speed mobile connectivity critical for MFS transactions; the plethora of substandard and/or cost-prohibitive smartphones in developing countries; and pervasive security vulnerabilities that threaten MFS transactions, to name a few.

There are some bright spots in <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/851-technology-inequality-opportunities-and-challenges-for-mobile-fianncial-services">Leon’s report</a>, however, and we think it’s important to acknowledge them.

Per GSMA’s 2017 <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/03/GSMA_State-of-the-Industry-Report-on-Mobile-Money_2016-1.pdf">State of the Industry Report on Mobile Money</a>, MFS are now available in two thirds of low- and middle-income countries, and in Sub-Saharan Africa, the number of mobile money accounts has already far surpassed the total number of traditional bank accounts, according to the <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Knowledge/AEB_Vol_6_Issue_5_2015_The_Banking_System_in_Africa__Main_Facts_and_Challenges-10_2015.pdf">African Development Bank</a>. We’ve already featured a number of mobile money success stories on this blog, including <a href="https://cfi-blog.org/tag/m-pesa/">M-PESA</a>, <a href="https://cfi-blog.org/tag/easypaisa/">Easypaisa</a>, <a href="https://cfi-blog.org/tag/bkash/">bKash</a>, and <a href="https://cfi-blog.org/tag/ecocash/">EcoCash</a>. However, Leon highlights several innovations and trends that promise to increase access to and quality of MFS for customers at the base of the pyramid. Specifically, this includes (but is not limited to):
<ul>
 	<li>

[caption id="attachment_23644" align="alignright" width="150"]<img class="wp-image-23644 size-thumbnail" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/05/thin-sim-cropped1.png?w=150" alt="Thin SIM example" width="150" height="143" /> A thin SIM can be placed over the SIM from another mobile network operator. Taisys manufactures thin SIMs for Equitel. Photo credit: Taisys.[/caption]

<a href="http://www.economist.com/blogs/baobab/2014/09/disrupting-mobile-banking-kenya">Thin SIMs</a>. Thin SIMs, also known as sticky SIMs or SIM overlay technology, are super thin SIM cards that sit on top of an existing SIM card and allow users to switch between mobile networks. With thin SIMs, users can choose which network they use, which spurs competition on price and quality. Thin SIMs have already been deployed throughout Kenya (<a href="http://www.itweb.co.za/index.php?option=com_content&amp;view=article&amp;id=144828">by Equity Bank</a>), Singapore (<a href="http://www.hardwarezone.com.sg/news/view.php?id=11751">by telco M1</a> and others), India (<a href="http://economictimes.indiatimes.com/tech/software/yes-bank-to-launch-sim-sleeve-payments-solution-for-feature-phones/articleshow/51806638.cms">by YES Bank</a>), and China (by <a href="http://www.cgap.org/blog/china-%E2%80%93-future-leader-branchless-banking-poor">Shanghai F-Road Commercial Services</a>, Wujin Rural Commercial Bank, and Quanzhou City Commercial Bank).</li>
 	<li><a href="http://www.androidauthority.com/how-it-works-systems-on-a-chip-soc-93587/">System-on-a-chip (SOC) technology</a>. SOC technology incorporates a number of mobile phone components—the central processing unit (CPU), memory, the graphic processing unit, power management circuits, wireless radios, and even more—onto a single silicon chip. This not only saves physical space, but also battery life—it takes less power to run a SOC than all the individual components it replaces—and battery life is crucial for conducting lengthy transactions on MFS apps.</li>
 	<li>The <a href="https://www.nytimes.com/2016/12/22/technology/apple-nokia-patent-smartphone.html">expiration of patents</a> for legacy mobile phone brands. Patents, even for the most basic mobile phone technologies, have been estimated to add a minimum of 5 percent to total smartphone costs. The expiration of these patents reduces costs and allows newer manufacturers to add “smarter” features to feature phones, such as Bluetooth, HTML browsers, GPS, social networking app integration, and cameras.</li>
 	<li>The emergence of <a href="http://economictimes.indiatimes.com/news/industry/tech/hardware/oppo-vivo-gionee-gain-significant-market-share-at-the-cost-of-samsung-micromax-intex/articleshow/53549573.cms">new competitor brands</a>. Newer brands from Chinese and Indian phone manufacturers have gained a significant market share in many emerging markets at the expense of mainstream incumbents. These brands offer high-end features at affordable prices that are attractive to many consumers. Overall quality may not equal top brands, but it is continually improving.</li>
 	<li>

[caption id="attachment_23645" align="alignright" width="132"]<img class="wp-image-23645 size-medium" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/05/hybrid-smart-feature-phone.jpg?w=132" alt="Example hybrid smart feature phone" width="132" height="300" /> A new market segment of hybrid “smart feature phones” is emerging in developing countries. The Wellstec F18 smart feature phone shown here has 4G, 256 MB storage, a small 2.4 inch non-touch display and uses Android 6.0 OS. Photo credit: Leon Perlman.[/caption]

Hybrid smart feature phones. Smart-ish feature phones represent a middle ground between a feature phone and a smartphone, and have become popular in emerging markets because they are inexpensive. They typically have small non-touch low-resolution displays, small memory capacity, a keypad, ability to operate at 3G/4G connectivity, and support for the latest Android operating systems.</li>
 	<li>The <a href="http://www.itu.int/net/pressoffice/press_releases/2015/CM03.aspx#.WQoBZ2nyupo">global switch</a> from analog to digital broadcast television (also known as digital migration). The transition from analog to digital broadcast television will free up much-needed spectra at the <a href="http://www.gsma.com/spectrum/what-is-spectrum/">700 MHz and 800 MHz frequency bands</a> that can be reallocated to improve mobile broadband coverage crucial for MFS transactions in both rural and densely populated areas. These frequency ranges can provide greater coverage per mobile base station, and at lower capital cost, since fewer base stations are needed to provide lower frequency spectra relative to the current 900/1800/2100 MHz frequency ranges. <a href="http://www.gsma.com/spectrum/managing-spectrum/">Regulation</a> can be implemented to ensure that mobile network providers provide a minimum of reliable 3G coverage—which is often not a given in developing countries—as part of their universal service obligations.</li>
 	<li>The development of <a href="http://www.computerworld.com/article/3113028/mobile-security/how-it-works-iris-scanning-improves-smartphone-security.html">iris scanners</a> for biometric verification and authentication. Iris scanning, via the front-facing camera of a mobile device or a tablet, is much more accurate than a fingerprint, because the iris has over 200 unique points of comparison, relative to just 40 unique points of comparison for a finger. This technology has the potential for explosive growth in India, where <a href="https://uidai.gov.in/about-uidai/about-uidai.html">the Unique Identification Authority of India (UIDAI)</a> has already collected the biometric data of over 1 billion of its citizens as part of its <a href="http://www.latimes.com/world/la-fg-india-database-2017-story.html">Aadhaar scheme</a>. The UIDAI has had <a href="http://gadgets.ndtv.com/mobiles/news/infocus-to-launch-aadhaar-enabled-smartphone-with-iris-scanning-feature-1634085">conversations</a> with device manufacturers and operative system providers on how to embed iris scanning technology onto devices for the Aadhaar platform. Of course, with such sensitive data, companies, governments, and individuals alike will need to safeguard and responsibly use this information.</li>
</ul>
Dig deeper into all of these promising developments for inclusive MFS in Leon Perlman’s report, <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/851-technology-inequality-opportunities-and-challenges-for-mobile-fianncial-services">Technology Inequality: Opportunities and Challenges for Mobile Financial Services</a>.

&nbsp;

&nbsp;

&nbsp;

&nbsp;

Promising Developments in Mobile Financial Services

Since the debut of mobile financial services (MFS) 10 years ago, the sector is now preparing for a switch to smartphones that will enable even more and better services. Not so fast, cautions CFI Fellow Leon Perlman.

In his report, Technology Inequality: Opportunities and Challenges for Mobile Financial Services, Perlman steers readers through a primer on the technology that enables MFS to operate on basic, feature and smart phones. But more importantly, the report sounds a cautionary note about the readiness of the sector for a large-scale shift to smartphone and internet-based MFS, particularly for low-end consumers. Leon's on-the-ground research conducted in 12 different countries finds that smartphone-enabled MFS is not an impending panacea for financial inclusion. Due to the slow spread of reliable, high-quality 3G coverage and sufficiently capable smartphones, the majority of MFS will be accessed on feature phones, using Unstructured Supplementary Service Data (USSD), SIM Application Toolkit (STK) and java-applets, rather than internet-enabled smartphones, for the forseeable future.

This report urges regulators and technology providers to continue supporting MFS based on feature phones, even as they work to create paths for new-generation services. While smartphones promise more intuitive and richer user interfaces, this promise will take some time to materialize fully and robustly. If mobile financial services are to be a force for financial inclusion, we must not prematurely abandon older technologies as we concurrently push to create a smartphone-based future.
<h2><img class="size-large wp-image-29309 alignright" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2017/04/Technology-Inequality-Inforgraphic-330x1024.png" alt="" width="330" height="1024" />Major Findings</h2>
<ul>
 	<li>For MFS to continue to grow, it is important to continue supporting feature phones with USSD and STK interfaces.
MFS, for people at the base of the economic pyramid (BoP), are currently provided largely on feature phones operating across 2G mobile networks and using menu-driven, text-based user interfaces. The main technologies facilitating MFS here are Unstructured Supplementary Service Data (USSD),Short Message Service (SMS) in its SIM Application Toolkit (STK) incarnation, and Java applets.Feature phones are likely to dominate MFS for BoP for the foreseeable future. While smartphones are penetrating BoP markets, the pace remains relatively slow. Additonally, feature phone manufacturing is actually growing. As early mobile technology patents expire, feature phone costs will continue to drop and use will grow.</li>
 	<li>Realizing the promise of smartphones for MFS first requires improving their technical specifications and the presence of high-speed networks. Cheap smartphones are not yet sophisticated enough to support MFS. Gaps in high-speed 3G mobile data coverage persist, especially in MFS-focused rural and peri-urban areas. Where there is no 3G coverage, there is usually no 4G coverage either. While 3G (and 4G) coverage is predominant in urban areas and along major highways, rural areas still receive mainly 2G coverage.</li>
 	<li>Costs, for both customers and providers, are the source of many of constraints to smartphone MFS adoption. Data costs for data-hungry smartphones may be prohibitive for many BoP users. Manufacturers produce less sophisticated phones to keep prices affordable for the mass market. Mobile network operators (MNOs) face high costs for acquiring spectrum and building infrastructure in rural areas in order to expand and upgrade service.</li>
 	<li>Security vulnerabilities on MFS channels and devices put customer transactions and MFS systems at risk. The 1970s-era Signaling System 7 (SS7) technology that enables mobile phone (and landline) communications is not secure and has been exploited by bad actors for decades. The standard mobile air platform is susceptible to relatively cheap, homemade devices performing “man-in-the-middle” interception of mobile voice, SMS and data traffic. Counterfeit and stolen phone sales are increasing and  some MFS smartphone apps are designed with insufficient security. On the brighter side, MFS apps on feature phones and written in Java mostly use encrypted SMS, so they could provide a secure and ubiquitous means of transacting.</li>
 	<li>Policy makers must address competition issues for MFS systems. Access to service gateways should be fair, reasonable and non-discriminatory. MNOs may be gatekeepers for access to services and infrastructure for competing MFS providers. Those competing service providers may be handicapped (“foreclosed”) by being denied access to USSD or STK gateways and short codes or through prohibitive pricing. Also, MNOs and non-bank service providers may be denied access to payment infrastructures required to interoperate or provide services such as merchant acceptance or ATM withdrawals. Thin SIM technology is being implemented in several countries as a technical fix to evade such blockages.</li>
</ul>
&nbsp;

Technology Inequality: Opportunities and Challenges for Mobile Financial Services

<a href="https://www.nokia.com/en_int/phones/nokia-3310"><img class="alignright wp-image-23202" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/nokia-3310-hero.png" alt="" width="150" height="343" /></a>

One of the most surprising unveilings at the recent  Mobile World Congress was the <a href="https://www.nokia.com/en_int/phones/nokia-3310">Nokia 3310</a>, a reboot of a 17 year-old feature phone that stands out as intentionally basic amidst a dizzying world of smartphone bells and whistles. This phone boasts no cinema-quality camera, no super-fast internet, and no Candy Crush. In exchange, it offers a month-long battery life, a simplified user interface, and a price point of $49.

To me, this phone is a signal to emerging markets that the mobile industry has not forgotten that much of the world—about 37 percent of people in developing markets and 24 percent of people in developed markets, according to GSMA—will still not be using a smartphone by 2020. These populations are not making the shift for reasons like cost, battery life, and connectivity limitations. For them, the Nokia 3310 is a promising announcement.

In his research on the technology infrastructure surrounding digital financial services, CFI Fellow Leon Perlman points out that while feature phones are not disappearing any time soon, the choices for feature phones and options for people who need them repaired are shrinking. Perlman’s research, which will come out later this spring, underscores the need for the mobile industry to continue to provide valuable infrastructure to people who have not switched to smartphones. He cites the continued prevalence of USSD-based mobile money interfaces, which feature phones can utilize and which do not require internet connection, as a major incentive for continued investment in technology infrastructure for feature phones. If people cannot safely and effectively access their mobile wallets without switching to shiny new smartphones, mobile money will cease to be as inclusive as it claims to be.

Skeptics dismiss the re-launch of the 3310 as mere nostalgia or a “digital detox” fad in an environment where connectivity is currency. But for a smallholder farmer living in a rural area with limited or intermittent electricity, the phone could be a lifeline to send and receive money, get independent commodity pricing quotes while negotiating a sale of crops, or keep in touch with family members who have migrated. This phone is a welcome acknowledgement from Nokia that the world has not forgotten that there is, and will continue to be, a market for simple and sturdy feature phones.
<blockquote>Skeptics dismiss the re-launch of the 3310 as mere nostalgia or a “digital detox” fad in an environment where connectivity is currency. But for a smallholder farmer living in a rural area with limited or intermittent electricity, the phone could be a lifeline</blockquote>
What’s more, the phone has two SIM card slots. In markets with competitive mobile environments, people use multiple SIM cards for multiple phone numbers and mobile wallets so they can take advantage of various networks’ discounts and promotions. I heard an anecdote last year about a research team that was asking people about their savings activity. One respondent pulled a SIM card in a small plastic bag out of his shirt pocket and said it was where he saved. No one in his social network knew about the savings, and he choose to keep the savings on a network that he never used to make calls simply so that he would not be tempted to draw from it frequently. For this man, having two SIM card slots in his phone would mean not having to keep the savings in a small plastic bag in his pocket. He could effectively have two mobile money accounts with two different purposes on his phone at all times.

My prediction is that while the phone will be snatched up by nostalgic consumers and hipsters looking to detox from our highly connected world, its most grateful customer will be low-income consumers in environments with limited connectivity.

Of course, essential to mention is the last reason you should care about the new phone: it comes with the game Snake. I for one am looking forward to getting my name on the leaderboard by not letting my snake eat its tail without first filling up the screen.

Nokia 3310 image from <a href="https://www.nokia.com/en_int/phones/nokia-3310">Nokia's website</a>.

Have you read?

<a href="https://cfi-blog.org/2017/03/01/mobile-money-in-myanmar-going-directly-from-cash-to-digital/">Mobile Money in Myanmar: Going Directly from Cash to Digital</a>

<a href="https://cfi-blog.org/2017/02/07/modelo-peru-whats-next-for-the-groundbreaking-mobile-money-platform/">Modelo Peru: What's Next for the Groundbreaking Mobile Money Platform?</a>

<a href="https://cfi-blog.org/2016/02/01/why-do-we-so-often-get-the-mobile-money-agent-value-proposition-wrong/">Why Do We So Often Get the Mobile Money Agent Proposition Wrong?</a>

&nbsp;

Nokia’s Got a Smart Idea: A “Dumb” Phone

[caption id="attachment_23145" align="alignright" width="330"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/tanzania.png"><img class="wp-image-23145" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/tanzania.png" width="330" height="264" /></a> (click to enlarge)[/caption]

This week at the Mobile World Congress in Barcelona, Verizon <a href="http://fortune.com/2017/02/22/verizon-testing-5g-11-cities/">announced</a> that it’s unveiling new 5G wireless connectivity for its mobile customers. More “G”s are not a surprising announcement, as mobile networks strut their speed at this annual event like body builders at a weightlifting competition. For those unfamiliar with what exactly 5G means, the network will provide speeds of a gigabit per second and faster, but only in a select group of cities in high income economies.

As we celebrate global innovation, we can also take a moment to highlight those who continue to have limited to no connectivity—with implications for global development. While 5G revs up, an astounding number of people are left out of mobile connectivity and therefore mobile money—even in countries known for their digital financial services uptake.

Our CFI Fellow Leon Perlman examines this phenomenon in <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-fellows-program/763">his upcoming report</a>. As a sneak preview, in his report Leon shows connectivity maps in a select group of emerging markets, such as the one above. Take this example of Tanzania, a market with growing mobile money usage. In this market, mobile network coverage misses large swaths of rural areas toward the center of the country. Certainly, those areas have lower population densities than other areas, but they are home to many people. The mobile financial services ecosystem depends on connectivity infrastructure that provides reliable and sufficiently high-speed data transmission. Lacking that, people in rural areas are left out in large numbers. In the map above, the blue splotches indicate mobile network coverage, and the dots are where mobile money agents are located.

Not only is wireless connectivity in many countries far from ubiquitous, it is also far from reliable. In CGAP’s work on “<a href="https://www.cgap.org/sites/default/files/Focus-Note-Doing-Digital-Finance-Right-Jun-2015.pdf">Doing Digital Finance Right</a>,” evidence from 16 markets showed that while customers appreciate and benefit from digital financial services, there is a significant issue in network downtime. Customers identified this as their top problem with digital financial services. When it comes to cash-in services, for example, customers have been forced to leave cash with a mobile money agent without confirmation that the money has been deposited in their accounts.

Today’s cutting edge fintech apps are built for customers with high connectivity. Next week at <a href="http://www.lendit.com/usa/2017">LendIt</a> I’m leading a panel discussion with four CEOs of fintechs that are harnessing smartphones to provide access to credit. Their business models are creative, and the pace of their expansion is dizzying. This conference – like most events of its kind – will focus on innovations that are enabled by increased bandwidth and smartphones, providing a glimpse of the future. But if innovative mobile financial services require newer and faster telecoms systems, poorly connected customers will still have to rely on an older generation of financial services.

At a closed roundtable last week on digital security, hosted by the Brookings Institution, the term “digital exclusion” was mentioned, and participants—from private sector, government, thinktanks, multilaterals—nodded their heads in recognition. We’ve all grown familiar with large groups of people and even entire economies being left out of development because their infrastructure is lacking. As Verizon speeds toward 5G in a select few densely populated urban areas in high income economies, other parts of our world languish on the slow road.

So, let’s take a moment to think about and make a plan for those who won’t be getting 5G. For those in attendance at Mobile World Congress, this means you! Looking forward to continuing to see how mobile money can work for development.

Map source: <a href="http://fspmaps.org/#/Tanzania/finance/map@-5.495704,34.892578,z6,dark">fspmaps.org</a>

Have you read?

<a href="https://cfi-blog.org/2017/01/30/modelo-peru-unique-model-unique-challenges-bright-future/">Modelo Peru: Unique Model, Unique Challenges, Bright Future</a>

<a href="https://cfi-blog.org/2015/08/13/the-hold-up-with-mobile-money-in-nigeria/">The Hold-Up with Mobile Money in Nigeria</a>

<a href="https://cfi-blog.org/2017/03/01/mobile-money-in-myanmar-going-directly-from-cash-to-digital/">Mobile Money in Myanmar: Going Directly from Cash to Digital</a>

&nbsp;

5G? Not so fast.

Jeffrey Riecke

If you had to embark on a journey similar to that of the 65 million people who are currently forcibly displaced, what would you bring? Most likely among your provisions would be a smartphone. Phones are the contemporary map and compass, a gateway to critical information, a means for keeping in touch with loved ones, and a financial toolkit. <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">More and more</a>, aid workers are witnessing refugees arriving at camps with smartphones. For both the refugee journey and the post-journey settlement process, a phone can be vital. With this in mind, you might not be surprised to learn that mobile money usage among refugees, including for cash transfers from governments and NGOs, is on the rise.

GSMA reports that the end of 2015, there were <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/04/SOTIR_2015.pdf">271 operating mobile money systems</a> across 93 countries, with over 400 million registered accounts globally. At the same time, the Center for Global Development <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">estimates</a> that the vast majority of aid to refugees is given in monetary form. Most aid is provided either through vouchers that can be used for specific purchases or in-kind donations of items like blankets, heaters, and bags of rice. There’s growing evidence suggesting that not only are cash aid transfers <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">superior to vouchers and in-kind aid</a>, but that mobile money is the <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">optimal vehicle for cash transfers</a>.

Most refugees use mobile phones extensively, with higher internet usage rates than the general population, according to a study from the Oxford University Humanitarian Innovation Project, “<a href="https://www.rsc.ox.ac.uk/refugeeeconomies">Refugee Economies: Rethinking Popular Assumptions</a>”. In some cases refugees even buy a new SIM card <a href="https://www.trulioo.com/blog/financial-support-for-refugees-displaced-people/">each time they enter a new country</a> in order to navigate their way to the next border. Governments and aid agencies are recognizing this trend and re-thinking how they support this vulnerable population. And for their part, mobile network operators (MNOs) increasingly see refugees as a new, viable customer base as well as an opportunity to contribute services to highly vulnerable people.

A <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">new report from GSMA</a> offers a handful of vignettes that illustrate the growing pervasiveness of phone-based financial services in refugee communities:
<ul>
 	<li>In Pakistan, which has the third-largest refugee community in the world, the government is the primary source of cash assistance for displaced individuals, and the majority of cash transfers are completed via mobile money. Four of the market’s top five MNOs are active participants in the mobile money disbursement programs.</li>
 	<li>In Uganda, GSMA surveyed refugees both in and outside camps and found that almost half of them used mobile money, mainly to receive remittances from family and friends. Recently, the MNO Orange Uganda built a tower in the Nakivale camp to support the launch of its mobile money service targeting the refugee population.</li>
 	<li>Refugees in Rwanda are regular users of mobile money. Some are even working as mobile money agents.</li>
</ul>
Mobile money presents refugees with deepening financial inclusion opportunities. Large barriers persist to refugees adopting and using such services, but when given the opportunity, refugees and internally displaced populations use mobile money in the same ways that other populations do: for remittances, person-to-person payments, merchant payments, loans, and savings.

Potentially most crucial for refugees are international remittances, either to send money home or to receive money from home. The international remittances market has been disrupted by mobile money in recent years, with transfers via phone <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2017/02/The-Importance-of-mobile-for-refugees_a-landscape-of-new-services-and-approaches.pdf">21 percent</a> cheaper on average than standard money transfer operations. And such services are spreading fast. In fact, international remittances are the fastest-growing mobile money service. One can now send international remittances via mobile money between more than 20 countries worldwide, particularly in regional markets, i.e., between neighboring countries. High rates of adoption are seen in several markets in which these services recently launched, including Burkina Faso, Ivory Coast, Mali, and Senegal.

Whether in settlement camps or post-settlement, refugees seek to quickly build new lives. To this end, they use person-to-person and merchant payments not only for consumption purposes, but also as livelihood-building and business tools. Eighty-nine percent of refugees in Kampala use their mobile phones to generate income, according to “Rethinking Popular Assumptions”. Phones can help refugees find employment, access market information, and run micro-businesses. A mobile money ecosystem also presents employment opportunities for ancillary services like selling phone charging services, mobile phone repair, and serving as mobile money agents. Mobile money empowers refugees to create or boost existing markets – for food, clothing, financial services, and more.

In addition to mobile money, we’ve seen an array of initiatives from governments and NGOs that pair aid with other digital financial services:
<ul>
 	<li>Lebanon hosts the most refugees per capita in the world with 1.2 million individuals. Aid organizations like the International Rescue Committee (IRC) <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">issue ATM cards</a> for refugees to access cash benefits, taking advantage of the fully-functioning distribution networks of merchants and ATMs available in the country.</li>
 	<li>In Syria, the United Nations Relief and Works Agency (UNRWA) <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwi_nNidh47SAhUqw1QKHUnmAIQQFggcMAA&amp;url=https%3A%2F%2Fcfi-blog.org%2F2016%2F11%2F15%2Fthe-future-of-refugee-financial-inclusion%2F&amp;usg=AFQjCNECigBXaYLGABweP1wabi4C7_sZdA&amp;sig2=CIjwqfD6abOcndsGBat1RA">developed a small fleet</a> of mobile lending units to reach clients in areas without financial infrastructure.</li>
 	<li>On the island of Lesbos, Greece, Mercy Corps <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">offers refugees debit cards</a> that connect to a bank account to help them build banking histories.</li>
 	<li>The Digital Finance Institute launched the <a href="http://www.digitalfinanceinstitute.org/?post_projects=childrens-adventure-camps">Banking on Refugees project</a> which is piloting a cloud-based branchless bank that harnesses biometric identification and digital payment solutions, including prepaid cards and e-wallets.</li>
</ul>
However, a number of challenges impede the spread of mobile money-based humanitarian aid for refugees, as well as their uptake of broader mobile money services. These can come from both the supply and demand side. In some environments the mobile money ecosystem is still too nascent and not yet a viable option. In others, demand is weak, either because services are not sufficiently convenient or robust, or because of lack of customer awareness or familiarity. In its recent study, GSMA found that for refugees using mobile money, convenience and connectivity was more important than familiarity with the service, pointing to the importance of service and agent coverage and agent liquidity.

Proof of identity also poses a serious issue. <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">As discussed on this blog previously</a>, refugees often leave their home country without identity documentation, and sometimes even when they have it, the host country government may not have the technology and data needed to authenticate these documents. Lack of identification can impede refugees from buying SIM cards, owning mobile phones, and accessing mobile money and other financial services.

UNHCR in Jordan is mitigating this problem using biometrics. Refugees in the UNHCR program in Jordan <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">receive iris scans</a> which are stored in the cloud. The UNHCR offers bank accounts for refugees through the Cairo Amman Bank. When refugees arrive at the bank’s ATMs, they look into a set of binoculars that scans and verifies their eyes, and they’re able to withdraw the money in their name.

Refugees are also often faced with the loss of the banking and credit histories they built in their home countries. We’ve <a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">advocated before for credit history portability</a> for refugees, allowing refugees to be able to apply preexisting credit histories in the host country and, if they return home, to bring credit histories accumulated in host countries back with them.

Trulioo, a company that works in identity verification, <a href="https://www.trulioo.com/blog/financial-support-for-refugees-displaced-people/">asserts the potential</a> to use an individual’s cyber identity for identity verification and for enabling access to credit and other financial services. MNOs could serve as centralized, cross-border identifiers, by harnessing the user data and transaction histories linked to specific SIM cards. Additionally, aggregation of an individual’s online interactions, including of mobile money and online transactions could serve in place of credit histories to open financial doors.

But often it all comes back to the initial distribution of relief payments, where governments, NGOs, MNOs, and banks too often conduct business as usual. Although buy-in and coordination from these stakeholders is essential, many remain uncomfortable, unfamiliar, or unconvinced about the merits of cash transfers instead of vouchers or donated items, or about the merits of mobile money. Elizabeth MacBride of Quartz <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">writes</a>, “One of the obstacles to donors shifting their giving to cash has been that the NGO edifice that funnels their money is built to resist its own destruction.” Indeed, mobile money cash transfers might be a more efficient and effective means to offer refugees crucial resources, but there are vested interests in the status quo. For example, in 2013 USAID shipped <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">1.4 million metric tons</a> of food aid as part of the World Food Program. To accomplish this, roughly $70 million was spent on shipping. Food sellers and shippers are likely to be strong advocates of retaining the in-kind system.

A number of studies suggest that not only is cash aid more efficient than other aid forms, it’s ultimately more helpful for refugees. One study estimates that the savings on administration gleaned from the more efficient digital cash transfer programs could help the aid reach 30 percent more people for the same price. In 2014 IRC, in partnership with Yale and the University of Brasilia, published a rigorous evaluation of emergency cash distribution for refugees with the core finding that refugees <a href="http://mastercardcenter.org/action/mobile-money-transforming-financial-inclusion-refugees/">used the money for food as intended</a>, as opposed to spending it on cigarettes or alcohol. Another IRC report in Lebanon found that 87,700 families who were given $575 via ATM cards <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">used the funds for essential purchases</a>, like food, clothing, fuel oil, and so forth. In both of these studies additional findings spoke to the entrepreneurial nature of refugees, who strive against extremely difficult odds to build new lives. In the first study it was calculated that for every $1 of cash assistance, $2 was created in local markets. In the second, with cash transfers instead of other aid forms, more children stayed in school because fewer families had to send their kids to work. Another study of Syrian refugees in Iraq found that <a href="https://qz.com/750020/the-deceptively-simple-economic-case-for-giving-refugees-cash-not-stuff/">70 percent</a> of individuals sold some of the aid they received in the form of rice. Compared to other forms of aid, cash transfers empower refugees to take action on behalf of themselves and smooth entry into their new country.

And digital channels for cash aid – whether mobile money or otherwise – offer a number of benefits over physical cash transfers. Digital finance offers greater transparency and the ability to track cash, which can combat the longstanding problem of corruption surrounding the physical handling of cash. And digital offers refugees greater security and safety from theft.

Sadly, the current refugee crisis is not going away any time soon. In the meantime, we applaud all those working to support these millions of individuals, through cash transfers, financial services, and other means.

Have you read?

<a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/">Financial Inclusion of Refugees: An Introduction</a>

<a href="https://cfi-blog.org/2016/09/27/financial-inclusion-of-refugees-azerbaijan-case-study/">Financial Inclusion of Refugees: Azerbaijan Case Study</a>

<a href="https://cfi-blog.org/2016/10/07/financial-inclusion-of-refugees-al-majmoua-in-lebanon/">Financial Inclusion of Refugees: Al Majmoua in Lebanon</a>

Refugees and Humanitarian Assistance: Which Kind of Aid Is Best?

The <a href="http://helix-institute.com/">Helix Institute of Digital Finance</a> recently launched the <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator%20Survey%20-%20Kenya%20Country%20Report%202014_0.pdf">Kenya Country Report 2014</a> as part of their Agent Network Accelerator (ANA) project. The ANA project is aimed at increasing global understanding of how to build and manage sustainable digital financial services (DFS) networks by conducting large-scale research among DFS agents and issuing training to providers and other stakeholders. In this two-part interview, Dorieke Kuijpers, Research Project Manager at the Helix Institute and co-author of the report, provides insight into the ANA project and the Kenya Country Report. The following is part two. Part one can be found <a href="http://cfi-blog.org/2015/08/20/accelerating-agent-banking-in-kenya/">here</a>.

One of the big findings of the survey is that banks' agents now account for 15 percent of the agent banking market in Kenya - a threefold increase over last year. What are some of the other key developments in the market?

We have identified a number of market developments by comparing the <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator%20Survey%20-%20Kenya%20Country%20Report%202014_0.pdf">Kenya 2014 survey</a> findings with those of the <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator_Kenya%20Country%20Report_2013.pdf">Kenya 2013 survey</a>. Mobile network operators (MNOs) have led the success in the digital financial services industry in Kenya and historically have been considered better in marketing and distribution than banks, which is not surprising given that many MNOs in East Africa have more clients than banks do. Nearly a decade of development later, we see this changing: banks are now making large investments in the DFS business and they are approaching it in a very different way.

An interesting finding is that although we observe a significant increase in the market presence of bank agents, the products and services they offer are in many ways additive as opposed to competing with those of MNO agents. While MNO agents are still conducting a higher number of transactions (almost twice as many as bank agents), bank agents are offering a greater and more sophisticated array of services, including bill payments, savings, and credits. Also, the median amount transacted among bank agents is roughly 50 percent higher, which means their revenue is now similar to that of MNO agents. This is reflected in the fact that out of the 32 percent of agents that report wanting to open a new till for another provider, the overwhelming majority of agents would like to join a bank's network, with Equity Bank being the most popular option.

Among bank agents, in terms of exclusivity (agents working exclusively for one provider), nearly three-fourths (73 percent) were exclusively working for one provider in 2013, where only one-fourth (26 percent) were exclusive in 2014. We believe this indicates that banks are using a different strategy of agent selection, favoring existing agents for recruitment. More on the key developments in the Kenyan market can be found in the <a href="http://www.helix-institute.com/blog/kenya-moves-beyond-m-pesa">here</a>.

By and large, Kenya’s agent banking is still dominated by agents serving mobile network operators. Can you give us a breakdown of the big providers by market presence? Does this change in a meaningful way across different cities and rural areas?

Safaricom, the leading provider in Kenya by far, has a market presence of 79 percent, followed by Equity Bank with 8 percent, Airtel with 5 percent, and Co-op Bank with 4 percent. In Nairobi, we find that Safaricom’s share of market presence is less, namely 70 percent, while Equity and Co-op Bank are doing better for themselves in the capital with shares of market presence at 11 percent and 8 percent, respectively.

In summary, the banks’ share of market presence has doubled outside of Nairobi as compared to 2013, while they have expanded their networks most aggressively and rapidly in Kenya’s capital. This makes sense because banks typically use the hub and spoke model, meaning they build their DFS agent network around their existing bank branches. In the long-term, banks will want to do more to extend their agent networks to non-urban areas. Banks are generally better placed to understand lower-income customers’ needs than MNOs but will need to think about how to manage liquidity and offer operational support to agents located further from their branches.

Agents seem to be making more money by investing less time and energy. What’s responsible for these changes?

Yes, we found there to be a 15 percent increase in non-dedicated agents (agents who also run other businesses) as compared to 2013, and that the non-dedicated agents spend a lower percentage of their time on the agency (50 percent) as compared to 2013 (60 percent). This points to agents diversifying their business activities and spending less time on DFS. We also see that agents are allocating less electronic float and cash, yet the number of transactions they carry out remains the same, and the profitability has increased by 10 percent.

One of the explanations for these findings is that operating costs have decreased by 37 percent in the last year. Because of this significant drop in expenses, agents have been able to increase their profitability without actually conducting more transactions. This may help explain why agents are more optimistic - the percentage of agents predicting they would continue as an agent increased from 58 percent in 2013 to 80 percent in 2014.

What changes to the agent banking industry do you envision in the years going forward?

We have observed many differences in how banks and MNOs approach the DFS industry as well as the type of products and services they offer. More recently, however, we also see convergence, and this is a trend we expect to continue.

Earlier this year, KCB and Safaricom launched the KCB M-PESA account, while Equity is partnering with Airtel to launch Equitel, a thin SIM that offers voice, data and money transfer services. We believe that these kinds of collaborations will become more common, and that they will lead to greater operability through the sharing of agents and switches. With more players in the market that have a significant market presence in Kenya, we also expect to see increased competition and new market dynamics.

We of course hope that the recent collaborations between banks and MNOs will result in exciting innovations on the DFS front, including a range of new products and services.The Helix Institute looks forward to continuously following the developments in the Kenya market closely and training DFS providers in the country in accelerating their agent networks and designing new, customer-centric products.

The Helix Institute of Digital Finance is a partnership between MicroSave, the Bill &amp; Melinda Gates Foundation, the International Finance Corporation, Financial Sector Deepening Africa, and the United Nations Capital Development Fund.

Have you read?

<a href="http://cfi-blog.org/2015/08/20/accelerating-agent-banking-in-kenya/">Accelerating Agent Banking in Kenya - Part One</a>

<a href="http://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

<a href="http://cfi-blog.org/2014/08/15/300-households-for-one-year-results-of-the-kenya-financial-diaries/">300 Households for One Year – Results of the Kenya Financial Diaries</a>

Accelerating Agent Banking in Kenya - Part Two

The <a href="http://helix-institute.com/">Helix Institute of Digital Finance</a> recently launched the <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator%20Survey%20-%20Kenya%20Country%20Report%202014_0.pdf">Kenya Country Report 2014</a> as part of their Agent Network Accelerator (ANA) project. The ANA project is aimed at increasing global understanding of how to build and manage sustainable digital financial services (DFS) networks by conducting large-scale research among DFS agents and issuing training to providers and other stakeholders. In this two-part interview, Dorieke Kuijpers, Research Project Manager at the Helix Institute and co-author of the report, provides insight into the ANA project and the Kenya Country Report. Part two will be published next week.

The new Kenya report focuses on the operational determinants of success in agent network management. By way of background, can you give an overview of these components and tell us about the scope of this survey?

The country report is based on 2,128 mobile money agent interviews carried out in 2014 across Kenya. For the survey, we partnered with <a href="http://www.researchsolutionsafrica.com/">Research Solutions Africa</a> (RSA), a research firm that has vast experience working in several African countries. After undergoing an intensive training by <a href="http://www.microsave.net/workinggroups/research">MicroSave’s lead researchers</a>, the team of enumerators recruited by RSA conducted the several-thousand interviews with mobile money agents spread throughout the country. The findings of the survey resulted in the Kenya 2014 Country Report as well as five (confidential) reports that present providers with an overview of provider-specific findings.

The questionnaire that we used focuses on five operational determinants of success in agent network management, or pillars, as we call them. Both our <a href="http://www.helix-institute.com/data-and-insights">country reports</a> and our provider reports are based on these pillars. The first pillar, agent and agency demographics, helps us develop an agent profile at the country level and covers indicators such as the age of an agency and the proportion of dedicated and exclusive agents. Core agency operations is the crux of the research as this pillar looks at the health of an agency—e.g. the products and services offered, the number of daily transactions, the types of transactions conducted, and the average value of transactions. Liquidity management looks at an agent’s liquidity practices and needs and how these affect their daily transaction levels. The pillar quality of provider support analyzes the extent to which service providers support their agents in terms of trainings and refresher trainings, monitoring visits, and availability of call centers. Lastly, business model viability assesses the financial strength of an agent.

How does Kenya’s agent banking network compare to other countries? Aside from its high customer uptake figures, what are some of the ways the Kenyan agent network stands out?

We find that in many ways, bank agents in Kenya are offering additional services as opposed to competing with mobile network operator (MNO) agents, which is quite unique. For example, more bank agents than MNO agents offer money transfer services and bill payment. In addition, bank agents in Kenya offer their customers the opportunity to deposit savings to a bank.

Our industry has placed a lot of emphasis on whether agents are managed by a bank or a mobile network operator. In Kenya, there are indeed a lot of differences between these two types of models, but in some of the other countries we have studied – in particular India, <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator%20Pakistan%20Country%20Report%202014.pdf">Pakistan</a> and <a href="http://helix-institute.com/sites/default/files/Publications/Agent%20Network%20Accelerator%20Bangladesh%20Country%20Report%202014.pdf">Bangladesh</a> – the bank branch penetration is higher and banks have more customers than the banks in Kenya. Their approach to DFS is different than that of banks in Kenya and is more akin to the approach used by telecom companies in Kenya. In our India Country Report 2014, we provide insights on the differences between existing models and their approaches in India. The India Country Report will be launched next Monday, August 24 in New Delhi and will be published on the <a href="http://helix-institute.com/data-and-insights">Helix website</a> that same day.

The Agent Network Accelerator project includes assessments carried out in eight countries across Africa and Asia. Along with these efforts, what else is included in the ANA project?

The ANA project is the largest research project on agent networks in the world and has set out to conduct detailed assessments in eight countries (Uganda, Tanzania, Kenya, Nigeria, India, Indonesia, Bangladesh, and Pakistan), twice, over a period of four years. With the continued support of the <a href="http://www.gatesfoundation.org/">Bill &amp; Melinda Gates Foundation</a>, we have already conducted over 22,500 agent interviews. In addition to Kenya, we will be conducting second rounds of research in Tanzania and Uganda this year.

Beyond completing the second round of surveys in the eight countries over the next two years, we are expanding the project in three important ways: 1) benchmarking research processes and survey rationalization; 2) geographical expansion within Africa; and 3) developing new training courses.

Our research team is constantly benchmarking its processes to ensure we keep delivering quality research that meets the industry’s best practices. At the moment, we are developing a rigorous automated process to our quality control systems in the field, and we are increasing the capacity of our analysis team. Additionally, we’re working on standardizing our questionnaires even more in order to make them more replicable. Another development on the research front includes the expansion of the ANA project: in collaboration with the <a href="http://www.uncdf.org/">United Nations Capital Development Fund</a> (UNCDF), we are conducting Agent Network Assessments and training courses in Zambia and Senegal this year. The assessment in Senegal will be the first one we carry out in West Africa. We look forward to gaining a deeper understanding of the DFS markets in this region and how they compare to the East African and South Asian markets. With the support of existing and additional supporters, we hope to continue expanding our research to other countries and regions.

The extensive data gathered through the ANA research forms the foundation for the training courses that we offer. By combining the research with hands-on field visits and conversations with practitioners that built successful agent networks, we ensure practitioners leave our training with the competitive advantage needed to accelerate their agent networks. In addition to our <a href="http://www.helix-institute.com/training-courses/core-agent-network-accelerator">Core Agent Network Accelerator (CANA) training</a>, we will premiere a new training course next month: the <a href="http://www.helix-institute.com/training-courses/product-development-accelerator">Product Development Accelerator (PDA) course</a>, aimed at training providers in adopting a customer-centric approach when developing new DFS products.

The Helix Institute of Digital Finance is a partnership between MicroSave, the Bill &amp; Melinda Gates Foundation, the International Finance Corporation, Financial Sector Deepening Africa, and the United Nations Capital Development Fund.

Have you read?

<a href="http://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

<a href="http://cfi-blog.org/2014/08/15/300-households-for-one-year-results-of-the-kenya-financial-diaries/">300 Households for One Year - Results of the Kenya Financial Diaries</a>

<a href="http://cfi-blog.org/2012/06/21/structure-for-success-lessons-from-a-kenyan-financial-literacy-teacher/">Structure for Success: Lessons from a Kenyan Financial Literacy Teacher</a>

Accelerating Agent Banking in Kenya - Part One

&gt; Posted by Andrew Fixler, Freelance Journalist

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Indian financial inclusion advocates enjoyed a brief victory lap and an international spotlight in January, and they are poised to move into 2015 with a renewed push. On January 20, Indian Finance Minister Arun Jaitley was presented with a <a href="http://www.guinnessworldrecords.com/news/2015/1/india-makes-financial-world-record-as-millions-open-new-bank-accounts">Guinness World Record</a> for the fastest financial inclusion roll-out in history, the Pradhan Mantri Jan Dhan Yojana (PMJDY). In one week, between 23 and 29 August 2014, 18,096,130 bank accounts were opened through this national inclusion strategy. Since that date the number has grown to over <a href="http://pmjdy.gov.in/account-statistics-country.aspx">123 million</a> across the country. During his January 25 joint address with Prime Minister Modi, President Obama <a href="http://www.whitehouse.gov/the-press-office/2015/01/25/us-india-joint-statement-shared-effort-progress-all">commended</a> Indian leadership’s commitment to prioritize financial inclusion for all Indian citizens, and pledged American support.

In a <a href="http://www.usaid.gov/india/press-releases/jan-27-2015-usaid-indian-and-us-companies-support-indias-initiative">January 27 press release</a>, USAID affirmed Obama’s pledge, and announced its intention to partner with over 20 Indian, U.S., and international organizations with the support of the World Economic Forum (WEF) to work alongside the Indian government “to expand the ability of Indian consumers and businesses to participate in the formal economy.”

Fast moving consumer goods companies (FMCGs), banks, payment networks, mobile network operators (MNOs), ecommerce platforms, and leading civil society organizations comprise the first cohort of partners, which includes Accion, Axis Bank, Bharti Airtel, Citi, Coca-Cola, FICCI, FIS, HSBC, ICICI Bank, IFC, ITC Limited, Janalakshmi, Marico, MasterCard, Procter &amp; Gamble, SAP, SEWA, SnapDeal, Telenor, Visa, Vodafone, and Yes Bank. As USAID explains in its press release, these organizations represent the categories of actors whose combined effort can build an inclusive digital economic infrastructure.

Partner organizations have already been essential to PMJDY’s success. In the state of Arunachal Pradesh, for example, the government-owned Apex Bank <a href="http://nabamtuki.org/political/website/nabamtuki/index.php/media-archives/development/540-arunachal-government-inks-moa-with-ngos-for-pmjdy.html">enlisted</a> the NGOs National Youth Project, Yuva Arunachal, and Manghi Welfare Society to support the banking of 11,654 households during the roll-out.

Top Indian policymakers, <a href="https://www.youtube.com/watch?v=yOwD2S3oHjU">with leadership from</a> Prime Minister Modi, have done a substantial amount to create an inclusive financial system. The PMJDY, initiated by Modi, has been successful in both raising the profile of the issue of financial inclusion and expanding account ownership. Other initiatives, such as the Aadhaar biometric ID card program and the <a href="http://www.microcapital.org/microcapital-brief-reserve-bank-of-india-rbi-allows-non-banking-finance-companies-nbfcs-to-work-as-agents-for-banks/">promotion of agent banking</a> by the Reserve Bank of India, have significantly reduced the hassle of opening accounts in rural areas. India is well on its way to the goal of an account for every household.

The big question, however, is whether these accounts will be actively used. In an interview I recently conducted with USAID representatives on the partnership initiative, the officials noted that India’s electronic payments ecosystem lags behind the rest of the country’s financial infrastructure. Stemming from this lag, “The one piece of the puzzle that hasn’t been fully addressed is that there are now more people with accounts – and increasingly they will have money in those accounts as the government digitizes social transfers – but relatively few opportunities to affordably and easily use those accounts to transact electronically. Rather than cashing-out their accounts every time they get a transfer, how do we keep money in the electronic system and realize the benefits and efficiencies that come along with that?”

According to a USAID official, the partnership will begin by examining how to effectively build a widely used electronic payments system. “At this stage, the idea is to coalesce around a common understanding of the problem, and to determine potential approaches…our objective up until this point has been coalescing key actors, and now we’ll be moving forward with those actors to co-create an action plan for tackling this challenge.”

At this point, the World Economic Forum plays a critical role in bringing together essential stakeholders and facilitating an actionable dialogue. The WEF is a “natural ally” of the program, as USAID representatives note. Inclusive finance features as a topic at its <a href="http://www.weforum.org/">annual forums</a> in Davos, and it has an <a href="http://www.weforum.org/issues/mobile-financial-services-development">initiative</a> to promote private sector support for digital financial services development.

All of the organizations involved in the initiative, although disparate, have an interest in digitizing the Indian economy. For FMCGs, digitization means operational efficiency and savings. Coca-Cola, one of India’s largest FMCGs, has already joined the <a href="http://betterthancash.org/">Better than Cash Alliance</a>. For banks and payment companies, it means more accounts, and greater usage. A digital economy yields big opportunities for MNOs via mobile money usage by consumers and businesses. eCommerce companies, which frequently operate on a “cash on delivery” model in India, will see enormous operational benefits from introducing electronic payments. Civil society organizations advocate for benefits to consumers that come from convenient, quality banking and commerce services. They will play the important role of helping to ensure that the consumers’ interests are heard throughout the process of developing new financial infrastructure.

The challenge of building this digital financial ecosystem infrastructure calls for a coordinated effort. Representatives of USAID note the need for corporate actors and policymakers to work toward a shared vision, stating that “all partners are eager to move quickly to action, and will play roles in line with their capabilities and spheres of influence.” Some of India’s largest corporations, Coca-Cola included, have attempted unsuccessfully to promote electronic payment networks in the past, underscoring the necessity for a diversity of stakeholders to work in concert.

The <a href="http://finclusion.org/fii-blog/keeping-financial-inclusion-customer-centric-india/">Financial Inclusion Insights</a> (FII) blog looks beyond the successful numbers of PMJDY to some of the demographic challenges the partnership will face. Even with the spread of account access, active use has lagged as many continue to see cash as the best transaction medium. Though mobile financial service access has enjoyed incremental growth, trust still has to be built between mobile network operators and consumers. FFI writes, “MNOs will have to go beyond relying on their significant distribution networks and actually invest in awareness, digital literacy and trust-building to attract more customers, especially in rural areas where there are greater deficits in the information environment.” The issue of mistrust also extends to the business correspondent and agent banking models, two branchless banking alternatives essential to PMJDY’s success. Access to and use of bank accounts is highly uneven across India’s states. For some individuals, account access remains out of reach due to a lack of proper identification or digital devices, or other socioeconomic barriers.

Underdeveloped digital finance ecosystems affect many countries. USAID’s involvement in this program is indicative of its interest to build out these ecosystems globally. India has a confluence of stakeholders in high government office and corporate leadership who see the value of building out a digital financial network, as well as a prominent position on the global economic stage. This makes the country uniquely positioned to take a leading role in tackling this important issue with the help of the right stakeholders.

Have you read?

<a href="http://cfi-blog.org/2014/12/09/rajans-revolution-and-modis-microfinance-mojo/" target="_blank">Rajan's Revolution and Modi's Microfinance Mojo</a>

<a href="http://cfi-blog.org/2014/07/24/the-implications-of-indias-2014-budget-for-financial-inclusion/" target="_blank">The Implications of India's 2014 Budget for Financial Inclusion</a>

<a href="http://cfi-blog.org/2014/08/01/positive-trends-for-indian-microfinance-an-interview-with-alok-prasad/" target="_blank">Positive Trends for Indian Microfinance: An Interview With Alok Prasad</a>

Indian Government, USAID, and International Organizations Partner in India’s Next Steps Towards Financial Inclusion