The pandemic <a href="https://www.worldbank.org/en/news/press-release/2022/06/29/covid-19-drives-global-surge-in-use-of-digital-payments" target="_blank" rel="noopener noreferrer">accelerated the adoption of digital financial services</a>, especially in emerging economies, largely due to the number of people who <a href="https://www.un.org/sustainabledevelopment/blog/2021/12/as-internet-user-numbers-swell-due-to-pandemic-un-forum-discusses-measures-to-improve-safety-of-cyberspace/" target="_blank" rel="noopener noreferrer">began using the internet for the first time</a>. The <a href="https://www.worldbank.org/en/publication/globalfindex" target="_blank" rel="noopener noreferrer">Global Findex 2021</a> found that of the adults in developing countries who paid utility bills directly from an account, one-third did so for the first time during the pandemic. In India, more than 80 million adults made their <a href="https://www.worldbank.org/en/news/press-release/2022/06/29/covid-19-drives-global-surge-in-use-of-digital-payments" target="_blank" rel="noopener noreferrer">first digital merchant payment</a> after the start of the pandemic; in China, over 100 million adults did the same. However, the Findex 2021 data also showed a rise in consumer protection risks and cautioned that less experienced financial consumers were more vulnerable to such risks.

As digital financial services proliferate, new risks emerge. One of these risks is known as <a href="https://www.deceptive.design/" target="_blank" rel="noopener noreferrer">deceptive designs</a>, which are tricks used by companies when designing user interfaces that have the effect – either deliberately or otherwise – of obscuring, subverting, or impairing consumer autonomy, decision making, or choice. In other words, deceptive designs are used to manipulate people into making decisions that may not be in their best interest. Deceptive design is all around us and is increasing with rapid digitalization.

Those most vulnerable to deceptive designs are consumers with low digital capability, low financial means, or are those who are vulnerable because of life events or mental health issues. The use of deceptive designs in financial services, especially when catering to low-income and vulnerable consumers, can cause harm such as loss of agency and risks of data privacy, and can extend to financial losses that increase vulnerabilities and erode trust in the usage of digital financial services.

While the implications of deceptive designs on user privacy and data protection are beginning to be discussed among regulators, consumer protection concerns have yet to be addressed. This is partly because design is hard to regulate, and manipulative design can exploit existing laws and legal loopholes.
<h1>Deceptive Design Patterns Are Ubiquitous</h1>
In the last week, how often have you used an app on your smartphone or a website to order groceries? To shop for clothes? Or logged in to read online news? Chances are at least once. It is also likely that you encountered several deceptive designs during that time. Harry Brignull, who raised awareness of deceptive design, features nearly <a href="https://www.deceptive.design/hall-of-shame/all" target="_blank" rel="noopener noreferrer">400 examples of deceptive design practices</a> on his website. The New York Times, a publication that was one of the earliest to speak about deceptive designs, uses deceptive designs to make their paywall “smarter” and <a href="https://www.techdirt.com/2022/08/19/when-tech-companies-do-it-the-ny-times-calls-it-dark-patterns-when-the-ny-times-does-it-its-called-being-smart/" target="_blank" rel="noopener noreferrer">make it difficult to cancel subscriptions</a>.

In Kenya and Tanzania, <a href="https://www.cgap.org/sites/default/files/Focus-Note-Consumer-Protection-in-digital-Credit-Aug-2017.pdf" target="_blank" rel="noopener noreferrer">CGAP’s research</a> found several challenges with how digital lenders disclose actual pricing to consumers, using monthly or weekly interest rate figures instead of a standardized calculation like an annualized percentage rate (APR). <a href="https://wiredspace.wits.ac.za/server/api/core/bitstreams/d6e32783-24e7-4e50-8bcf-8c58f84bd872/content" target="_blank" rel="noopener noreferrer">Research by Mazer and Rowan (2016)</a> also found that some digital lenders only disclosed the price after consumers clicked the “I accept” button and the loan was executed. Insurance, a financial product that often is accused of mis-sale, can also use deceptive designs when sold online. In the UK, Currys, a well-known retailer, <a href="https://twitter.com/darkpatterns/status/1561031067334844418" target="_blank" rel="noopener noreferrer">nudges online shoppers during check out</a> by preventing them from moving forward unless they choose to buy insurance. In India, until laws changed recently to prevent the mis-sale of travel insurance, it was common to see travel portals use <a href="http://rsrr.in/wp-content/uploads/2021/04/UNPACKING-DARK-PATTERNS-UNDERSTANDING-DARK.pdf" target="_blank" rel="noopener noreferrer">pre-checked buttons to bundle travel insurance</a> with ticket purchase.
<h1>Focus on Consumer Protection by Design</h1>
The nature of these emergent risks requires new partners to work together – including designers, researchers, technologists, civil society actors, and lawyers who work on consumer rights, along with regulators, supervisors, investors, financial service providers, and tech-based providers. To kick off this work, CFI and <a href="https://www.credit-suisse.com/us/en.html" target="_blank" rel="noopener noreferrer">Credit Suisse</a> are partnering to leverage the diverse talent and expertise of Credit Suisse employees through the Innovation for Impact series, a spinoff of the bank’s <a href="https://www.credit-suisse.com/careers-news/en/articles/careers/spark-ideas-explore-new-trails-202012.html" target="_blank" rel="noopener noreferrer">Future of Banking Hackathon</a>. Applying Credit Suisse’s Fresh Perspectives! Framework, the bank’s innovation lifecycle approach, teams of Credit Suisse employees will be guided through addressing the challenges that low-income consumers can face from the use of deceptive designs in financial services. The teams will work together to generate novel ideas, and rapidly test, learn, and adapt their solutions to address the presented challenges.

Through its <a href="https://www.credit-suisse.com/about-us/en/our-company/corporate-responsibility/economy-society/financial-inclusion.html" target="_blank" rel="noopener noreferrer">Financial Inclusion Initiative</a> (FII), Credit Suisse has partnered with Accion for over a decade, including as a founding supporter of CFI. Through the FII, Credit Suisse aims to support the availability of innovative and financially inclusive solutions to help advance progress towards the UN Sustainable Development Goals (SDGs) by providing both financial as well as human resources. The Innovation for Impact series provides a win-win opportunity for Credit Suisse employees to leverage and develop their expertise and innovation capabilities while at the same time contributing to an important challenge facing the inclusive finance sector.

The partnership between Credit Suisse and CFI is a way to begin generating awareness of deceptive designs with investors and financial service providers, and the harms they can cause to low-income consumers. The work on deceptive designs is part of a larger body of work that CFI is developing that looks at how to embed consumer protection by design for systemic change to create digital, inclusive financial systems that are more equitable, less discriminatory, and more empowering.

CFI is launching a strategic area of work around ‘Consumer Protection by Design’ to identify and address newer risks that emerge as inclusive finance is digitalized. This area of work will define the term consumer protection by design, identify newer risks (including deceptive designs), and assess whether these risks tend to be prevalent in specific geographies, industries, and company stages, and if they target specific user groups that are more susceptible. CFI will also conduct a landscape analysis of the specific harms posed to vulnerable consumers with a focus on identifying market monitoring tools and regulatory solutions that can be used to mitigate these harms.

The Hidden Traps of Deceptive Design: Embedding Consumer Protection into DFS

<h1>Challenge</h1>
Financial inclusion means different things to different people. Today’s marketplace represents a wide array of providers with varying interests. Some focus on access to bank accounts, while others build electronic payments infrastructure, and still others develop credit services or insurance. With significant resources invested to expand financial services to low-income, first-time and underserved consumers, the importance of ensuring that newly included people actually benefit from the services cannot be underestimated. To be effective, the financial inclusion community needs alignment and direction about how to tackle a big challenge—too big for any one entity to solve.
<h1>Approach</h1>
CFI approached this challenge by building communities of support and action around a progressive agenda for global financial inclusion:
<h3>Agenda Setting</h3>
We articulated a vision for financial inclusion that includes service range, quality, affordability, convenience, consumer protection and empowerment. We understand what meaningful financial inclusion looks like, and our agenda reflects that.
<h3>Community Building</h3>
We know that constructing a financial inclusion community that serves, protects and empowers customers requires the combined efforts of many actors. We add value to the sector by bringing people together, building consensus and enhancing the industry’s collective knowledge and skills.
<h3>Delivering Insights</h3>
We investigate big, unanswered questions that can catalyze the industry to meet the financial needs of underserved people around the world.
<h1>Results</h1>

Setting an Agenda for Global Financial Inclusion

In honor of our 10th anniversary, we invite you to participate in a one-day symposium, <strong>Getting Inclusion Right</strong>, to be held at The National Press Club in Washington, DC on November 1, 2018.

Join a select group of actors and influencers in the financial inclusion arena as we consider <em>what we must get right</em> if financial inclusion is to reach its full promise – access to a full suite of financial services delivered with quality to all who can use them to improve their lives.

We will convene a variety of distinguished thinkers and practitioners for a day of discussion and debate to help set the agenda for the next decade.

Learn more at <a href="http://financialinclusionweek.org/cfi10/">http://financialinclusionweek.org/cfi10/</a>.


CFI@10 Getting Inclusion Right Symposium

<h1>Why Benchmarking Matters</h1>
<h5>HOW DO WE KNOW WE'RE BEING EFFECTIVE?</h5>
Achieving financial inclusion requires continuously evaluating how well the industry is progressing and how far we still have to go. Benchmarking activities help us measure progress and identify priorities for research and action. To reach 3 billion people who are left out of or poorly served by the financial sector, a full understanding of progress and setbacks is essential.

&nbsp;
<h1>Approach</h1>
<h5>INDEPENDENT AND CRITICAL PERSPECTIVE</h5>
We are committed to keeping the industry focused on financial inclusion that benefits consumers. CFI assesses public industry data, like the <a href="https://globalfindex.worldbank.org/">Global Findex</a> and the <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx">Gallup Global Financial Health Study</a> with an independent and critical eye, shining a spotlight on where action is most needed. We also participate in joint benchmarking exercises with partners to examine specific aspects of the sector, like the regulatory environment or risk perceptions. In all our benchmarking and research endeavors, we are keen to reality test prevailing narratives, ask tough questions and shine a light on overlooked trends.

&nbsp;
<h1>Results</h1>
<h5>WHAT HAVE WE ACHIEVED?</h5>
<h2>Benchmarking the Enabling Environment</h2>
Together with partners, CFI sponsors and contributes to the Global Microscope—a project led by the Economist Intelligence Unit. Intended to benchmark the enabling environment for promoting financial inclusion, the Microscope assesses the institutional and regulatory ecosystem based on selected indicators across over 50 developing economies. We have helped the Microscope evolve from a study of microfinance in Latin America and the Caribbean into a global study of the broader financial inclusion ecosystem. Additionally, we also look at new indicators on the enabling environment for digital financial services.

With 2018 marking its eleventh edition, the Microscope is one of the few benchmarking tools in the financial inclusion sector that spans a decade or more. Regulators across the world use its scoring and rankings as yardsticks for their own performance. Investors also consult the study when considering investment strategies. Many countries are cognizant of where they stand in the global rankings and are motivated to improve.


Benchmarking Financial Inclusion Progress

We are excited to announce the fourth annual Financial Inclusion Week! Over the past three years, over 80 partner organizations have engaged thousands of people worldwide to discuss the most pressing actions needed to advance financial inclusion globally. In 2018, we aim to continue the conversations from last year and engage an even wider community of stakeholders to discuss this year’s theme Getting Inclusion Right.

In 2018, the Center for Financial Inclusion at Accion is celebrating its 10th anniversary and using this moment as an opportunity to celebrate progress, but mostly to look to the future. CFI invites the Financial Inclusion Week 2018 community to join us in this journey and reflect on the question, “What do we need to get right?” What do we need to get right to ensure that gains in financial services access lead to true improvements in the lives of the underserved? What are the great upcoming risks that we need to address now to ensure that customers are adequately protected?

During Financial Inclusion Week 2018, partner organizations around the globe will hold conversations focused on what the industry must do to ensure that access to financial services brings real value to customers’ lives. <em>Getting Inclusion Right</em> means creating products and implementing policy that bridge the gap between access and financial health. We want to hear from you on how to best do this from October 29 – November 2, 2018.

Join the Financial Inclusion Week community today by <a href="https://docs.google.com/forms/d/1IpZZep9OTzaIAmrWUDzopx3yolD3Km-XY3a0pdJWwH8/edit">signing up</a> to receive updates and information on partnership. Visit <a href="http://www.financialinclusionweek.org/">www.financialinclusionweek.org</a> for a list of past partners and a round-up of the Financial Inclusion Weeks of year’s past. And stay tuned for a full calendar of Financial Inclusion Week events to be released at the beginning of September 2018.

Financial Inclusion Week 2018

<em>This post is part of a </em><em>series</em><em> examining the global phenomenon of de-risking and its impact on financial inclusion. To investigate this issue, CFI staff partnered with </em><a href="https://www.credit-suisse.com/ch/en/about-us/responsibility/economy-society/focus-themes/employee-engagement.html"><em>Credit Suisse Global Citizen</em></a><em> Rissa Ofilada, a compliance lawyer based in the Philippines, </em><em>to undertake a comprehensive literature review and conduct interviews with key players in the conversation on de-risking. </em>

Are anti-money laundering and counter-terrorism financing (AML/CTF) rules to blame for de-risking and the resulting financial exclusion? A World Bank <a href="http://pubdocs.worldbank.org/en/953551457638381169/remittances-GRWG-Corazza-De-risking-Presentation-Jan2016.pdf">survey</a> of financial institutions says, “probably.” The survey respondents listed concerns about money laundering and terrorism financing risks, including the imposition of international sanctions pertaining to AML/CTF. To say the least, the de-risking phenomenon has huge implications for the advancement of financial inclusion in our current geopolitical climate.

De-risking has been <a href="http://documents.worldbank.org/curated/en/113021467990964789/pdf/101098-revised-PUBLIC-CBR-Report-November-2015.pdf">defined</a> as the trend of <a href="http://documents.worldbank.org/curated/en/113021467990964789/pdf/101098-revised-PUBLIC-CBR-Report-November-2015.pdf">financial institutions terminating or restricting business relationships</a> with clients or categories of clients to avoid, rather than manage, risk. This can take the form of: restricting or terminating correspondent banking relationships (CBRs) where one bank provides services to another; restricting or terminating money transfer operators (MTOs); and restricting or terminating the accounts of individual clients deemed to be risky. It’s important to note that recently “de-risking” as a term has been called inappropriate by some as there may be other reasons why, to give one example, CBRs are terminated. Nevertheless, we use it here as it is the most commonly used phrase to describe this phenomenon.

<a href="http://www.fatf-gafi.org/publications/fatfrecommendations/documents/fatf-action-to-tackle-de-risking.html">According to the Financial Action Task Force</a> (FATF), the global body charged with policing terrorism finance and other security threats, the drivers of de-risking are complex and include:
<ul>
 	<li>Regulatory burdens – There is an overwhelming sense in the industry that regulations and sanctions related to the implementation of AML/CFT requirements are excessive and prohibitive for many institutions interested in engaging with the client bases often excluded by de-risking.</li>
</ul>
<ul>
 	<li>Reputational risk – Non-compliance with AML/CFT requirements can extend beyond the financial costs of enforcement actions and can potentially damage an institution’s reputation, negatively affecting relationships with investors and stock prices, among other detriments.</li>
</ul>
<ul>
 	<li>Lower risk appetites of banks – Banks’ risk appetites have largely declined since the 2008 global financial crisis, many institutions have opted to exit entire categories of relationships where a higher likelihood of connection to illegal activities exists.</li>
</ul>
<ul>
 	<li>Profitability - The core decision-making driver of financial institutions, by and large, remains cost-profit analysis. “According to a study conducted by the British Financial Services Authority in 2011, the banks surveyed appeared willing to maintain what appeared to be unacceptable risks related to the handling of the proceeds of crime if the relationships were profitable,” <a href="https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/rr-bank-de-risking-181115-en_0.pdf">write</a> Durner and Shetret in a 2015 analysis of de-risking. However, often the client base excluded by de-risking brings relatively low profitability, which is a key factor when paired with the costs of satisfying AML/CFT requirements.</li>
</ul>
But before coming to a conclusion about this issue in subsequent posts, let’s step back and see how we got here.

In 1990, the FATF issued the “<a href="http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%201990.pdf">Forty Recommendations</a>” to combat the misuse of financial systems by persons laundering drug money. In 1996, <a href="http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%201996.pdf">revisions</a> were made to include evolving types of money laundering. These recommendations were endorsed by more than 130 countries. In 2001, the FATF <a href="http://www.fatf-gafi.org/media/fatf/documents/reports/FATF%20Terrorist%20Financing%20Typologies%20Report.pdf">revised</a> this list to incorporate combating terrorist financing, with the inclusion of “Eight Special Recommendations on Terrorist Financing.” In 2003, the “Forty Recommendations” were <a href="http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202003.pdf">revised</a> again, to include the monitoring and evaluation of countries’ adherence to international standards on AML/CFT. This update established the mutual evaluations by FATF and FATF-styled regional bodies, as well as assessments conducted by the International Monetary Fund  and World Bank.

So, what does all this have to do with financial inclusion? That is exactly the question proponents of financial inclusion around the world asked at this time—their fear was that all of these global standards would limit financial inclusion activities. To help enable expanded, appropriate financial account access, financial inclusion proponents called for a more flexible approach that would allow for innovations like reduced identification requirements for low-value accounts – i.e. proportionate requirements for less risky customers.

The FATF heard these concerns from the financial inclusion community, and in <a href="http://www.fatf-gafi.org/publications/fatfrecommendations/documents/fatf-recommendations.html">2012</a>, the “Forty Recommendations” were revised to adopt a risk-based approach in identifying, assessing, and understanding the money laundering and terrorist financing risks of each country. The approach is <a href="http://www.fatf-gafi.org/publications/fatfrecommendations/documents/fatf-recommendations.html">outlined</a> by the FATF as follows:
<p style="padding-left: 30px"><em>Countries should apply a risk-based approach (RBA) to ensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate with the risks identified. This approach should be an essential foundation to efficient allocation of resources across the anti-money laundering and countering the financing of terrorism (AML/CFT) regime and the implementation of risk-based measures throughout the FATF Recommendations. Where countries identify higher risks, they should ensure that their AML/CFT regime adequately addresses such risks. Where countries identify lower risks, they may decide to allow simplified measures for some of the FATF Recommendations under certain conditions.  </em></p>
The FATF followed-up yet again in 2014 with some <a href="http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Banking-Sector.pdf">additional clarification on this risk-based approach</a>.

[caption id="attachment_22066" align="alignright" width="330"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/timeline.png"><img class="wp-image-22066" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/timeline.png" width="330" height="243" /></a> (click to enlarge)[/caption]

Sounds great, right? The problem is that there remains—two years later—uncertainty as to how to comply with the principles set by FATF. Our literature review and interviews with key players in the space indicates that neither national governments nor banking institutions have sufficient capacity to identify, assess, and understand the risks of engaging with particular population segments—and the consequences of working with population segments <em>perceived</em> as risky are just too great. <a href="https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/rr-bank-de-risking-181115-en_0.pdf">For example</a>, from 2011 to 2012 there was a 131-fold increase in fines and monetary settlements under deferred prosecution agreements, from $26.6 million to $3.5 billion. This latter figure includes a $1.9 billion settlement paid by HSBC to U.S. and U.K. regulators for inadequately monitoring wire transfers to Mexican drug cartels, and for violating sanctions through business with clients in Cuba, Iran, Libya, Myanmar, and Sudan. The potential and realized costs of serving these typically lower-income populations compared to the profits might just be too great. This trend has caused financial institutions around the world to be very conservative and caused them to close high-risk accounts based on sector or geographic considerations.

As a result, with little clarification on what exactly proportionate standards are, both national governments and individual financial institutions tend to avoid segments perceived as risky, particularly if they are not highly profitable segments.

What we know now, with a few years of evidence, is that de-risking has adversely affected the gains of financial inclusion, with some analysts concluding that it has resulted in the financial exclusion of certain populations. According to the <a href="http://www.cgdev.org/sites/default/files/CGD-WG-Report-Unintended-Consequences-AML-Policies-2015.pdf">Center for Global Development</a>, those most affected are likely to include “the families of migrant workers, small businesses that need access to working capital or trade finance, and recipients of life-saving aid in active-conflict, post-conflict, or post-disaster situations.” There is mounting empirical evidence to show that it has resulted in the non-delivery of financial services—and especially payments—to specific groups of intended beneficiaries. For Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, de-risking is akin to “<a href="http://www.ft.com/content/19ab0272-085a-11e5-85de-00144feabdc0/">financial abandonment</a>.” Federal Reserve Chair Janet Yellen <a href="http://www.ustream.tv/recorded/59249233">told the U.S. Congress</a> that the trend was causing “a great deal of hardship.” The <a href="http://ufa.worldbank.org/">Universal Financial Access (UFA) goal</a> that by 2020, all adults globally have access to a transaction account or electronic instrument to store money, and send and receive payments - which we thought was attainable - is under serious threat, and in the countries most affected, there are serious humanitarian issues at stake.

De-risking may very well be the single biggest threat to financial inclusion around the world.

<em>Stay tuned for our next post in our series on de-risking. We’ll be talking more about the role of the state of New York, whether banks themselves are to blame, and how governments are responding.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/09/29/de-risking-why-should-you-care/">De-Risking: Why You Should Care?</a>

<a href="https://cfi-blog.org/2016/03/23/basel-committee-guidance-on-financial-inclusion-views-from-a-supervisor/">Basel Committee Guidance on Financial Inclusion: Views from a Supervisor</a>

<a href="https://cfi-blog.org/2014/07/15/somalia-facing-drought-with-fewer-remittance-lifelines/">Somalia: Facing Drought with Fewer Remittance Lifelines</a>

&nbsp;

Does Global De-Risking Create “Financial Abandonment”? The Background You Need to Know

[caption id="attachment_22038" align="alignright" width="330"]<a href="https://www.flickr.com/photos/65162298@N07/6029132512/"><img class="wp-image-22038" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/09/6029132512_b5b26fd99a_b.jpg" width="330" height="220" /></a> Somalis, who rely heavily on money transfers from abroad, have been severely affected by the closing of remittance companies' accounts.[/caption]

<em>This post is the first in a series examining the global phenomenon of de-risking and its impact on financial inclusion. Through the </em><a href="https://www.credit-suisse.com/ch/en/about-us/responsibility/economy-society/focus-themes/employee-engagement.html"><em>Credit Suisse Global Citizens Program</em></a><em>, </em><em>CFI partnered with Rissa Ofilada, who works as a lawyer in compliance in the Philippines, to undertake a study on de-risking. In the series, we’ll discuss the causes of the phenomenon, what it means for customers at the base of the pyramid, how it affects global momentum toward financial inclusion, and what solutions are on the horizon.</em>

The term de-risking may sound arcane and technical, but in fact some observers believe that de-risking is the biggest threat to the progress that has already been made on financial inclusion. We at CFI are worried about it—and you should be too.

De-risking refers to the trend of commercial banks, payments companies, and regulators closing down “suspicious” accounts. These accounts could be suspicious for any number of reasons. The owner may not have had adequate proof of identity—a common problem for lower-income people in countries without well-developed identification systems. Or the owners may not be able to precisely trace the source of the funds they deposit—a frequent issue for those operating in the informal sector. Or the provider had a problem with another lower-income customer who was flagged as suspicious, and as a result decided to close all accounts owned by people with similar patterns or profiles.

We are also starting to see regulators pulling back from regulations that allow for basic accounts and lower know-your-customer (KYC) standards for payments. About a decade ago, the government of South Africa began to offer banks the opportunity to forego the proof of address requirements for transactions of less than approximately $315 per day—a victory for financial inclusion. Today, however, the South African Parliament is considering dropping this exemption under the Financial Intelligence Centre Amendment Bill. And other countries are following suit, pushing their financial institutions to be far more conservative.

Who is responsible for de-risking? Well, it appears no one—and everyone—is to blame. The Financial Action Task Force (FATF), the global body charged with policing terrorism finance and other security threats, proposed a set of regulations in 2012 that they hoped would leave space for financial inclusion while still accounting for the kinds of risks FATF is focused on. This guidance did not prevent the New York State Banking Commissioner from responding to the fear of terrorist attacks by levying fines on global banks that transacted with particular markets and particular people. While the fines were not directed against transactions with the kinds of clients targeted by financial inclusion efforts, many banks began to shy away from these lower-income clients, too. Governments, faced with the prospect of limited interaction of their nationals with the global financial system, adopted conservatism in their policies so as to avoid running up against sanctions from U.S. authorities. This trend filters down to employees at financial institutions, particularly since some violations carry jail time or huge fines. Bankers have started to choose to transact with the least “risky” customers, excluding people who cannot prove their identities or sources of funds. And as a result the very people our industry has been fighting to include are shut out of the formal financial system.

In the regulatory push to create a more accountable and responsible financial system, our industry may have also succeeded in promoting the mass exclusion of lower-income and hard-to-reach customers, small non-profits and NGOs, and migrants and refugees.

If you would like to know more, then you’re in luck. In this blog series—stay tuned—we’ll be looking at de-risking from various angles and seeking solutions. Looking forward to exploring the issue along with you.

<em>Image credit: <a href="https://www.flickr.com/photos/65162298@N07/6029132512/">Giro 555 SHO</a></em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/03/23/basel-committee-guidance-on-financial-inclusion-views-from-a-supervisor/">Basel Committee Guidance on Financial Inclusion: Views from a Supervisor</a>

<a href="https://cfi-blog.org/2014/07/15/somalia-facing-drought-with-fewer-remittance-lifelines/">Somalia: Facing Drought with Fewer Remittance Lifelines</a>

<a href="https://cfi-blog.org/2014/09/08/emerging-themes-in-responsible-digital-finance/">Emerging Themes in Responsible Digital Finance</a>

&nbsp;

De-Risking: Why Should You Care?

<em> </em>

<a href="http://www.planetfinancechina.org/wp-content/uploads/2015/08/New-Insights-Into-An-Evolving-P2P-Lending-Industry_PositivePlanet2015.pdf"><img class="alignright wp-image-19379" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/positive-planet-report.png" alt="" width="250" height="353" /></a>Over the past five years, peer-to-peer lending (P2P) has grown rapidly. Now more commonly referred to as “marketplace lending” because of the large range of institutions, intermediaries, and non-“peer” parties involved, the industry is poised to continue its year-on-year triple-digit growth. The breakneck speed of P2P’s growth seems natural given the many advantages it offers. As an industry, focus has gradually moved from a community of individuals lending directly to other individuals (often within affinity groups), and has evolved into a powerful engine of technical efficiency. Today, P2P is viewed in many different ways: a <a href="http://cfi-blog.org/2014/12/05/the-role-of-peer-to-peer-lending-in-financial-inclusion/">potential agent of financial inclusion</a>; an innovation in big data analytics and credit risk evaluation; an efficient mechanism for loan matching without the often burdensome capital and regulatory requirements of banks; an innovative operational model leveraging the cost savings of online platforms; a new asset class for retail and institutional investors; and the list goes on.

Change has been slow to come, with many banks questioning the P2P model’s long-term relevance and P2P lenders failing to capture the public eye for many years, but big banks have recently begun to show their appetite for the more robust of the online lenders. Banks have made equity stakes in P2P businesses in the past, such as Barclays’ 49 percent investment in South Africa’s RainFin. However, 2015 seems to be the breakout year for P2P into mainstream finance. In June, Goldman Sachs announced plans to enter the consumer lending space through an online platform, akin to what <a href="https://www.lendingclub.com/">Lending Club</a> and <a href="https://www.prosper.com/">Prosper</a> offer in the U.S. Several days later, Morgan Stanley featured an <a href="http://www.morganstanley.com/ideas/p2p-marketplace-lending/">optimistic report</a> on P2P lending on its home page. In August, Standard Chartered led a $207 million C-round of funding for Chinese P2P company Dianrong.

Despite all of the change, the majority of articles published do not provide in-depth explanations of the specific mechanisms and trends (e.g. online vs. offline models or specific roles/risks of the various parties involved) that underlie this recent expansion. Rather, articles repeatedly focus on the growth potential of the industry, in some instances highlighting risks, but typically without deeper analysis. This is especially true of commentary on China, where data is difficult to find and as a result conflicting interpretations exist.

These discrepancies are also due, in part, to the fact that very few reports have gone deeper to pull back the curtain and examine the details of the P2P market. Moreover, few reports have tied detailed analysis of these various P2P trends together into the past, present, and future “story of P2P.” Without this type of in-depth analysis, it is hard to separate the hype from the facts and examine the underlying risks inherent in the industry, as well as future trends.

For the past six months, Positive Planet China has been collaborating with the Credit Suisse Microfinance Capacity Building Initiative to produce a piece of research, titled “<em>New Insights Into an Evolving P2P Lending Industry: how shifts in roles and risk are shaping the industry</em>.” Rather than being another desktop-only research report that simply summarizes the existing field, this paper is also based on numerous interviews with industry experts to dive into deeper layers of the P2P industry.

Included is a focused analysis of P2P in China that aims to clarify some of the confusion about this massive but opaque market, as well as a review of platforms with more socially-focused missions. Additionally, the paper provides context for the global industry, its current situation, and what to look for in the future. We hope that this report will provide a roadmap for regulators, consumers, industry players, and anyone else interested in understanding, evaluating, and driving the industry to further levels of development.

<em>The full Positive Planet report can be read <a href="http://planetfinancechina.org/new-insights-into-an-evolving-p2p-lending-industry-how-shifts-in-roles-and-risk-are-shaping-the-industry/">here</a>.</em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/12/05/the-role-of-peer-to-peer-lending-in-financial-inclusion/">The Role of Peer-to-Peer Lending in Financial Inclusion</a>

<a href="http://cfi-blog.org/2013/09/27/financially-included-through-crowdsourced-financing/" target="_blank" rel="noopener">Financially Included Through Crowdsourced Financing?</a>

<a href="http://cfi-blog.org/2015/01/08/the-twelve-days-of-fintech/">The Twelve Days of Fintech</a>

&nbsp;

Insights into an Evolving Peer-to-Peer Lending Industry in China

A quantitative review of the current status of financial inclusion globally, based on the two Findex datasets and supplemented by data from the EIU Global Microscope 2014, UN, World Development Indicators, IMF, Alliance for Financial Inclusion, and the GSMA State of the Industry.
<h1>Key Findings</h1>
<h2>The world – every region, income level, and “slice” of the global population – is moving toward greater financial access.</h2>
According to the World Bank’s Global Findex data, the number of financially excluded people globally dropped from 2.5 billion to 2 billion in the three years from 2011 to 2014. At this rate, by 2020 the gap will have closed significantly, with 1 billion excluded adults remaining. With an added push, the World Bank’s goal of universal access to some type of financial account by 2020 seems within reach.
<h2>Financial exclusion will look much different in 2020 than it looks today.</h2>
Exclusion will be more hidden—in harder-to-reach population segments, in slow-growth countries, and in inadequate products that are not actively used to improve lives. Emphasis needs to turn to “leaving no one behind” and to offering services that make a real difference.
<h2>Universal financial access is a first step toward full financial inclusion.</h2>
According to CFI, Financial inclusion is a state in which everyone who can use them has access to a range of quality financial services at affordable prices, with convenience, dignity, and consumer protection, delivered by a range of providers in a stable, competitive market to financially capable clients. The purpose of promoting financial inclusion is to enable people to use financial services to better manage their lives. A fully included person is an active user of quality financial services that bring significant value to their lives. Progress on access to an account must be accompanied by further efforts to achieve deeper inclusion.
<h2>Although the number of accounts has grown, many of these accounts are not in active use.</h2>
In low and middle income countries, the percent of account holders who deposit or withdraw more than three times per month remains very low, a direct contrast to the active usage patterns seen in high income countries. Accounts in these countries tend to be limited in purpose (e.g. a vehicle to receive a salary or benefit payment which is promptly cashed out). Work is needed to make accounts more useful to more people.
<h2>Progress on inclusion requires building and maintaining an enabling ecosystem including policy, regulation, and industry infrastructure.</h2>
In recent years the world has made strides on technology change, solidified government commitment and action, and increased quality and use of public goods like credit reporting systems, physical infrastructure, and digital infrastructure. These improvements increase both access and ease of use of financial services.
<h2>Our hope is that this report provokes further questions.</h2>
Which regions are advancing faster than others and why? Which countries are moving quickly, slowly, or not at all? How significant is the contribution of mobile phones to increasing account access? Who will still be excluded in 2020, and where will they be located? How can the push to financial inclusion retain a focus on quality and value for the customer?

&nbsp;

&nbsp;

&nbsp;

By the Numbers: Benchmarking Progress Toward Financial Inclusion

<a href="http://www.centerforfinancialinclusion.org/bythenumbers"><img class="alignright wp-image-18331" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/06/by-the-numbers.png" alt="" width="280" height="362" /></a>Can the world achieve full financial inclusion by 2020? <a href="http://www.centerforfinancialinclusion.org/bythenumbers" target="_blank" rel="noopener"><em>By the Numbers: Benchmarking Progress Toward Financial Inclusion</em></a>, a new Financial Inclusion 2020 (FI2020) publication from CFI, offers a quantitative review of financial inclusion globally, using publicly available data to examine recent progress and projecting a scenario out to 2020.

Last month the development community emitted a collective cheer as the new Global Findex data revealed that the number of unbanked individuals around the world dropped from 2.5 billion to 2 billion between 2011 and 2014. This looks like huge progress. If the trends continue, the financial exclusion gap will close to 1 billion individuals without access to formal financial services by 2020.

However, know it’s not all about access. We promote financial inclusion to enable people to use financial services to better manage their lives. A fully included person is an active user of quality financial services that bring significant value. Expanding financial access is the first step towards financial inclusion, and it needs to be followed by an uptick in the frequency and ways in which people use services as well as strengthening of the financial ecosystem. <em>By the Numbers</em> explores progress in these areas along with access and estimates the potential for reaching full inclusion by 2020.

Here are some of our “headline” observations in the publication:
<ul>
 	<li>The world – every region, income level, and “slice” of the global population – is moving toward greater financial access. (See the slideshow below for a breakdown of excluded adults by region.)</li>
 	<li>As we get closer to universal access, financial exclusion will look different than it does today. Exclusion will be more hidden – in harder to reach population segments, in slow growth countries, and in inadequate products that are not actively used to improve lives. Emphasis needs to turn to “leaving no one behind” and to offering services that make a real difference.</li>
 	<li>Active use of services continues to be a problem. In low and middle income countries, the percent of account holders who use their accounts to withdraw three or more times per month remains very low and is not growing, a direct contrast to the active usage patterns seen in high income countries.</li>
 	<li>The “technology revolution” in financial services is no longer news. Inexpensive, small-footprint delivery channels like agents and ATMs have outpaced expensive branches. An ever-improving communications infrastructure and enabling policies make this possible.</li>
 	<li>We expect to see creativity in product design and delivery channels built on this infrastructure with the rapid rise of smartphones and the decreasing cost of technology.</li>
 	<li>Policy makes a difference. Countries that develop a strategy to pursue financial inclusion saw twice as much growth in account ownership in the last three years as those who had no strategy or simply made a commitment. Increased attention to financial inclusion policy and regulation—from standard-setting bodies, international organizations, and individual governments—is very encouraging, but more work is needed to better understand what policies are best.</li>
</ul>
<a href="https://slides.com/cfi_accion/deck/embed"><img class="aligncenter wp-image-18337" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/06/slide-show.png" alt="" width="620" height="404" /></a>

To read the report and its data findings, <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/by-the-numbers" target="_blank" rel="noopener">click here</a>.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/04/22/financial-inclusion-by-2020-it-depends/">Financial Inclusion by 2020? It Depends</a>

<a href="http://cfi-blog.org/2015/04/28/global-findex-offers-next-steps-for-how-to-give-people-bank-accounts/" target="_blank" rel="noopener">Global Findex Offers Next Steps for How to Give People Bank Accounts</a>

<a href="http://cfi-blog.org/2014/11/06/financial-inclusion-2020-round-up-2014/" target="_blank" rel="noopener">Financial Inclusion 2020: Round-Up 2014</a>

&nbsp;

Benchmarking Progress Toward Financial Inclusion

Paolo Limcaoco

Elizabeth Winters

Tahira Dosani

East Asia and Pacific

Indonesia

Philippines

Kenya

Sub-Saharan Africa

Nigeria

Latin America and The Caribbean

Alternative Data

Challenges and Crises

Credit

Data Analytics

Delivery Channels

Digital Credit

Digital Financial Services

Education Finance

Enabling Environment

Entrepreneurs of MSMEs

Financial Health

Financial Service Providers

Financial Technology

Fintechs

Impact Investing

Mobile Banking

MSME/SME Finance

Partnerships

Payments

Resilience

Supply Chain Finance

Underserved Groups

Women

Financial Inclusion Strategy

Agricultural and Rural Finance

Responsible Investing

Smallholder Farmers

Consumer Protection

Trends

Article

Press Release

Case Study

Credit Suisse

Credit Suisse has been a longstanding partner of Accion, notably in helping to launch both the Center for Financial Inclusion (CFI) in 2008 and Accion Venture Lab in 2012. Its support has gone well beyond financial contributions and has developed into a valuable relationship of mutual advice, referrals, and opportunities to engage public audiences.

A leading global financial institution, Credit Suisse is committed to, as it states in its corporate responsibility report, “fostering inclusive growth by addressing socio-economic challenges.” Through its involvement in the founding of impact investment asset manager responsibility in 2002 and its own Financial Inclusion Initiative (formerly the Microfinance Capacity Building Initiative), Credit Suisse was one of the first Swiss banks to recognize the power of microfinance as both a transformative tool for the financially excluded, and an investment opportunity for its clients.

Credit Suisse and Accion: Exploring new frontiers in financial inclusion

Southeast Asia is home to over 650 million people and is a region that, despite strong economic growth pre-COVID-19, still has a significant amount of the population with unmet essential needs. <a href="https://internationalfinance.com/southeast-asias-growing-digital-banking-landscape/" target="_blank" rel="noopener noreferrer">More than 70 percent of people in Southeast Asia</a> do not have access to bank accounts, insurance penetration rates range between one and three percent, and nearly two-thirds of small businesses don’t have access to formal financing options. While already an issue before COVID-19, there is even greater need to address the problem now given the loss of livelihoods and income and the disproportionately negative effect of the pandemic on the lower-to-middle income segment.

This is where we believe that fintechs can play a significant role and why we are eager to expand our work in Southeast Asia. There is a clear opportunity and opening to break through and support those that live outside the formal financial system. Through over 50 investments globally, we have seen how fintechs play a pivotal role in driving inclusion and we believe that this can be the case as well here in Southeast Asia. Here are some ways fintechs can play a key role in pushing forward the recovery of the region:
<h3>Target consumers and businesses that now have digital profiles</h3>
Two trends have influenced a growing digital base. First, the rise in internet users – <a href="https://internationalfinance.com/southeast-asias-growing-digital-banking-landscape/" target="_blank" rel="noopener noreferrer">over 40 million people went online for the first time last year</a>. Second, pandemic-related lockdowns, by necessity, have led to an increased usage of online and digital channels for both individuals and enterprises. The outcome is the creation of millions of new digital profiles and data points. Those that were previously invisible to the formal financial system now have an expanding digital record that can be confirmed. With the digital push, consumers and small businesses are now more than just their (lack of) credit history. Highly relevant data is now available, and fintechs can use that information to serve this untapped market.
<h3>Explore platforms and partnerships for data and acquisition</h3>
Fintechs have always utilized business models that push the boundaries of data and acquisition. One recent trend that has been gaining momentum is embedded finance, where financial services are added on top of core offerings of tech platforms. By going through a platform approach or by partnering with other stakeholders, fintechs can minimize acquisition costs, gain access to transaction data, and efficiently deliver financial products. A good example is our most recent investment in Indonesia, a startup called Fairbanc. <a href="/an-embedded-finance-platform-helps-mom-and-pop-shops-grow-in-indonesia" target="_blank" rel="noopener noreferrer">Fairbanc partners with FMCGs to provide their merchants</a>, normally small mom-and-pop stores, with a buy-now, pay-later solution. Integration and partnerships can greatly improve the economics of financial services. As more consumers and businesses use various types of tech platforms such as e-commerce sites and procurement and inventory platforms, fintech startups can find a way to efficiently reach new customers and provide high-quality financial solutions.
<h3>Meet the financing needs of adjacent, underserved sectors</h3>
Financial services have always been cross-functional, able to operate across all sectors. But we see this becoming more relevant now as more agri-fintech, health-fintech, ed-fintech, and even property-fintech startups have sprung up. Pintek in Indonesia is a great example within education. They focus on supporting the education industry by <a href="/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">financing key stakeholders such as schools and students</a>. With this approach, fintechs provide tailored solutions through deep sector and customer knowledge to an underserved segment. While most models cast a wide net initially and look to serve the widest customer bases, we are now seeing increasing focus on key verticals. And fintechs can benefit from this focus, as it gives them domain expertise that leads to strong product-market fit and quick adoption. In addition, the understanding of and relationship with the customer can lead to quick and effective responses to challenging situations such as the pandemic.
<h3>Provide highly relevant financial products that increase inclusion and resilience</h3>
Finally, fintechs must now take a more holistic perspective. While credit has always been the low-hanging fruit, it is key now for fintechs to be able to offer a suite of solutions that address key pain points and build inclusivity. Advance, our Philippine <a href="/a-digital-solution-for-people-living-paycheck-to-paycheck-in-the-philippines" target="_blank" rel="noopener noreferrer">portfolio company that provides employees a way to bridge paychecks</a>, has financial wellness as a key part of their roadmap and overall mission. We believe that this is a necessary approach for fintechs to ensure that the product they develop increases the overall wellbeing and long-term resilience of their customers.

As we continue to face the unprecedented challenges from COVID-19, it is clear that fintechs can and must play a role in the recovery. There is a need to help those that have been hit hardest by this pandemic by connecting them to the resources needed to lift themselves out of it and build a safety net for future difficulties. Inclusive fintech can cross barriers and meet that need for many people and businesses.

At Accion Venture Lab, we look forward to investing in and supporting innovative and highly impactful founders and fintech for inclusion ventures and building the broader ecosystem here in Southeast Asia. We are now on the ground thanks to the generous support of our partners, especially the <a href="https://www.credit-suisse.com/about-us/en/our-company/corporate-responsibility/economy-society/asia-pacific/apac-foundation.html" target="_blank" rel="noopener noreferrer">Credit Suisse APAC Foundation</a> who are providing core funding as part of their commitment to supporting financial inclusion in the region. We believe now is the right time to push the boundaries of innovation, technology, and financial services. While the region is not out of the woods yet, and recovery from the pandemic will take some time, we remain hopeful that by working closely with fintechs, we can play our part in supporting families and small businesses as they recover from the COVID-19 shock and find a way to thrive.

Building resilience in Southeast Asia through inclusive fintechs

All around the world, basic financial services enable people to open their own businesses, educate their children, and provide for their families, but they aren’t within reach for everyone — including <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer" data-stringify-link="https://globalfindex.worldbank.org/" data-sk="tooltip_parent">980 million women</a> who don’t have a bank account or even the ability to send and receive money on their phones. The COVID-19 pandemic has <a href="https://www.centerforfinancialinclusion.org/the-case-for-a-gender-intelligent-approach-an-opportunity-for-inclusive-fintechs">exacerbated inequalities that women face</a> and exposed how the <a href="https://www.womensworldbanking.org/insights-and-impact/womens-economic-empowerment-doorway-to-economic-recovery/">gender gap in financial inclusion</a> continues to hold women back.

This year, the <a href="https://www.unwomen.org/en/news/stories/2020/11/announcer-international-womens-day-2021">UN Women theme for International Women’s Day</a> is “Women in leadership: Achieving an equal future in a COVID-19 world.” We’re highlighting women leaders who are working to open opportunity for women and men through inclusive finance in our <a href="https://www.accion.org/series/women-of-accion">annual International Women’s Day blog series</a>. You can learn about more inspiring women in <a href="https://www.accion.org/women-leaders-open-opportunity-through-inclusive-finance-part-one" target="_blank" rel="noopener noreferrer">our first</a> and <a href="/women-leaders-open-opportunity-through-inclusive-finance-part-three" target="_blank" rel="noopener noreferrer">third article</a> in this series.

Meet some of the women we’re inspired by:
<h3>Luz Borchardt, Co-founder of Henry</h3>
<img class="size-full wp-image-23551 alignright" src="https://content.accion.org/wp-content/uploads/2021/03/luz-borchardt-henry.jpg" alt="Luz Borchardt" width="450" height="510" />Luz Borchardt sees her work in Latin America’s education sector as a revolution. “The traditional education system is broken. At Henry, we are disrupting and kicking the paradigm of education as we know it. We challenge the status quo of education. We open opportunity by giving access to people who do not have the material resources, but do have the talent, by allowing them to defer the payment of the cost of their education until the person gets a job and becomes productive.” Luz and her co-founders started <a href="https://soyhenry.com/">Henry</a>, an Accion Venture Lab portfolio company, to make software development training more accessible to people in Latin America by embedding financial services into their education platform. Luz’s passion lies in <a href="https://www.accion.org/making-sure-fintech-is-an-equalizer-for-women-not-another-barrier">unlocking the talent of Latin American women</a> by bringing them into the booming tech industry. “Having more women in STEM would bring benefits for their professional development and economic autonomy, but also their communities and countries urgently require women’s contribution to find new solutions to the problems we face as a society,” she says. “Likewise, it is essential that every user finds their vision of the world represented at each table where a digital product is thought [of], designed, and developed. More women in technology is synonymous with a more egalitarian and inclusive society.”

Despite growing demand for technical skills, coding and software development are still not considered appealing careers for women in the region. “We have the great challenge of breaking down the stereotypes that we consume and creating a horizon of possibilities about what is expected of each gender to reduce the gap between men and women. These stereotypical representations operate from an early age and condition the future of many girls and women who do not believe they are ready to [become developers] in the tech sector.” When women in Latin America embrace tech as a career, more opportunities for jobs and financial stability open up to them. “When women become financially empowered, they invest most likely in education, food, and health, which has an impact on society in general and helps reduce social inequalities and boost economic growth.”

Luz is energized by the impact that she makes through Henry’s work. “I love it, it makes me feel well, we change the lives of a lot of people. And this fills us with pride and encourages us to continue working with great intensity, to be able to invest in more and more people.” She encourages more women to pursue entrepreneurship like she has. “I want to encourage every woman that wants to make an impact to act, to be the protagonist of this world that surrounds us. Entrepreneurship is a matter of attitude. If you find a problem you are passionate about, investigate it in-depth, prototype a solution, talk to many people to validate your idea, and execute it — and the show begins! The best way to start is to implement and navigate your idea. I deeply encourage women to start by doing, even if the idea or solution is not perfect.  I also encourage women to find their own voice in this conversation, too — whether that's in your home, in your workplace, or in your community. We need to expand women’s power and influence all over the world!”

Women leaders open opportunity through inclusive finance, part two

Tracking the data collected through Accion’s hundreds of partners around the world can seem daunting and complicated. But making sense of this data is key to understanding how our work is making a difference for vulnerable populations, especially as they confront the challenges of COVID-19.

In 2020, Accion welcomed Credit Suisse’s Saad Khalid for six months as a volunteer to help Accion improve data collection and tracking efforts. An analyst in Credit Suisse’s compliance division, Saad leveraged his expertise to help a team of Accionistas build a data system to improve our monitoring and evaluation processes. Ultimately, they sought to enhance Accion’s ability to tell the story of our impact.

Saad’s experience at Credit Suisse in data analysis, data consolidation, rapid prototyping, and stakeholder management made him a valuable addition. His help centralizing Accion’s data opened doors for us to learn and grow. Saad said he hoped to leave us with a working solution, not mere recommendations, and indeed he has.
<h2><strong>Building on a longstanding partnership</strong></h2>
Credit Suisse employees like Saad can engage with Accion through the bank’s Global Citizens Program and Virtual Volunteering Program, whereby Credit Suisse employees can join Accion teams and apply their skillsets towards projects that build organizational capacity and help us better serve low-income families and small businesses across the globe.

<a href="https://www.accion.org/credit-suisse-and-accion-exploring-new-frontiers-in-financial-inclusion" target="_blank" rel="noopener noreferrer">For more than a decade, Accion and Credit Suisse have partnered to build a financially inclusive world.</a> Credit Suisse was integral to the 2008 launch of the Center for Financial Inclusion at Accion, which uses rigorous research and advocacy to advance inclusive financial systems for low-income people around the world. Credit Suisse was also a key supporter of the 2012 launch of Accion Venture Lab and supports its continued efforts to expand access to financial services through investing in and growing seed-stage fintech startups.
<h2><strong>Adding a new and valuable perspective</strong></h2>
Saad shared that his experience growing up in Pakistan and later in the UK helped draw him to work with Accion. He saw firsthand the life-changing effect that access to financial tools can have on improving the livelihoods of families and their communities. Saad also has a long history of working in the social impact sector.

In his spare time, Saad serves on the founding teams of two mission-driven startups. One startup offers digital recruitment solutions in Pakistan, and the other is a gig economy platform that democratizes access to employment via data labeling for machine learning.

Both Saad and the Accion team gained valuable lessons through his participation in the Credit Suisse Global Citizens Program. Saad gained a better understanding of data’s role in Accion’s work and also came to value Accion’s “capital plus” model, in which investors broaden their involvement with partners to include mentorship, technical assistance, governance, and more.

Saad’s invaluable additions strike at the essence of Accion’s partnership with Credit Suisse. As the broader industry continues to deepen transparency and data-informed approaches, we are excited to continue to build on his contributions to our work.

Partnering for a better view of Accion’s impact

<em>Cambridge, MA, November 9, 2020 </em> – Global nonprofit Accion announced today the appointment of Eraj Shirvani to the organization’s Board of Directors.

“We are pleased to welcome Eraj Shirvani to the Accion Board of Directors,” said Accion Board Chair Diana Taylor. “Eraj’s extensive global experience in providing financial services to underbanked populations positions him well to support Accion’s efforts to build a financially inclusive world, which are more important than ever today in light of the COVID-19 pandemic.”

Shirvani brings to the Accion Board more than 30 years of experience with Credit Suisse, most recently as the Vice Chairman of Emerging Markets, where he oversees the company’s work to build, maintain and grow client relationships in emerging markets. He has also served on the Board of Credit Suisse International (CSi) and Credit Suisse Securities Europe Ltd (CSSEL).

Shirvani previously served on the Board of the International Swaps and Derivatives Association (ISDA) from 2004 to 2016 and was elected Chairman of that board in 2008. He has also been a board member of the Clearing Corporation and the Depository Trust &amp; Clearing Corporation’s DerivServ Board, the Association for Financial Markets in Europe (AFME), and the Global Financial Markets Association (GFMA). Shirvani holds an MBA from Columbia University's Columbia Business School, and a bachelor’s degree in French and International Relations from the University of Pennsylvania.
<p style="text-align: center"><strong>###</strong></p>

<h3><strong>About Accion</strong></h3>
Accion is a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. We catalyze financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of — or poorly served by — the financial sector. For nearly 60 years, Accion has helped tens of millions of people through our work with more than 160 partners in 55 countries. More at <a href="http://www.accion.org" target="_blank" rel="noopener noreferrer">http://www.accion.org</a>.

Eraj Shirvani Named to Accion Board of Directors

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

<p class="p1"><em>By Simon Brunner in the <a href="https://www.credit-suisse.com/corporate/en/responsibility/dialogue/bulletin.html?WT.i_short-url=%2Fbulletin&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Fdialogue%2Fbulletin.html">Credit Suisse Bulletin</a></em></p>
<p class="p1">“Show me your credit rating and I’ll tell you who you are,” is the unwritten rule of the economic mainstream: If a global company, a small village shop, a home buyer or even an entire country wants to borrow money, they must first provide proof of their assets and income. But how can a farmer in rural Kenya provide reliable financial information when such information depends in large part on his harvest?</p>
<p class="p1">Apollo Agriculture, a start-up founded in Nairobi in 2016, wants to solve this problem with the help of remote sensing technology and data science. Apollo uses machine learning models to build credit profiles for their customers, using alternative data sources. This includes inferences from satellite imagery of customers’ fields, as well as self-reported and behavioral data gathered during the customer enrollment process. Apollo then provides approved customers with a package of farm inputs, advice, and insurance, on credit that is customized to the size of their farms. This means that farmers in the Kenyan city of Nakuru, for example, can access the quality seed and fertilizer they need to increase their yields and are protected in case of drought.</p>
<p class="p1">Co-founder and CEO Eli Pollak has ambitious plans: “Our business is helping small-scale farmers make more money on their farms. We see fantastic opportunities to help farmers expand and achieve higher returns, including higher profitability crops, more crop diversification, irrigation, and access to markets.”</p>

<h2 class="p2"><span class="s1">Accion Venture Lab </span></h2>
<p class="p2">As part of its Financial Inclusion Initiative, Credit Suisse supports Venture Lab, the seed-stage investment arm of Accion, an NGO and pioneer in the area of financial inclusion. Venture Lab provides startup capital and support to innovative start-ups that facilitate, improve, and reduce the cost of access to financial services for people living in poverty. Apollo Agriculture is part of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab/">Accion’s <span class="s2">portfolio. </span></a></p>

<h2 class="p1">Improving realities</h2>
<p class="p1"><em>A conversation with Laura Hemrika, the Global Head of <a href="https://www.credit-suisse.com/corporate/en/responsibility/economy-society/focus-themes/financial-inclusion.html?WT.i_short-url=%2Ffinancialinclusion&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Feconomy-society%2Ffocus-themes%2Ffinancial-inclusion.html">Corporate Citizenship &amp; Foundations at Credit Suisse</a></em></p>

<h4 class="p1">Q: Laura Hemrika, what does Credit Suisse seek to achieve through its Corporate Citizenship activities?</h4>
<p class="p2">A: Through our work, we seek to contribute to a more inclusive future where all people can both access the resources and develop the financial, entrepreneurial, and other skills they need to thrive in the economy and society. We focus on the topics of financial inclusion, financial education, and future skills, and partner with NGOs and social enterprises transforming the realities of thousands of people worldwide.</p>

<h4 class="p1">Q: Why did Credit Suisse choose to support Accion’s Venture Lab?</h4>
<p class="p2">A: Venture Lab has a very successful approach to identifying innovative new financial inclusion business models and helping them reach scale. Thanks to their smaller size, presence on the ground close to investees, and international team with deep experience in building financial inclusion and tech businesses, they are better placed to do so than we are, and are a great complement to our strengths. They provide early-stage investment capital — which can be difficult to obtain, especially for start-ups in emerging markets — and work closely with entrepreneurs to help build their companies. These companies are the future of financial inclusion, merging big data, new technology, and new models to deliver financial services to new customer segments, especially low-income people in developing countries.</p>

<h4 class="p5">Q: What support does Credit Suisse provide to help partners achieve sustained growth and impact?</h4>
<p class="p1">A: Our partners need not only capital but also expertise to grow and achieve a greater social impact. We, therefore, complement our grant funding with the knowledge and expertise of our employees through a number of employee engagement programs. Whenever valuable, we also try to connect our partners to other Credit Suisse resources, such as our clients and business colleagues, or to our other partners. Together we can achieve an even bigger impact.</p>
<em class="markup--em markup--p-em">A version of this post appeared previously in the </em><a href="https://www.credit-suisse.com/corporate/en/responsibility/dialogue/bulletin.html?WT.i_short-url=%2Fbulletin&amp;WT.i_target-url=%2Fcorporate%2Fen%2Fresponsibility%2Fdialogue%2Fbulletin.html"><em class="markup--em markup--p-em">Credit Suisse Bulletin</em></a><em class="markup--em markup--p-em">.</em>

Loans with the help of satellite images

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.

<em>By David Schnapp in the <a href="http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=613ABF4F-0882-493C-034CBDCF408D3C76">Credit Suisse Bulletin</a></em>

Despite her small stature, Madame Flora Edojah is a force to be reckoned with. A 53-year-old catfish merchant, she is the epitome of a businesswoman. Her stand at Ijesha Market in Lagos, the capital of Nigeria, has been a mainstay of the local fish trade for decades. The catfish is the most popular fish here, and for the hundreds of women who sell it, Madame Flora is a symbol of success.

With the heart and soul of an entrepreneur, Flora is building a mini-empire. And now “Lidya” enters the picture. Lidya offers a digital platform to facilitate access to financing. The company is supported by Accion Venture Lab – the world’s leading seed-stage investor in fintech for the underserved. The name Lidya comes from an ancient Greek kingdom that was located in Western Anatolia. Lidyans are credited with introducing the world’s first ever gold and silver coins, which revolutionized the way the goods are traded.

In May 2017, Lidya entered into an agreement with Triton Aqua Africa, a Nigerian supplier of catfish, frozen fish and chickens. Lidya issues fast loans to distributors who buy these products, based on their previous purchases. When Lidya was looking for a borrower in southeastern Nigeria, there was one person Triton Aqua Africa could wholeheartedly recommend: Flora Edojah. Originally from Nigeria’s oil-rich Delta State, she moved to Lagos in 1986 and began to sell small quantities of catfish. When Nigeria’s economy started experiencing a boom at the turn of the century, demand for catfish rose. Madame Flora saw the potential for working with larger customers like supermarkets and hotels. Because of challenges associated with obtaining loans from Nigerian banks, however, it was virtually impossible for her to enter the large-scale market. “There’s too much stress involved with it,” says Flora Edojah, now a successful fish merchant. “Lidya makes it very simple for me.”
<h3><strong>Solid Basis for Business </strong></h3>
According to the development bank IFC, which is a member of the World Bank Group, Nigeria and its more than nine million SMEs need another 30 billion US dollars in loans from traditional banking institutions. In 2016, the financial services provider Lidya began to close this gap, allowing small and medium-sized enterprises to submit applications for loans of between 500 and 50,000 dollars using their mobile phones. Lidya uses dozens of data points to evaluate their creditworthiness within 24 hours, then pays out the loans immediately. Muneeb Ahmed, an investment officer at Lidya, also helped Madame Flora open a bank account and obtain a bank verification number to establish and boost her credit rating.

“Madame Flora is an example for others,” says Ahmed, pointing out that Lidya’s work is not just about issuing loans, but also about putting businesses on a secure footing. Flora Edojah uses these loans to purchase catfish. She no longer keeps her earnings under her mattress, but in a bank account. Now she is in a position to do business with major players, such as supermarkets and hotels.
<p id="34fd" class="graf graf--p graf-after--p"><em class="markup--em markup--p-em">A version of this post appeared previously in the </em><a href="http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=613ABF4F-0882-493C-034CBDCF408D3C76"><em class="markup--em markup--p-em">Credit Suisse Bulletin</em></a><em class="markup--em markup--p-em">.</em></p>

Madame Flora and the catfish

<div class="byline">Last week I had the opportunity to participate in Credit Suisse’s 2017 <a class="markup--anchor markup--p-anchor" href="https://www.credit-suisse.com/microsites/conferences/laic/en.html" target="_blank" rel="nofollow noopener">Latin America Investment Conference (LAIC)</a> in São Paulo, Brazil. The annual conference brought together over 2000 people and is designed to provide investors as well as business, political, and economic leaders with insights into the region’s investment landscape and key trends. The conference featured a high-profile set of speakers and participants from across Latin America, making for many fascinating conversations and interactions.</div>
It was great to see that in addition to an array of sessions on important macroeconomic issues, policy insights, and investment trends, Credit Suisse also dedicated a session for participants to discuss fintech and its power to drive financial inclusion in Latin America. Our panel included Sergio Furio, Founder and CEO of <a class="markup--anchor markup--p-anchor" href="https://www.creditas.com.br/?" target="_blank" rel="nofollow noopener">Creditas (formerly known as BankFacil)</a>, a leading digital lending platform focused on secured lending in Brazil, and Gioia Deucher, CEO of <a class="markup--anchor markup--p-anchor" href="http://www.swissnexbrazil.org/" target="_blank" rel="nofollow noopener">swissnex Brazil</a>, a platform for an exchange of knowledge and ideas in science, education, art, and innovation.

I represented <a class="markup--anchor markup--p-anchor" href="https://www.accion.org/venturelab" target="_blank" rel="nofollow noopener">Accion Venture Lab</a> on the panel and had the opportunity to share our insights as a seed-stage impact investor that works to drive financial inclusion globally, and with a substantial presence in Latin America. We invest capital in and provide support to innovative <a class="markup--anchor markup--p-anchor" href="https://www.accion.org/content/venture-lab-portfolio" target="_blank" rel="nofollow noopener">fintech startups</a> that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale.

Our discussion focused on recent fintech innovations and trends, the promises and the challenges of the fintech space in emerging markets, and the opportunity for investing in this space, especially in Latin America.
<h2>Fintech for financial inclusion: Opportunities and challenges</h2>
Our panel discussed the opportunities we are most excited about in fintech that will increase access, quality, and affordability of financial services — particularly for underserved customers. We believe that technology brings immense potential for financial institutions to be able to expand their customer reach, optimize costs, and enhance their product and service offering by using new digital channels, tools, and data analytics. If done right, tech innovations can enable banks, fintech startups, and other financial institutions to serve customer segments that have traditionally been too costly or too difficult to serve — presenting immense, currently untapped, commercial opportunities while contributing to advancing financial inclusion.

However, tech innovation on its own is not a silver bullet for financial inclusion or commercial viability. It is important for providers to center their innovations based on a thorough understanding of the customers they are trying to serve. Any tech innovation can only be effective if it presents a solution for a particular customer pain point that existing products or services have yet to successfully address. Fintech innovators also need to carefully assess the context of their target markets, particularly with regard to the level of tech proliferation and adoption, to ensure product-market fit. The reach of tech adoption among underserved segments could be narrower in some markets due to factors such as less robust national IT infrastructure, prohibitive costs, or constraining regulatory environment.

Ensuring a solid consumer protection mechanism is also a key element to factor in as we advance the role of fintech in financial inclusion. As digitization becomes increasingly widespread, a substantial amount of data about an individual customer is being captured by product and service providers. Without responsible use of personal data, customers could be at risk of harmful practices such as privacy infringement or predatory marketing. It is critical that any use of customers’ data is done with customers’ consent and with full transparency.

As we advance fintech for financial inclusion, beyond expanding access and improving quality of financial services, we are keen to explore opportunities for fintech to catalyze initiatives on building financial health and financial capabilities for underserved customers, as well as to enable customer engagement models that create meaningful and delightful user experiences.
<h2>The fintech for financial inclusion space in Latin America</h2>
The Latin American market is ripe for fintech innovations, mainly due to the enabling environment that the region poses. Latin America has seen a rapid increase in mobile phone penetration and has also benefitted from smart policy initiatives. Take for example, the mandated electronic invoicing (e-invoicing) policy that governments in Mexico, Chile, Brazil, Argentina, Ecuador, and others have been spearheading. The policy requires all buyers and sellers to register invoices with the tax authorities electronically when a transaction takes place. This digitization of invoices leads to a creation of a rich pool of transaction information for micro and small businesses (MSMEs) that enable lenders to better assess creditworthiness — leading to <a class="markup--anchor markup--p-anchor" href="https://www.accion.org/sites/default/files/Bridging%20the%20Small%20Business%20Credit%20Gap%20Through%20Innovative%20Lending%20by%20Accion%20Venture%20Lab.pdf?_ga=1.46975969.714758165.1445872654" target="_blank" rel="nofollow noopener">increased access to capital for these MSMEs</a>.

To put this in context, Brazil has more 5 million MSMEs that employ almost 60 million people. However, only 7 percent of those MSMEs have easy access to credit and two-thirds of those MSMEs have difficulty accessing financial services (according to studies by McKinsey and Ernst &amp; Young). Current providers have been unable to fully serve MSMEs due to high acquisition and transaction costs, which also keep the lending interest rates high (~40 percent). Fintech solutions that leverage positive changes in the market, such as using this new stream of data from e-invoicing for underwriting, provide opportunities for both incumbents and new players to tap into this highly underserved market.
<h2>Investing in fintech for financial inclusion in Latin America</h2>
At Venture Lab, we are excited by the massive opportunity that Latin America presents in terms of investing for financial inclusion. We are encouraged by the performance of our portfolio companies in the region, from both the angle of commercial success and from the perspective of social impact. Our portfolio in the region includes online SME lender <a class="markup--anchor markup--p-anchor" href="https://konfio.mx/" target="_blank" rel="nofollow noopener">Konfio</a>, mobile point of sale payment solution <a class="markup--anchor markup--p-anchor" href="https://clip.mx/us/lector/" target="_blank" rel="nofollow noopener">Clip</a>, healthcare lender <a class="markup--anchor markup--p-anchor" href="http://saludfacil.org/" target="_blank" rel="nofollow noopener">Salud Facil</a>, small retail inventory financing provider <a class="markup--anchor markup--p-anchor" href="http://www.tiendapago.com/en/" target="_blank" rel="nofollow noopener">Tienda Pago</a>, and alternative credit scoring platform <a class="markup--anchor markup--p-anchor" href="https://www.destacame.cl/" target="_blank" rel="nofollow noopener">Destacame</a>.

As we continue to explore investment opportunities and build our portfolio of companies across Latin America, we look to tap into events such as LAIC to gain deeper insights into the market, to exchange insights and forge partnerships with other investors, financial sector actors and regulators. We enjoyed the ability to be able to connect with and work alongside industry leaders in our effort to drive fintech innovation for financial inclusion in Latin America. Credit Suisse’s focus on fintech for financial inclusion and their ongoing support of Accion Venture Lab have helped us support and scale our <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/content/venture-lab-portfolio" target="_blank" rel="nofollow noopener">portfolio</a>. Congratulations to Credit Suisse for a wonderful event!