About two dozen leaders of inclusive finance organizations, impact investors, and analysts from around the world convened recently at a workshop hosted by Lehigh University’s <a href="https://business.lehigh.edu/centers/martindale-center/about" target="_blank" rel="noopener noreferrer">Martindale Center</a> to share views on how financial inclusion interacted with the socio-economic crises of the COVID-19 pandemic. The event built on the success of a previous similar workshop that resulted in the publication of <a href="https://www.brookings.edu/book/the-future-of-microfinance/" target="_blank" rel="noopener noreferrer">The Future of Microfinance</a> by Brookings Institution Press in 2020.

Participants included practitioners working, building, promoting, advocating, and leading commercial financial inclusion providers in Africa from a private sector perspective. As such, they are close to the reality of the people they are serving or invest in and their insights are anchored in the on-the-ground dynamics of the African market in the wake of COVID. Here is what they are telling us.
<h1>Impact of COVID on African MFIs, Banks, and Clients</h1>
<blockquote class="pullquote--right">Ongoing crises in Africa are not uniquely due to COVID-19, but rather are a conjunction of many crises during the last several years.</blockquote>
The CEOs of leading African inclusive financial services organizations participating at the Lehigh workshop uniformly agreed that ongoing crises in Africa are not uniquely due to COVID-19, but rather are a conjunction of many crises during the last several years. COVID, in fact, did not affect the continent much health-wise; instead, the impact came more from restrictions on domestic and cross-border mobility, which caused substantial economic downturns, especially in countries and regions dependent on imports and exports. At the same time, climate change effects such as droughts, floods, and ruined crops have created substantial <a href="https://www.fao.org/3/cb0258en/CB0258EN.pdf" target="_blank" rel="noopener noreferrer">threats to food security</a> and increased social unrest in many parts of Africa. Compounding the turmoil, security crises fueled by terrorism, refugees, and displaced populations (<a href="https://www.unrefugees.org/emergencies/sahel/" target="_blank" rel="noopener noreferrer">millions in the Sahelian countries</a>) have also significantly destabilized Sub-Saharan Africa.

Aiming to alleviate rapid <a href="https://www.ada-microfinance.org/sites/default/files/inline-files/Synthesis_Microfinance%20Clients%20Facing%20the%20COVID-19%20Crisis_EN_1.pdf" target="_blank" rel="noopener noreferrer">deterioration in household financial positions</a> during the pandemic, governments and central banks across Africa issued loan repayment moratoriums, which squeezed lenders’ liquidity, including mainstream commercial banks but especially microfinance institutions (MFIs). Nevertheless, even though the rate of late or restructured loan repayments from clients—the credit risk ratio—<a href="https://www.mf-rating.com/wp-content/uploads/2021/10/COVID-19-Impact-on-FSPs.pdf" target="_blank" rel="noopener noreferrer">increased everywhere</a>, debt write-offs among African MFIs have not been as bad as feared. Overall, the sector has shown <a href="https://www.suerf.org/suer-policy-brief/38105/africa-and-covid-19-can-the-financial-sector-stay-on-course-for-a-green-and-digital-future" target="_blank" rel="noopener noreferrer">substantial resilience in Africa</a>, although the situation remains tenuous; “seriously fragilized” is how one CEO at the workshop described it.

As for impacts on MFI clients, a stark distinction is apparent between urban and rural settings. Urban clients have suffered most due to lockdowns affecting micro and small enterprises. Many rural clients, by contrast, fell back into an agricultural self-subsistence economy during a season or two, as there were no markets to sell to. Low-income households in both settings saved as much as they could during the pandemic and reduced spending. Workshop participants at Lehigh uniformly agreed that African MFIs’ clients, especially the most vulnerable ones, were—perhaps more than ever—remarkably resilient and able to cope.
<h1>Crisis Begets Opportunities</h1>
As is often true in times of crises, opportunities appear. Workshop participants pointed out that in Africa, new opportunities for MFIs and lower-income clients came directly from constraints dictated by lockdowns. Logistical barriers <a href="https://cdn.odi.org/media/documents/Africa_trade_and_Covid19_the_supply_chain_dimension.pdf" target="_blank" rel="noopener noreferrer">hindered possibilities for exporting goods</a>, including agricultural products, and for importing things like fertilizer and animal feed. Trade in services plummeted as people stopped moving and spending, and tourism collapsed in countries like Kenya where incomes are especially dependent on spending by tourists.

However, from these difficulties, layered on top of effects from climate change, new behaviors are emerging in various parts of Africa. Some farmers have decided to shift to organic production practices like agroecology and raising chicken and pigs using only farm-produced feed and farm waste, saving on expensive imported inputs. Similarly, farmers unable to export have increased selling locally in neighboring towns, expanded direct selling along major roads, or began selling <a href="https://blogs.lse.ac.uk/africaatlse/2020/06/19/what-strategies-do-traders-use-food-survive-covid19-lockdown-kampala/" target="_blank" rel="noopener noreferrer">door-to-door</a> where possible. Others are leveraging <a href="http://www.xinhuanet.com/english/2020-05/27/c_139092514.htm" target="_blank" rel="noopener noreferrer">digital approaches</a>, including e-commerce platforms, social media, and mobile payments. In short, because of COVID restrictions, many farmers in Africa adopted organic, sustainable, and digital agriculture practices.
<blockquote>Because of COVID restrictions, many farmers in Africa adopted organic, sustainable, and digital agriculture practices.</blockquote>
Many people in Africa also changed their consumption habits, switching to local producers for vegetables, meats, and other staples. Circular economy trends <a href="https://www3.weforum.org/docs/WEF_Five_Big_Bets_for_the_Circular_Economy_in_Africa_2021.pdf" target="_blank" rel="noopener noreferrer">appeared in a wide range of sectors</a> – including agri-food, textiles, fashion, electronics – and also in packaging. Consumers are also <a href="https://www.africa.com/covid-19-increases-brand-sustainability-awareness-shifts-consumer-behaviour-in-sub-saharan-africa/" target="_blank" rel="noopener noreferrer">moving towards sustainable brands</a>, thanks both to heightened awareness of climate effects and to experiences in lockdowns. Surprisingly, the African response to COVID has been to adopt more sustainable norms and practices in agriculture and consumption – a fascinating resilience outcome.

Another substantial trend evident in these times of security crises and risks is <a href="http://cdn-odi-production.s3-website-eu-west-1.amazonaws.com/media/documents/ODI-YFLP-Youth-led_digital_innovation_and_resilience_during_Covid-19-13AugFinal.pdf" target="_blank" rel="noopener noreferrer">high rates of youth entrepreneurship</a>. This is occurring across the social spectrum –among youth from both rural and urban communities, as well as those with diplomas and those who did not finish school. Youth are choosing not to migrate and instead are staying put and creating non-traditional businesses and entering new types of apprenticeships, such as small enterprises in agriculture transforming crops or raw materials, and in <a href="https://www.forbes.com/sites/davidrvetter/2021/12/14/meet-the-african-green-entrepreneurs-showing-the-west-how-its-done/?sh=7b03d50551cb" target="_blank" rel="noopener noreferrer">green economy enterprises</a> such as renewable energy, recycling, utilizing waste, or addressing pollution. This trend is strongly supported by national and local governments, as well as by civil society and corporate social responsibility initiatives, which are promoting and funding incubators and seed capital investments, as well as—in collaboration with MFIs and banks—credit guarantee mechanisms, all aimed at fostering the startup and scaling phases of the young enterprises of Africa’s increasingly entrepreneurial youth.

Africa has the world’s largest population share of youth and the potential is enormous. Often discussed, enhancing youth entrepreneurship has unfortunately seemed a somewhat quixotic policy quest for decades in Africa. But remarkably, the consensus at the Lehigh workshop was that this time the initiatives seem to be working and helping fulfill the aspirations of many young people to be autonomous and contribute to their communities and local economies. Additionally, many African <a href="https://www.afdb.org/en/news-and-events/press-releases/lionesses-business-confidence-report-speaks-high-levels-resilience-africas-leading-women-entrepreneurs-despite-covid-19-49847" target="_blank" rel="noopener noreferrer">women entrepreneurs</a> have proven to be very resilient and are growing their businesses due to COVID.
<h1>Acceleration of Digital Inclusive Finance in Response to COVID</h1>
The <a href="https://www.centerforfinancialinclusion.org/digitally-reshaping-inclusive-financial-services-in-the-wake-of-covid-19">digital revolution in inclusive financial services</a> is unquestionably progressing quickly throughout Africa in the wake of COVID, including West and Francophone Africa and rural areas that have been neglected until recently.

While financial access in Africa remains low, mobile penetration is high, <a href="https://data.worldbank.org/indicator/IT.CEL.SETS.P2?locations=ZG" target="_blank" rel="noopener noreferrer">exceeding 90 percent</a>. Due to COVID restrictions on mobility, mobile phones have been indispensable not only for communication but also for domestic and international remittances. Facing limited access to markets coupled with security risks in using cash for transactions, farmers, cooperatives, and food processing companies accelerated their embrace of <a href="https://www.brookings.edu/blog/africa-in-focus/2021/08/16/digital-technology-and-african-smallholder-agriculture-implications-for-public-policy/" target="_blank" rel="noopener noreferrer">digital marketplace platforms</a>. Survey evidence suggests that most African micro and small enterprises did too which <a href="https://fbj.springeropen.com/articles/10.1186/s43093-022-00154-4" target="_blank" rel="noopener noreferrer">improved their financial resilience</a>. Banks and MFIs throughout Africa also are going digital and embracing “<a href="https://thecalabashnewspaper.com/afrimoney-gtbank-launch-bank-to-wallet-wallet-to-bank-promotion/" target="_blank" rel="noopener noreferrer">bank to wallet, and wallet to bank</a>” transactions and agency banking. Many banks and MFIs are teaming up to deliver financial services jointly or as agents to <a href="https://www.brookings.edu/blog/africa-in-focus/2021/12/14/mobile-financial-services-can-increase-impacts-of-microfinance-organizations-but-the-story-is-more-complicated-than-we-think/" target="_blank" rel="noopener noreferrer">deepen outreach to clients and improve cost efficiency</a> – for example by reducing the need to operate separate branches everywhere. Governments have also gone more digital by ramping up <a href="https://www.worldbank.org/en/results/2021/04/13/prioritizing-the-poorest-and-most-vulnerable-in-west-africa-togo-s-novissi-platform-for-social-protection-uses-machine-l" target="_blank" rel="noopener noreferrer">mobile money transfers from social protection programs</a> during COVID.

Moving beyond financial services, agricultural value chains are rapidly leveraging the high mobile penetration by also digitizing delivery services, distribution channels, electronic learning, and messaging at scale to reach out to remote populations (e.g., for health, financial education, agricultural practices, prices, weather warnings), enhancing inclusion and informed decision making.
<h1>Financial Inclusion’s Green Future in Africa</h1>
The African MFI leaders at the workshop reflected on how their clients fared through the pandemic and other recent crises. Uniformly, they agreed clients responded with <a href="https://www.centerforfinancialinclusion.org/does-financial-inclusion-boost-borrowers-resilience-three-lessons-from-the-pandemic">resilience</a>, innovative abilities to adapt, and incredible capacities to seize opportunities to not just recover but even advance. As such, African MFIs must follow the dynamics of their clients and deliver products and services that fit customers’ new needs. Client centricity is essential to meet client needs but is also a key element of client protection in light of <a href="https://www.cgap.org/sites/default/files/publications/slidedeck/2022_02_Slide_Deck_DFS_Consumer_Risks.pdf" target="_blank" rel="noopener noreferrer">heightened risks for digital finance consumers</a>.

Financial institutions also need to better understand the market intricacies and client opportunities in the green (micro)economy and develop financial products accordingly, partnering with those who can deliver services and technical advice to assist the transformation. Working towards an ecosystem approach to deliver <a href="https://www.centerforfinancialinclusion.org/green-inclusive-finance-a-framework-for-understanding-how-financial-services-can-help-low-income-people-weather-climate-related-risks">green inclusive financial services</a> in an efficient, secured, synergetic, and sustainable manner will be the way forward.
<blockquote class="pullquote--left">Working towards an ecosystem approach to deliver green inclusive financial services in an efficient, secured, synergetic, and sustainable manner will be the way forward.</blockquote>
Green inclusive finance ecosystem platforms will surely develop in Africa. However for that to happen, the impact investing sector and climate finance will need to collaborate, which would be a giant step forward as the two sectors have largely ignored the other for the last decade. Impact investors will need to learn how to invest in the green microeconomy as a mainstream target. In parallel, climate finance—so far largely directed elsewhere—will have to understand that unless communities, especially the most vulnerable among them, benefit significantly from environmental rehabilitation, preservation, and protection of biodiversity, sustainable development is not possible.

In Africa, impact investment remains an emerging sector, focused—rightly so—on financial inclusion and agriculture. Climate finance and green inclusive finance are at infant stages. Supporting, from the funding side, post-COVID initiatives from youth and local communities in climate adaptation, will be the next challenge and opportunity for Africa. And inclusive finance stakeholders should play significant roles in close partnership with others in that ecosystem.

The African inclusive finance leaders at the Lehigh workshop collectively sent a very positive and energetic message to their peers. During these crisis times, clients in Africa have shown high levels of resilience and of capacity to overcome. They have developed innovative strategies in the green economy. Financial institutions should accompany them by being client centric in product and service development, in using digital delivery channels, and in working as a collaborative ecosystem to manage new digital risks and protect customers. Africa is a vulnerable continent in the face of climate change, but it can be the most resilient one if we act together.

&nbsp;

The authors were panelists at the Lehigh University workshop and this note is the result of workshop discussions and subsequent analysis. Participating leaders from African MFIs included Anne Marie Chidzero, Chief Investment Officer at FSD Africa Investements, Kimanthi Mutua, founder of KREP, the first microfinance institution in Africa to be transformed into a full-fledged commercial bank, now named SIDIAN Bank where Kimanthi has been CEO and remains a board member, and Pierrette Kouakou, Managing Director of FIN’ELLE in Cote D’Ivoire. Views expressed are the authors’ and not necessarily those of other participants.

Post-COVID Crisis & Opportunity in African Inclusive Finance

School entrepreneurs, as independent business owners, play a vital role in community development. By operating a local school, they can make investments that not only grow their school and create an enabling learning environment, but benefit their entire community – from creating jobs and generating demand for local businesses, to providing a space for networking opportunities and stronger community cohesion.

However, school entrepreneurs often need access to loans tailored around their school’s termly operating model. Globally, the demand for finance from affordable private school entrepreneurs and parents is estimated to be at least $24 billion.

Join Opportunity EduFinance and representatives from three of our partner financial institutions in Nigeria, Pakistan and Uganda as we discuss the links between financing the affordable private school sector and sustainable community development and Sustainable Development Goal #4: 'To ensure inclusive and equitable quality education and promote lifelong learning opportunities for all'.

Webinar Speakers:

Scott Sheridan, Director of Operations, Opportunity EduFinance

Rogers Nwoke, Managing Director/CEO, Hasal Microfinance Bank Limited, Nigeria, and President, National Association of Microfinance Banks

Kamran Azim, Chief Executive Officer, Taleem Finance Company Ltd and former Head of Operations at Kashf Foundation, Pakistan

Alex Ahabwe, Education Finance Manager, Opportunity Bank Uganda, Ltd.

Webinar: Financial Inclusion for School Leaders

For Financial Inclusion Week 2017, WSBI highlights the ways that new partnerships and new products are helping its members make progress toward financial inclusion.

&gt; Posted by Mina Zhang, Senior Advisor, WSBI

The World Savings and Retail Banking Institute (WSBI) and its members are committed to <a href="http://www.worldbank.org/en/topic/financialinclusion/brief/achieving-universal-financial-access-by-2020">Universal Financial Access</a> (UFA), doing their part to help realize the “account for everyone” goal. <a href="https://www.wsbi-esbg.org/press/latest-news/Pages/WSBI-makes-further-progress-towards-UFA-2020-goal.aspx">Our data</a> from the end of 2016 shows that we’re making progress, with 136 million new clients and 236 million new transaction accounts, since the UFA benchmarks were set at the end of 2014.

For <a href="http://www.financialinclusionweek.org/">Financial Inclusion Week 2017</a>, we are highlighting the ways that new partnerships and new products are helping us achieve this goal.

WSBI members that harness new technologies have made real inroads. They have been able to more effectively offer affordable, quality products and services that meet the needs of underserved and unbanked people, allowing them to boost financial access and usage and attract new customers. In a nutshell, WSBI members’ approaches to financial inclusion include:
<ul>
 	<li>Integrating the unbanked at the start of financial inclusion journey</li>
 	<li>Extending banking networks to underserved areas</li>
 	<li>Digitizing savings mobilization and financial service to meet the changing needs of customers</li>
 	<li>Improving financial literacy, particularly among youth</li>
</ul>
<h3>Integrating the Unbanked at the Start of the Financial Inclusion Journey</h3>
[caption id="attachment_24473" align="alignright" width="195"]<img class="alignnone size-full wp-image-24473" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/wsbi-vivet-e1509740959598.png" alt="ViVet app screen." width="195" height="320" /> ViVet app screen. Photo credit: WSBI[/caption]

LienViet Postbank (LVPB) Vietnam is top among the WSBI membership in Asia in new accounts. The number of accounts has almost doubled from 2014 to 2016. This achievement is thanks to its innovative approach to integrate the unbanked at the start of financial inclusion journey.

<a href="https://www.youtube.com/watch?v=IqRdJhqaPsQ">ViViet</a> is LVPB’s payment solution that provides access to payment and banking services via mobile phones for customers in Vietnam. Only 22 percent of the population has access to formal banking services in Vietnam, but around 90 percent of Vietnamese adults are using mobile phones, and the mobile phone subscription rate is 128 percent. The wide gap between banking customers and telecommunication subscribers implies significant potential for the ViViet e-wallet.

ViViet is tailored to the needs of the unbanked because it can grow with users as their financial journey expands. They may start with bill payment, then open a bank account, access a microloan, and so on. ViViet currently serves as a payment tool for services including utility bills, transportation, mobile phone cards and air-time top-ups. ViViet can also be used for payment of loans, insurance premiums, tuition fees and online purchases, as well as fund transfers between ViViet and external bank accounts.

&nbsp;
<h3>Extending Banking Networks to Underserved Areas</h3>
[caption id="attachment_24476" align="aligncenter" width="611"]<img class="alignnone size-full wp-image-24476" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/wsbi-nsbi-saver-e1509741166378.png" alt="WSBI NSBI Saver" width="611" height="341" /> NSB i-Saver outlet in Sri Lanka. Photo credit: WSBI[/caption]

There are about 6 million smartphones in Sri Lanka, and today  a smartphone or computer device can easily be converted into a virtual bank. NSB i-Saver allows customers in Sri Lanka to deposit money in any NSB Bank account in a convenient and efficient manner via more than 16,000 touch points throughout the country, as a result of partnerships with the mobile network operator and other retailers. This expansion of service is expected to further inculcate the habit of savings among Sri Lanka’s populace, thus resulting in wealth creation and mobility of funds for investment.

Similarly in El Salvador, Fede Puntos Vecinos (Fedecredito’s agent banking scheme) has increased access to financial services in underserved areas. To date, service stations have been implemented in 196 of 262 municipalities in El Salvador—that means one service point for every 20 kilometers. As of December 2016, Fede Puntos Vecinos processed 5.4 million transactions valued at some US $195 million, with an average transaction amount of around US $35.

As one example, through the Fede Puntos Vecinos business model, mini-market owner Carlos Armando Barillas increased sales and broadened offerings at his initial store (opening a new bookshop section) and opened a new brand new store in another municipality.
<h3>Digitizing Youth Savings and Improving Financial Literacy</h3>
[caption id="attachment_24480" align="alignleft" width="300"]<img class="alignnone size-medium wp-image-24480" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/11/wsbi-postbank-uganda.jpg?w=600" alt="A woman speaks with a microphone in front of a panel at a PostBank Uganda YouthSave event." width="300" height="201" /> PostBank Uganda YouthSave event. Photo credit: WSBI[/caption]

PostBank Uganda unveiled a goal-based mobile savings product called the PostBank Youthsave Solution to encourage youth to save more diligently. This product aims to improve the financial inclusion of youth through educating them about saving money. It also aims to retain them as loyal customers and ultimately position PostBank as the preferred financial institution for young people. YouthSave was developed with support of the WSBI, which supported the research into youth and student behavior and gaps that affected the saving culture. The research confirmed that young people have access to and prefer digital platforms like mobile phones and the Internet.

The YouthSave account enables youth to access their accounts digitally, as well as learn how to save for multiple goals using a mobile phone application. Its functionality includes setting and tracking savings goals, setting start and end dates for savings goals, editing savings goals, checking the account balance, buying airtime, paying bills, and transferring money. This digitally-enhanced product is available to students and youth between 18 and 30 years old.

These challenges and questions make our work in financial inclusion even more pressing. If we address them well, we can expect more people joining into the financial mainstream.

&nbsp;

An Account for Everyone: How New Products and Partnerships Are Helping WSBI Members March Towards Universal Financial Access

My sister-in-laws won’t let me say the “H” word around their kids because of how much hockey equipment and ice time cost. Instead they have opted for lacrosse. The joke’s on them, however, as the recent Time article “<a href="http://time.com/4913687/how-kids-sports-became-15-billion-industry/">How Kid Sports Turned Pro</a>” estimates the average annual spending for lacrosse for one child is $7,956 while hockey is only $7,013!

There is no doubt a major shift happening in the United States around youth sports: away from informal neighborhood and club leagues toward more organized and costly alternatives. Kids don’t just show up to a field with a bat and a ball anymore. According to Time, families are now asked to shell out $300 for a bat, $250 for a glove, $200 for a uniform, $90 for cleats, $70 for an equipment bag, and the list goes on. And in this case of baseball, that is just the equipment. There is also the travel, tournament fees, batting cages, and private coaching that many parents fund with the hope of giving their kid a slight competitive advantage. Youth sports are big business, having grown from an $8 billion industry in 2005 to a $15 billion industry in 2016.

Those of us working on financial inclusion might take note that this shift means that many lower income families are being shut out entirely. Just 19 percent of families with annual incomes under $25,000 participate in organized sports versus 41 percent of families with incomes over $100,000.

Some observers think that one of the drivers of higher and higher costs is parents’ often irrational hope that their children will ultimately get college sports scholarships. This hope is more alluring as college costs soar. The possibility that scholarship hopes drive spending warrants our examination because it speaks to a major underlying factor in our financial inclusion work: people do not always make rational financial decisions and are especially bad at responding accurately to small probabilities.

The Time article points out the long odds that a high school player will continue playing in college (1 in 41 for football and 1 in 99 for basketball) and the even longer odds of going pro. Most parents might know such facts intellectually, but nevertheless discount the odds when it comes to their own children. If we were programmed to make rational financial decisions, more parents would save the excessive money otherwise spent on sports, sign their kids up for the recreational league, and use the savings to pay for college.

This sports phenomenon also illustrates an exclusionary dynamic that is at work in many instances, including financial services. As elite sports programs vie to attract parents who can afford them, membership requirements become increasingly high-end, shutting out lower income parents. Similarly, as banks compete for depositors who can maintain high balances, they create bank account products that are too expensive for low income consumers when they could create products with broad appeal.

Even though I know all this in my head, I just signed up my 4 year old for a learn-to-skate program. There goes two hundred dollars for him to push milk carts around on the ice while my husband and I (who both could have taught him to skate) watch. NHL, here we come. I’ll see you at the rink!

Have you read?

<a href="https://cfi-blog.org/2016/06/09/three-behavioral-implications-of-how-mexico-diaries-households-pay-for-healthcare/">Three Behavioral Implications of How Mexico Diaries Harness Households Pay for Healthcare</a>

<a href="https://cfi-blog.org/2014/12/16/beyond-design-behavioral-science-for-the-pilot-and-scale-of-product-innovations/">Beyond Design, Behavioral Science for the Pilot and Scale of Product Innovations</a>

<a href="https://cfi-blog.org/2013/11/05/kate-mckee-on-the-behavioral-economics-of-poverty-and-implications-for-financial-inclusion/">Kate McKee: On the Behavioral Economics of Poverty and Implications for Financial Inclusion</a>

Financial Exclusion and Youth Sports

[caption id="attachment_22489" align="aligncenter" width="615"]<img class="wp-image-22489" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/12/myanmar-accion-champions-financial-inclusion-fish-seller-ma-san-hew-microfinance-client-of-accion-dawn-image-by-john-rae.jpg" width="615" height="412" /> Accion client Ma San Htwe selling fish in Myanmar, one of the key areas discussed at European Microfinance Week 2016.[/caption]

<a href="http://www.e-mfp.eu/european-microfinance-week-2016">European Microfinance Platform</a> is celebrating 10 years of supporting inclusive finance innovation, and hosted European Microfinance Week 2016 (EMW) in Luxembourg a few weeks ago. At the conference, I joined discussions about key organizations and challenges in the industry. Here are five of the main takeaways from the week:
<h4>1. The Underserved Refugee Population
</h4>
The <a href="http://sptf.info/">Social Performance Task Force</a> (SPTF) is helping to provide financial services to the refugee population, which is now <a href="http://sptf.info/working-groups/refugee-microfinance">approximately 20 million people</a>. In reality we don’t know very much about the socioeconomic needs of refugees, and much of the research is focused on humanitarian efforts. SPTF is working to research and provide guidelines to financial service providers to better serve the financial needs of this population. The guidelines will be published on SPTF’s website in the coming months. Learn more about leading organizations supporting refugees from <a href="https://cfi-blog.org/tag/financial-inclusion-of-refugees-blog-series/">CFI’s blog series</a> on refugees.
<h4>2. Opportunity in Myanmar
</h4>
Representatives from VisionFund, Advans, UNCDF, and M-CRIL provided a look at the economic landscape of Myanmar and the future of financial inclusion there. In Myanmar, 70 percent of the population was excluded from formal financial services <a href="http://partners.wsj.com/metlife/multipliers/articles/myanmars-economic-revolution/">until 2011, when microfinance rapidly </a>expanded. After 2011, 267 licensed Monetary Financial Institutions (MFIs) opened. This<a href="http://partners.wsj.com/metlife/multipliers/articles/enabling-new-business/"> opportunity</a> comes with many barriers to inclusion, such as a lack of government regulation and funds and capacity-building issues. However, there is widespread optimism with an adoption of regulations proposed by the <a href="http://smartcampaign.org/home/1082/1082">Smart Campaign</a>, as well as further demand for microfinance in Myanmar. Investors should consider moving into the region for long term impact.
<h4>3. Offshore Financial Centers
</h4>
The <a href="http://fiecouncil.com/">Financial Inclusion Equity Council</a> (FIEC) hosted a discussion at EMW about their latest research on offshore financial centers. Daniel Rozas and Sam Mendelson of the European Microfinance Platform have been working with FIEC members, raising questions about the key drivers in deciding to domicile funds offshore, and why this is important for the impact investing space. This session was a good introduction to the research, and their publication will be released early next year.
<h4>4. Cyber Security and Digital Finance</h4>
Expanding digital finance is important to everyone working in the financial inclusion space. Unfortunately, operational costs are too high to open banks in remote areas. The threat of cyber-attacks and the challenge of gaining trust in emerging markets are also important topics to review. International Development organizations, investors, regulators, and innovators gathered to highlight the risk. One topic that was discussed was the risks specifically faced by smaller banks: they are much more vulnerable to cyber-attacks and they don’t have enough capital to invest in security measures. Organizations like Suricate Solutions (an electronic banking and IT security firm) and <a href="http://www.uncdf.org/">UNCDF</a> are working with regulators to collect data from the market and set up preventative measures to avoid vulnerability for the financial inclusion sector.
<h4>5. Microfinance and Access to Education
</h4>
This year, access to education was the theme of the European Microfinance Award. It was represented by three finalists from around the world: Kashf Foundation (Pakistan), Fundación Génesis Empresarial (Guatemala), and Opportunity Bank (Uganda). The winner was Kashf Foundation, an organization that provides loans to private schools, training for teaching staff, and educational opportunities for women and girls. In a country where 25 million children are out of school, this €100,000 award by the Luxembourg Ministry of Foreign and European Affairs will make a great impact. The organization is also <a href="http://www.smartcampaign.org/certification/certified-organizations#Kashf">SMART Certified</a> by the Center for Financial Inclusion.

These are just a few of the important discussions about innovations in financial inclusion. Each presents not only challenges but unique opportunities to learn and collaborate to make progress in inclusive finance.

Have you read?

<a href="https://cfi-blog.org/2016/11/15/the-future-of-refugee-financial-inclusion/">The Future of Refugee Financial Inclusion</a>

<a href="https://cfi-blog.org/2015/02/18/myanmars-first-ecommerce-platform-supports-the-transition-from-cash-to-electronic/">Myanmar's First eCommerce Platform Supports the Transition from Cash to Electronic</a>

<a href="https://cfi-blog.org/2016/07/22/more-in-for-impact-whats-up-in-socially-responsible-investing/">"More in for Impact": What's Up in Socially Responsible Investing?</a>

&nbsp;

5 Themes in Financial Inclusion Innovation from European Microfinance Week 2016

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

Combatting Elder Financial Exploitation…Over Dinner

&gt; Posted by Brian Kuwik, Chief Regional Officer, Africa, Accion

<a href="https://www.flickr.com/photos/worldbank/7556692048/in/album-72157601441433631/"><img class="alignright wp-image-21759" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/08/7556692048_e7bb0398bc_z.jpg" width="331" height="248" /></a>Today around the world, we <a href="http://www.un.org/en/events/youthday/">celebrate</a> our youth and their achievements and reflect on the goals of “eradicating poverty and achieving sustainable consumption and production” for the youth of this generation. To achieve these goals, a culture of saving money consistently over time will be important.

How can financial institutions, policy makers, and parents encourage the youth to save? A six-year project (2010-2015) across four countries, <a href="http://www.newamerica.org/asset-building/youthsave/">YouthSave</a>, led by Save the Children and Washington University examined this question. Recently, I attended the project’s dissemination event in Accra, Ghana and learned about how, as part of the project, a bank partnered with middle and secondary schools to offer formal savings accounts to students 12-18 years of age.

Many Ghanaian students are saving money informally in their schools because they either lack national identification documents or cannot find an adult whom they trust to be the primary signatory to a bank account.  Some entrepreneurial students act as “susus” collecting cash from their classmates on a daily basis and safe-guarding it. Since they often keep one day of savings as a fee for this service, this can be a costly way of saving.

As part of the YouthSave project, HFC Bank <a href="https://static.newamerica.org/attachments/12261-key-findings-from-the-youthsave-project-in-brief/GhanaBrief.f9ca498f3fcf4efc9948a18b4164aff8.pdf">offered</a> Enidaso accounts – youth-focused savings accounts – to students in middle and secondary schools to provide an alternative to such costly informal services. Opening and servicing these accounts in the schools increased uptake and usage of the accounts. The schools are important channels for the bank to offer this service. And their development as channels depended significantly on collaborative relationships between the bank and the schools’ headmasters and teachers as well as incentives and outreach events in the schools.

Yet, many Ghanaian youth, especially those of a low-income background, <a href="https://static.newamerica.org/attachments/12261-key-findings-from-the-youthsave-project-in-brief/GhanaBrief.f9ca498f3fcf4efc9948a18b4164aff8.pdf">expressed</a> concern that they did not trust their parents or teacher to be the primary signatory of the account.  In other countries such as Colombia, the regulations permit youth to open bank accounts independently.  A key finding of the project was that lowering the minimum age for opening and operating a savings account would further improve access and usage of this service among the youth.  In Colombia, such accounts can be opened at <a href="https://static.newamerica.org/attachments/12261-key-findings-from-the-youthsave-project-in-brief/ColombiaBrief.c82a12afcdfa4da1b375f1e66970cfae.pdf">7 years of age</a> without an adult co-signer.

For the majority of Ghanaian youth who opened accounts during the project, financing their own education was the main goal for the use of their savings.  They aimed to save money to pay their future school fees when their parents could not.  For low-income youth, a savings account can be an especially important tool in positively influencing and even driving their educational aspirations.  At the dissemination event in Accra, a young lady shared her experience in using her savings to pay her school fees for her final year of secondary school when her parent could not afford the fees.  This enabled her to continue her education and eventually open a business.

The business case for banks to offer youth savings is <a href="https://static.newamerica.org/attachments/12261-key-findings-from-the-youthsave-project-in-brief/FinancialInstitutionsBrief.b41604d800d24d5e9f63c5377ffa7a4f.pdf">not short term</a>. Banks interested in serving the youth must perceive the business case of developing long term customer relationships. This approach can result in the youth becoming “customers for life”. Over time, the youth can become very loyal customers for a wider range of financial services such as payments and loans. Learning to save is the first step in that process. Many youth express loyalty to banks which accompany them in taking this first step.

The YouthSave project is rich in lessons for financial institutions and policy makers. As a parent, I realized how important it is for me to set an example and develop an appreciation among my children for saving money as a life tool. I am inspired by the young lady in Accra who shaped her own destiny by saving to ensure that she finished secondary school. She has shown us how to take matters into our own hands and use one of many tools to eradicate poverty: save for education.

Image credit: <a href="https://www.flickr.com/photos/worldbank/7556692048/in/album-72157601441433631/">World Bank</a>

Have you read?

<a href="https://cfi-blog.org/2013/04/30/four-insights-into-youth-financial-capability/" target="_blank">Four Insights into Youth Financial Capability</a>

<a href="https://cfi-blog.org/2013/11/18/riding-financial-inclusion-disruption-are-youth-savers-the-surfers-or-the-wave/" target="_blank">Riding Financial Inclusion Disruption: Are Youth Savers the Surfers or the Wave?</a>

<a href="https://cfi-blog.org/2013/06/28/extending-protection-to-youth-clients/" target="_blank">Extending Protection to Youth Clients</a>

Learning from Our Youth: Saving for Education

&gt; Posted by Jeffrey Riecke, Communications Specialist, CFI

<img class="alignright wp-image-21528" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/07/thumb_d1d482f5b64147f3b642423546056b7e.jpg" width="330" height="220" />Last week the President of Mexico <a href="http://www.gob.mx/presidencia/prensa/mexico-incluyente-es-un-pais-en-donde-los-derechos-no-solo-sean-un-ideal-sino-una-realidad-permanente-en-la-vida-diaria-de-sus-habitantes?idiom=es&amp;hootPostID=59e0b3040a7725b90ee6f6f77ec46fca">launched</a> the country’s long-delayed National Financial Inclusion Strategy. The comprehensive plan engages the spheres of private banking, social welfare, public education, telecommunications, and more to extend quality financial services to the <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=3&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwiTh93rrMjNAhWDQD4KHbawCZAQFggpMAI&amp;url=http%3A%2F%2Fwww.worldbank.org%2Fen%2Fnews%2Ffeature%2F2016%2F06%2F23%2Fmexico-to-accelerate-path-to-financial-inclusion&amp;usg=AFQjCNGdb7LKkf3NUC2pMxk3B2TJCMGN7g&amp;sig2=2msHvwRJF51iDTiZcO9L0A">56 percent</a> of adults in the country who remain without a formal bank account. Although the plan was nearly full-formed three years ago and has since sat on the proverbial shelf, the enactment of the strategy represents a reaffirmed commitment to financial inclusion across the Mexican Government, including the Office of the President, the Central Bank, the Ministry of Finance, and the Ministry of Public Education.

The national strategy is structured as a six-pillared plan. The Ministry of Public Education (Secretaria de Educacion Publica) will promote financial education starting with children and youth by incorporating related content into the curriculum of public education. Financial education will also be embedded in government programs like <a href="http://www.gob.mx/presidencia/acciones-y-programas/prospera-programa-de-inclusion-social">Prospera</a>, <a href="http://www.creditojoven.gob.mx/portalcj/content/index.html">Credito Joven</a>, and <a href="http://empresarias.inmujeres.gob.mx/">Mujeres PYME</a>. Prospera is Mexico’s conditional cash transfer program, which has 6.5 million beneficiaries. Credito Joven is a youth inclusion program introduced in February 2015 that aims to empower young people, in part by providing credit to those with no credit histories. Mujeres PYME offers finance and business development support to small businesses led by women.

The strategy will harness technological innovation in areas including digital payments, mobile phones, and mass data analysis. Recent fintech progress in the country offers a strong foundation on which to build. In 2010 the Mexican government began efforts to digitize social transfers previously made in cash. In 2013 the government launched its national digital strategy, “<a href="https://www.gob.mx/mexicodigital/">Mexico Digital</a>”, to further support the country’s transition to a digital economy. Today half of Prospera program recipients receive their payments in digital accounts facilitated by the program. Between 2013 and 2015, the number of digital transactions conducted through the Government’s <a href="https://www.imf.org/external/pubs/ft/wp/2010/wp10143.pdf">Treasury Single Account</a> increased from 69 million to 116 million. The Better Than Cash Alliance <a href="https://www.betterthancash.org/news/blogs-stories/digitization-of-payments-in-mexico-saves-billions">estimates</a> that the Government of Mexico saves roughly $1.3 billion per year through digitized payments that were previously made in cash. Moody’s Analytics <a href="https://usa.visa.com/visa-everywhere/global-impact/moodys-analytics-study-the-global-impact-of-electronic-payments.html">found</a> that between 2011 and 2015, the use of digital payments boosted Mexico’s GDP by around $8 billion. Following the launch of the national strategy last week, Mexico bolstered the switch to digital finance for citizens, businesses, and the government by <a href="http://www.prnewswire.com/news-releases/mexicos-route-to-financial-inclusion-begins-with-commitment-to-reduce-the-use-of-cash-300289618.html">joining</a> The Better Than Cash Alliance.

Out of Mexico’s population of 120 million, <a href="http://www.prnewswire.com/news-releases/mexicos-route-to-financial-inclusion-begins-with-commitment-to-reduce-the-use-of-cash-300289618.html">107 million</a> have a mobile phone and 68 million of these are smartphones. This represents a 24 percent increase in smartphones over just the past 15 months. However, there’s still a long way to go for mobile money – only 9.5 percent of those with bank accounts in the country have mobile banking services associated with them. The Central Bank’s inter-bank payments system, SPEI (Sistema de Pagos Electronicos Interbancarios), has evolved to accept the payments of non-bank providers, like those offering mobile money, <a href="http://www.gsma.com/mobilefordevelopment/programme/mobile-money/national-infrastructure-to-support-mobile-money-interoperability-lessons-from-mexicos-inter-bank-payments-system-spei">facilitating</a> an interoperable mobile money platform that could mature into a comprehensive digital finance ecosystem. Speaking on the newly launched financial inclusion strategy, Luis Videgaray Caso, the Secretary of Finance, <a href="http://www.gob.mx/presidencia/prensa/mexico-incluyente-es-un-pais-en-donde-los-derechos-no-solo-sean-un-ideal-sino-una-realidad-permanente-en-la-vida-diaria-de-sus-habitantes?idiom=es&amp;hootPostID=59e0b3040a7725b90ee6f6f77ec46fca">asserted</a> that telecommunications reform is generating the most important foundational changes for the Mexican financial system.

Along with telecommunications infrastructure, the strategy prioritizes the development of financial infrastructure in underserved areas. The strategy emphasizes building partnerships between financial players, such as retail chains, to extend banking services to more dispersed locations. In its review of the national strategy, Fitch Ratings <a href="http://www.businesswire.com/news/home/20160623006033/en/Fitch-Mexican-National-Policy-Financial-Inclusion-Supports">highlighted</a> the importance of agent banking models; however, the deployment of agents is still at a relatively early stage. In September of 2015, there were 2.8 correspondents in Mexico per every 10,000 adults, compared to 1.9 bank branches per every 10,000 adults.

The fourth pillar of the national strategy is increased access and use of formal financial services for the underserved and excluded populations. During the launch event for the strategy, President Enrique Pena Nieto <a href="http://www.gob.mx/presidencia/prensa/mexico-incluyente-es-un-pais-en-donde-los-derechos-no-solo-sean-un-ideal-sino-una-realidad-permanente-en-la-vida-diaria-de-sus-habitantes?idiom=es&amp;hootPostID=59e0b3040a7725b90ee6f6f77ec46fca">noted</a> that through government programs his administration has been able to include nearly 7 million women in the formal financial system. Along with the Credito Joven and Mujeres PYME programs targeting youth and women, there is also a new program providing credit for small farmers. So far, 270,000 farmers have received credit products from the program, and 85 percent of these individuals lacked prior credit histories. Credit access for SMEs is also a big priority for the country, as they make up 71 percent of employment in the country and 51 percent of revenue from the business sector, but only 11 percent of the country’s banks’ total loan portfolio.

The strategy emphasizes the importance of client protection - promoting safer services, responsible institutions, and clarity on the rules and conditions surrounding the provision of financial products and services. This section of the national plan focuses on strengthening <a href="http://www.condusef.gob.mx/">CONDUSEF</a>, the government agency concerned with the treatment of financial clients.

Finally, the sixth pillar of the national strategy is the generation of data and measurements to assess financial inclusion. In any effort, it is critically important to conduct periodic evaluations and use up-to-date data. The national strategy seeks to continue efforts like the country’s <a href="https://www.bbvaresearch.com/en/publicaciones/determinants-of-financial-inclusion-in-mexico-based-on-the-2012-national-financial-inclusion-survey-enif/">National Survey of Financial Inclusion</a>. The week prior to the release of the national strategy the second National Survey of Financial Inclusion was announced.

Undoubtedly Mexico’s new National Financial Inclusion Strategy is ambitious. After all, its ultimate aim is for all Mexicans to gain access to the formal financial system. At the strategy’s launch event, Queen Maxima of the Netherlands, speaking in her role as special advisor to the U.N. Secretary General, <a href="http://www.gob.mx/presidencia/prensa/palabras-del-presidente-de-los-estados-unidos-mexicanos-epn-durante-la-presentacion-de-la-politica-nacional-de-inclusion-financiera?idiom=es">stated</a> that successful implementation of the plan will require careful planning and coordinated action across public and private groups. But if the strategy is realized, the benefits would be massive. Achieving full financial access in Mexico would bring 67 million individuals into the formal banking system.

Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2016/05/13/steering-financial-education-towards-creating-financial-capability-in-mexico/">Steering Financial Education Towards Creating Financial Capability in Mexico</a>

<a href="https://cfi-blog.org/2016/06/09/three-behavioral-implications-of-how-mexico-diaries-households-pay-for-healthcare/">Three Behavioral Implications of How Mexico Diaries Households Pay for Healthcare</a>

<a href="https://cfi-blog.org/2015/11/13/a-pathway-to-better-retirement-in-mexico/">A Pathway to Better Retirement in Mexico</a>

Mexico Launches Comprehensive Financial Inclusion Strategy

As we say goodbye to April, I reflect on the month that since 2004 has been recognized as <a href="http://www.financialliteracymonth.com/">Financial Literacy Month</a> by the U.S. government and that also brings us <a href="http://www.pay-equity.org/day.html">Equal Pay Day</a>, which was originated by the National Committee on Pay Equity in 1996. To celebrate and learn more about these topics, I attended two events in Boston: a talk hosted by <a href="http://www.budgetbuddies.org/">Budget Buddies</a>, a financial literacy coaching program for women, and an Equal Pay Day <a href="http://www.wbur.org/2016/04/12/goldberg-pay-gap-calculator">event</a> hosted by Massachusetts Treasurer Deborah Goldberg. I was struck by a few pertinent themes that ran through both events.

1. Gender Gaps. Financial literacy is low in the U.S. and worldwide according to <a href="http://www.wsj.com/articles/get-ready-to-be-told-you-dont-know-money-1457321010#livefyre-comment">The Wall Street Journal</a>: “Only 57 percent of Americans passed a basic financial literacy test, according to one recent global survey; in another survey, teens in the U.S. ranked between those of Russia and Latvia. Around the world, meanwhile, just one-third of adults are considered to be financially literate.”

However, there is also a gap between genders in financial literacy – <a href="http://media.mhfi.com/documents/2015-Finlit_paper_17_F3_SINGLES.pdf">5 percent on average worldwide</a> (35 percent for men, 30 percent for women) and <a href="https://www.youtube.com/watch?v=woTC6AyRXSo">10 percent in the U.S</a>., according to Standard &amp; Poor’s Ratings Services Global Financial Literacy Survey.

Budget Buddies, which focuses only on women, makes the case that strong money management skills are especially important for women because:
<ul>
 	<li>Women still earn about <a href="http://www.catalyst.org/knowledge/womens-earnings-and-income">20 percent less than men</a> and are more than twice as likely to work part-time.</li>
 	<li>Women also spend an average of <a href="http://www.bls.gov/data/">12 fewer years</a> in the work force, due to caring for children and older relatives.</li>
 	<li>As a result of their lower lifetime earnings, women have <a href="https://www.ssa.gov/policy/docs/issuepapers/ip2009-02.html">lower Social Security payments</a> in their later years.</li>
 	<li>Lower lifetime savings exacerbate this problem, as women outlive men by 5 years on average.</li>
</ul>
2. Confidence Matters. A recent Atlantic article presents a theory that a <a href="http://www.theatlantic.com/magazine/archive/2014/05/the-confidence-gap/359815/">confidence gap</a> between men and women is one reason why wage and promotion inequalities exist in the workplace. Evidence shows that women are less self-assured than men—and that to succeed in the workplace, confidence matters as much as competence. It seems confidence may be one contributor to the fact that, despite passage of the <a href="https://www.whitehouse.gov/issues/equal-pay">Equal Pay Act in 1963</a>, the gender gap in pay still persists.

Similarly, confidence is a hurdle for women with financial literacy. A study commissioned by the Girl Scouts, <a href="http://www.girlscouts.org/content/dam/girlscouts-gsusa/forms-and-documents/about-girl-scouts/research/GSRI_Having_It_All_report.pdf">Having It All: Girls and Financial Literacy</a>, found “girls are extremely optimistic about their future lives but admit to lacking the financial confidence and knowledge to achieve their dreams.” It also uncovered that about 50 percent of girls feel confident making financial decisions, and only 12 percent would consider themselves very confident.

3. Knowledge is Power. Improved financial literacy might support greater economic self-sufficiency and empowerment. Despite the huge focus on higher education that it is known for, Massachusetts is still one of 12 states in the country that does not require schools to offer financial education courses to students. Financial literacy is especially key in a state where the majority of students take on an enormous amount of student debt, an average of $29,391 in 2014. And where the average annual cost of day care, $17,062 as of this year, is well above the “10 percent” of a family’s income that the Department of Health and Human Services considers affordable.

[caption id="attachment_21250" align="aligncenter" width="585"]<a href="http://www.mass.gov/treasury/docs/empowerment/financial-literacy-in-massachusetts-report.pdf"><img class="wp-image-21250" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/05/picture-1.png" width="585" height="587" /></a> (click to enlarge)[/caption]

However, for many women, perhaps the single most important piece of financial knowledge may be understanding your worth in the market place. And for that, in April Massachusetts released <a href="http://equalpayma.com/en/Calculator">a tool kit</a> for understanding the pay gap, which includes a calculator allowing women to play with the concept of pay differentials in their industry.

A December 2015 <a href="http://www.mass.gov/treasury/docs/empowerment/financial-literacy-in-massachusetts-report.pdf">Report on Financial Literacy in Massachusetts</a> indicates that there is still a lot of work to be done, and the equal pay <a href="http://equalpayma.com/en/faqs#sthash.3IPtp8l0.dpuf">website</a> indicates that “at the current rate, the wage gap for women in Massachusetts will not close until 2058.” Some of the keys to improve both efforts include more data, greater transparency, and early education, including education focused on building confidence. Additionally, like the aim of the CFI’s new <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/innovations-in-financial-capability">financial capability innovations project</a>, it’s important for practitioners and stakeholders to widely share ideas that work, especially between domestic and international efforts, which often seem to be disconnected. For example, the microfinance industry has long focused on financial literacy, recognizing it as an important cornerstone to responsible lending, and has long focused on women.

Have you read?

<a href="https://cfi-blog.org/2016/04/20/g2p-and-gender-when-will-pakistani-women-be-able-to-withdraw-their-own-money/">G2P and Gender: When Will Pakistani Women Be Able to Withdraw Their Own Money</a>

<a href="https://cfi-blog.org/2016/03/08/in-the-hands-of-women-a-reflection-on-the-gender-gap-in-financial-inclusion/">In the Hands of Women: A Reflection on the Gender Gap in Financial Inclusion</a>

<a href="https://cfi-blog.org/2016/03/22/the-trouble-with-retail-credit-cards/">The Trouble with Retail Credit Cards</a>

In the United States, Gender Gaps in Financial Literacy and Pay Persist

&gt; Posted by Center Staff

<img class="alignright wp-image-21224" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/04/thumb_769d558f79c24160b4c408ede6a180a2.jpg" width="315" height="210" />Remember the first time you tried to cook? Chances are you were nervous or at least apprehensive about how the food would turn out. If friends or family were in attendance, or, worse, were to eat what you were preparing, you were probably even less confident. Remember the second time you cooked? Or the third? Probably not. The more you actually got into the kitchen, the more your skills sharpened, and the more routine it became.

Using formal financial services for the first time, like cooking, can be intimidating – especially for people not used to interacting with formal institutions. Banks are big and complicated. A person of moderate means might feel that the bank will treat her as a low priority customer. And the notion of entrusting one’s livelihood to an unfamiliar entity is scary.

As part of CFI’s new <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/724">financial capability project</a>, we scanned the globe for the top innovations to help clients build their capability and make sound financial decisions. One of the <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2016/04/a-change-in-behavior-abridged-version.pdf">behaviorally-informed practices</a> we identified among these innovations as having great promise to affect changes in behavior is learning by doing, a strategy closely connected to effective, practical learning. Think of how much quicker your capability grew by actually cooking, than by reading a cook book.

Learning by doing, whether through technology-enabled simulations, or in real life with the supervision of front-line staff, enables customers to overcome the initial barriers to use that come with unfamiliarity and lack of confidence. Learning by doing offers customers the space to learn and get comfortable with financial products. This can be especially valuable for customer activation.

In our project we came across many organizations that promote learning by doing – some via group settings, others through interactive games or individual interventions. Here are a few of our favorites.

To promote savings, AgentPiggy, a virtual piggy bank from Chile, gets children and parents involved in creating and working toward financial goals. AgentPiggy allows parents to create a starting balance and weekly allowance amount for their child’s virtual piggy bank. The activities prompt learning by doing as children set goals and manage their money via specific challenges. For example, parents can set up a system where children earn money through completing challenges such as performing certain household chores.

Fundación Capital (FC) helps build the financial capability of recipients of government cash transfers in Colombia and 11 other countries in Latin America through its program Iniciativa LISTA. Developed in 2012 in rural Colombia, Iniciativa LISTA aims to change attitudes towards and provide knowledge about financial services. The program is currently being scaled to 100,000 households under Colombia’s Más Familias en Acción. For LISTA, FC developed a tablet loaded with financial education modules and games. The LISTA tablet serves as a decentralized, self-paced, customized learning platform that can be used in the absence of a trained facilitator. Each family in a village keeps a tablet for a few days, allowing users to practice with technology in private.

The tablet also includes an ATM simulator and other practice exercises. The ATM simulator is the most popular element on FC’s tablet, which also suggests that it is the most useful. The primary goal is to reduce fear of ATMs and increase confidence around technology. The confidence barrier is large and can lead to financial exclusion among poor women. FC found that the tablets were especially popular among youth. Similar programs are being prepared or implemented in Brazil’s Bolsa Familia, the Dominican Republic’s G2P programs, and Mexico’s PROSPERA.

[caption id="attachment_21227" align="aligncenter" width="614"]<img class="wp-image-21227" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/04/fundacion-capital1.jpg" width="614" height="384" /> Screenshot of Fundación Capital's tablet-based ATM simulator[/caption]

Swadhaar FinAccess, a microfinance institution in India, worked with Accion to launch a mobile money pilot with Airtel Money and Axis Bank that enables Swadhaar’s loan customers to repay loan installments using mobile money. To address slow adoption of this option, Accion and Swadhaar developed training modules to help clients gain comfort with the new service. The modules were informed by research and used engaging approaches like storytelling and videos. In addition, local peer educators were hired to demonstrate how to use the mobile money account, accompany clients to agents, and troubleshoot issues such as registering the SIM or obtaining a PIN code. An app was developed allowing trainers and peer educators to assist clients to practice mobile transactions. Early findings demonstrated that targeted customer education was important to driving uptake and use of both the loan repayment solution and other transactions such as saving, airtime recharge, and bill payment.

For youth inclusion, integrating financial capability-building into school curricula has been at the top of the list of actions in many national financial capability strategies. Banking authorities are cooperating with Ministries of Education in a substantial number of countries, including Brazil and Peru, and significant public money is channeled in this way. Compared to stand-alone financial education for adults, financial education for children may have greater long-term effect, as it reaches people when habits are being created. However, even here, it would be important to incorporate learning by doing. Learning by doing can be applied by linking education to the opening and use of youth bank accounts. Innovations for Poverty Action is testing the effectiveness of this approach in Uganda and Ghana, and it has shown short-term results.

This post was adapted from ‘A Change in Behavior: Innovations in Financial Capability’. For more on learning by doing, and the other six behaviorally-informed practices, <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/innovations-in-financial-capability">click here</a>.

Image credits: Accion; Fundación Capital

Have you read?

<a href="https://cfi-blog.org/2016/04/12/a-change-in-behavior-innovations-in-financial-capability/">A Change in Behavior: Innovations in Financial Capability</a>

<a href="https://cfi-blog.org/2016/04/14/six-recommendations-on-financial-capability/">Six Recommendations on Financial Capability</a>

<a href="https://cfi-blog.org/2016/04/22/making-fun-work-for-financial-capability/">Making Fun Work for Financial Capability</a>

To Build Financial Capability – Get Your Hands Dirty

Renee Chao-Beroff

Todd A. Watkins

Mina Zhang

Danielle Piskadlo

Lizzy Bolze

Steve Waddell

Sonja Kelly

Susy Cheston

Apis Partners

Sub-Saharan Africa

El Salvador

Sri Lanka

Uganda

Vietnam

Myanmar

Chile

China

Colombia

Dominican Republic

Europe and Central Asia

Ghana

Guatemala

India

Mexico

Nigeria

Paraguay

Peru

Tanzania

United States

Zambia

Latin America and The Caribbean

Cambodia

Yemen, Rep.

Rwanda

Pakistan

Challenges and Crises

Enabling Environment

Financial Health

Financial Service Providers

Impact Investing

Microfinance Institutions

Resilience

Smallholder Farmers

Underserved Groups

Youth

Digital Credit

Digital Financial Services

Refugees and Migrants

Aging and Older Adults

Financial Capability

Agent Banking

Financial Inclusion Strategy

Mobile Banking

Women

Personal Financial Management

Consumer Protection

Credit

Fintechs

Housing Finance

Microfinance

Payments

Persons With Disabilities

Risk Management

Saving

Social Performance

Alternative Data

Insurance

Index Insurance

MSME/SME Finance

Agricultural and Rural Finance

Remittances

Transparency

Blog Post

Event

Jeffrey Riecke

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

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

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

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

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

Aging and Financial Inclusion: Steal These Ideas!

&gt; Posted by Center Staff

<a href="http://newsfeed.financialinclusion2020.org/"><img class="aligncenter wp-image-19628" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/10/10-5-fi2020-news-feed.png" alt="" width="615" height="330" /></a>The latest edition of the <a href="http://newsfeed.financialinclusion2020.org/">Financial Inclusion 2020 News Feed,</a> our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are: the United Nations (U.N.) General Assembly held a side event last week on youth financial inclusion; the Microfinance Gateway spotlighted resilience, for both households and financial institutions, in the realm of financial inclusion; and the Global Banking Alliance for Women (GBA), in collaboration with the Inter-American Development Bank (IDB) and Data2XCARE, released a report on the value of data to women's financial inclusion. Here are a few more details:
<ul>
 	<li>The U.N. General Assembly side event focused on the importance of financial inclusion for youth, including youth entrepreneurs, and it was asserted that the energy and dynamism of young people will be integral in achieving the newly adopted 2030 Sustainable Development Goals. Fifty-four percent of youth between 15-24 don't have a bank account.</li>
 	<li>Resilience, or the ability to anticipate, adapt to, and/or recover from adverse situations, is a key lens for considering financial inclusion. Microfinance Gateway's spotlight shares industry work on resilience from Freedom from Hunger, ILO, IMF, Making Finance Work for Africa, Microinsurance Network, and MicroSave.</li>
 	<li>GBA, IDB, and Data2XCARE's new report, based on interviews with over 50 financial inclusion stakeholders, makes the case for sex-disaggregated data - how this data could inform better policies and private sector action - and discusses the challenges to its collection and use.</li>
</ul>
For more information on these and other stories, read the latest issue of the FI2020 News Feed <a href="http://newsfeed.financialinclusion2020.org/">here</a>, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at <a href="mailto:ezuehlke@accion.org">ezuehlke@accion.org</a>.

Youth at the U.N., Resilience, Data and Women's Financial Inclusion – The Latest FI2020 News Feed

&gt; Posted by Center Staff

<a href="http://newsfeed.financialinclusion2020.org/"><img class="aligncenter wp-image-19044" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/8-18-2015.png" alt="" width="615" height="331" /></a>The latest edition of the <a href="http://newsfeed.financialinclusion2020.org/">Financial Inclusion 2020 News Feed,</a> our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are the Microinsurance Network's first annual "The State of Microinsurance" magazine, the findings of Child and Youth Finance International's (CYFI) survey on youth finance regulation in Latin America and the Caribbean, and a blog post from the MasterCard Foundation on the role of microfinance associations in expanding financial inclusion. Here are a few more details:
<ul>
 	<li>The Microinsurance Network magazine sheds light on global microinsurance progress, failures and innovations, approaches to regulation, assessing and meeting demand, and the role of microinsurance in disaster risk management strategies.</li>
 	<li>The Latin America youth finance regulation survey, which CYFI aims to replicate in other regions, revealed that there is a great diversity in approaches to regulating practices affecting this client segment, and that young people are rarely seen as independent economic actors.</li>
 	<li>In a recent blog post, the MasterCard Foundation draws on its experience working with microfinance associations in sub-Saharan Africa to discuss their myriad abilities to advance financial inclusion, including through knowledge sharing, collecting and analyzing sectoral data, and supporting collective lobbying.</li>
</ul>
For more information on these and other stories, read the latest issue of the FI2020 News Feed <a href="http://newsfeed.financialinclusion2020.org/">here</a>, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at <a href="mailto:ezuehlke@accion.org">ezuehlke@accion.org</a>.

Microinsurance, Youth Finance, Microfinance Associations – the Latest FI2020 News Feed

&gt; Posted by Center Staff

<a href="http://newsfeed.financialinclusion2020.org/"><img class="aligncenter wp-image-18949" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/08/8-10-2015-e-zine.png" alt="" width="615" height="330" /></a>

The latest edition of the <a href="http://newsfeed.financialinclusion2020.org/">Financial Inclusion 2020 News Feed,</a> our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are the release of a New America Foundation report on account dormancy in youth savings, Yemen exploring mobile banking to combat the hardships of war, and Cambodia launching its first agricultural insurance programs. Here are a few more details:
<ul>
 	<li>The New America report considers how to understand the challenge of youth account dormancy in large-scale account-based initiatives and policy efforts, describing the range of issues related to account engagement from the perspectives of financial institutions, policymakers, and account-holders.</li>
 	<li>Yemen, following its central bank passing regulation on e-money and mobile money in December, is looking to the development of digital finance to cover critical services during wartime, as 30 to 40 percent of bank branches are closed.</li>
 	<li>The Cambodian Center for Study and Development in Agriculture (CEDAC) has launched the country's first agricultural insurance programs, in the form of pilots for the next year and a half, protecting rice farmers against loss from drought and floods.</li>
</ul>
For more information on these and other stories, read the latest issue of the FI2020 News Feed <a href="http://newsfeed.financialinclusion2020.org/">here</a>, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at <a href="mailto:ezuehlke@accion.org">ezuehlke@accion.org</a>.

Youth Savings, E-Money in Yemen, Agricultural Insurance – the Latest FI2020 News Feed

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

New Surveys Fill Data Void in China’s Microfinance Industry

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

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

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

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

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

To Develop Savings Skills, Start ‘Em Young!