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

El Salvador

Sri Lanka

Uganda

Vietnam

Digital Credit

Digital Financial Services

Youth

Blog Post

&gt; Posted by Susy Cheston, Senior Advisor, CFI

<img class="alignright wp-image-18318" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/06/thumb_819d117b7e674def88fe59653e42a808.jpg" alt="" width="331" height="210" />Almost three decades ago, I walked into a meeting with a loan officer at a major bank in Boston. I was running a not-for-profit dance company that was well-respected, had good governance, and had a decent business plan—but hey, it was a not-for-profit dance company with no endowment and no certainty of surviving beyond its next show. We were not a good risk on paper. My job was to persuade the loan officer to give us an unsecured line of credit based solely on our business plan and his judgment of our ability to execute against that plan. He looked at our financials, but he also sized me up. This was not data analytics, this was the old-time community bank model of a decision based on a hand shake and a relationship, a sense of trust. Truth be told, the loan officer was biased in our favor. He really loved our work and believed in what we did. That plus a few well-placed board members had gotten me in the door where a company with a similar balance sheet and risk profile would have been left out in the cold.

A few years later, I landed in El Salvador where I formed lending groups among poor, illiterate women in the relatively early days of microfinance. “Ella es buena paga” was the phrase the women used to identify someone who was known as good for paying her debts. It meant that when a vendor in the marketplace or the owner of a corner store let a customer buy something on credit, she was good for it. On the basis of a reputation as “buena paga,” the lending group would allow a woman to join them. Needless to say, those who were known as “mala paga” would be blacklisted and not permitted to join the group.

Perhaps the greatest microcredit miracle of the last century was that, thanks to these lending groups, poor women who were credit invisible were revealed as credit worthy, identified as such through social relationships and their standing in the community. It was the kind of relationship-based credit decision that I and our dance company had benefited from in Boston, but that people at the base of the pyramid had always been excluded from.

Back in the 1860s in the United States, local merchants had their own version of “buena paga” and “mala paga.” They would keep lists of their customers who didn’t pay their debts. After a while, they started sharing those lists with each other. It was a pretty simple risk management system -- a basic list of people they considered to be poor credit risks. Soon enough, someone started providing the service of collecting that information from merchants and sharing it with others—but only at a local level. People still knew each other.

By 1899, the Retail Credit Company (RCC) was founded to provide that service of sharing information about who was “buena paga” and who was “mala paga.” They grew quickly, and by the 1920s, they had offices all over the United States. By the time the 1960s arrived, RCC had credit information and files on millions of Americans and would <a href="http://archive.wired.com/wired/archive/3.09/equifax_pr.html">share it with just about anyone</a> who paid them for it. The game had moved from relationships to data.

But credit bureaus didn’t only collect information on who paid off their loans. They collected data on people’s health, personal habits, morals, use of vehicles, and finances. <a href="http://archive.wired.com/wired/archive/3.09/equifax_pr.html">According to Professor Alan Westin</a> writing in The New York Times in 1970, Retail Credit collected "...facts, statistics, inaccuracies and rumors… about virtually every phase of a person's life; his marital troubles, jobs, school history, childhood, sex life, and political activities." The company was also alleged to reward its employees for collecting negative information on consumers.

When I worked in El Salvador in the 1990s, a woman could be ostracized and left out of a lending group due to a feud or some kind of unfair discrimination—something that had nothing to do with her ability and willingness to pay off her loan. As an outsider to the community, I did not know enough to be able to intervene in those cases, nor would I have. Since the women were guaranteeing each other’s loans, they needed to have a high level of trust in each other. It was a relationship-based model.

Nevertheless, one potential downside of that group lending model was that a woman could be outcast and become even more excluded by being left out of the group. In the 1960s in the United States, that outcast effect was magnified many times over if a consumer had the bad luck to have Retail Credit come across negative information of any kind. If you were blacklisted, the game was over.

This brings us back to <a href="http://en.wikipedia.org/wiki/Alan_Westin">Alan Westin</a>, who was a real hero of credit reporting. A professor at Columbia University in the 1960s, Westin conducted some of the first significant work on consumer data privacy and data protection. His major books on privacy – Privacy and Freedom (1967) and Databanks in a Free Society (1972) – shaped the conversation, prompting U.S. privacy legislation and supporting the launch of many privacy movements globally in the 1960s and 70s. According to Westin, privacy is defined as an individual’s right “to control, edit, manage, and delete information about them[selves] and decide when, how, and to what extent information is communicated to others.”

Thanks in part to Professor Westin’s advocacy, those Wild West days of credit reporting in the United States were significantly cleaned up when the <a href="http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act">Fair Credit Reporting Act</a> was passed in 1970, establishing limits on what information credit bureaus could share, and with whom.

Retail Credit Company not only responded to its tainted image by changing its name to Equifax, but it also significantly cleaned up its act. In 1989—the same year I was approaching my nice Boston loan officer for a line of credit—Jack Rogers took over as CEO of Equifax. Rogers made a number of changes, including reorienting the company toward providing tailored risk management for its customers; taking the company international; and, in a major break from its recent practices, setting a vision of becoming the gold standard of the industry with respect to personal privacy. He did something pretty revolutionary, inviting the company’s chief critic, none other than Alan Westin, to work with the company to transform its privacy policies and practices. Westin did exactly that, and today on its corporate website, Equifax proclaims: “We are committed to a well-established set of principles that address consumer privacy issues, and we take pride in being a trusted steward of consumer information….” The commitment seems to be real, and there is a strong corporate culture built around protecting those privacy principles.

Today, credit bureaus process billions of points of data every month and monitor activity on at least a billion credit cards in the United States. In addition to the U.S., Equifax works in 18 other countries (it’s the market leading credit bureau in all but a few of them), generating <a href="http://www.equifax.com/about-equifax/company-profile">158 billion credit score updates</a> per month. Based on the myriad of data Equifax and other credit bureaus collect they make decisions about the credit-worthiness of individuals and assign them credit scores, determining if someone is “buena paga” or “mala paga.” They have immense power that is fueled by spectacular access to data and sophisticated models of data analytics. With new technologies, new abuses also become possible, making it more important than ever to focus on people and to protect their privacy. While the old days are blessedly gone—no longer is someone denied a loan because of marital troubles or political activities—still, there are people today in the United States whose credit score unfairly and unjustly prevents them from receiving a loan, effectively giving them a bad name. Sometimes the reason is the most faceless of all--simply a data entry error on the part of the credit bureau.

The fight for consumers to have some control over their own data—and their reputations -- continues on. It’s part of the balancing act of businesses managing risk through some combination of relationships and data, with credit reporting ever evolving. On May 20, <a href="http://www.usnews.com/news/business/articles/2015/05/20/31-state-deal-should-make-credit-report-errors-easier-to-fix">new regulations</a> were agreed to that should make it easier for customers in the United States to correct inaccuracies in their credit reports. And on June 1, Equifax settled a lawsuit against the company by a man whose first name is God. Equifax had refused to recognize God Gazarov’s name as legitimate, and had effectively cast him out of the financial system. Now, Equifax has <a href="http://wina.com/news/030030-equifax-settles-lawsuit-with-man-named-god/">restored its relationship with God</a>. We’ll hope that is a sign of good things to come.

Image credit: Accion

Have you read?

<a href="http://cfi-blog.org/2014/01/07/ratings-to-loosen-the-regulatory-noose-on-chinas-microcredit-companies/" target="_blank">Ratings to Loosen the Regulatory Noose on China’s Microcredit Companies</a>

<a href="http://cfi-blog.org/2013/02/14/how-client-protection-certification-and-ratings-work-together/" target="_blank">How Client Protection and Ratings Work Together</a>

<a href="http://cfi-blog.org/2014/05/05/the-future-of-creditworthiness/">The Future of Creditworthiness</a>

Buena Paga, Mala Paga: An Incomplete and Personal History of Credit Reporting

Consumer Credit

Credit

&gt; Posted by Joshua Goldstein aka Mr. Provocative

[getty src="452198062?et=etJLyN29RcJHrVRGCVNZOA&amp;sig=JAYol1f4nIMYKEG8kW8mxSlOSuj0suGNibgLiv3J0Kc=" width="594" height="445"]

Since October, more than 52,000 unaccompanied children, mostly from Honduras, El Salvador, and Guatemala have illegally entered the United States, mostly through the Rio Grande Valley. Until the justice system processes their cases, they’re being held in miserably overcrowded border detention centers, military bases, and other facilities in Texas and elsewhere.

All kinds of reasons are given for this exodus - gang violence, lack of economic opportunity, the perception that under a “liberal president” amnesty will be granted. The policy wonks and talking heads can debate the causes of this humanitarian crisis and assign blame to their hearts' content. And of course, we have to “study” the situation and make sure that if we allow some of these frightened minors to join family members in the United States, this doesn’t incentivize other youth to risk life and limb to set off on a dangerous journey from their homelands to reach the United States.

But come on pundits, these are children, scared, vulnerable children, some just a few years old. And whatever the proximate cause of their departure from their countries like violence or poverty, the destination for most of these children is usually pretty clear: loved ones, whom they miss. Many of these absentee parents/guardians had left their children behind years before and migrated legally or illegally to the United States and have been sending back remittances ever since.

The current crisis reminded me of my 2008 Mr. Provocative blog post about a fantastic book called Enrique’s Journey, which looks at the dark side of the explosive growth of remittance provision, resulting from separated families. The book helps get us into the hearts and minds of some of these children, who then, as today, are driven by a simple and powerful emotional mandate: they want to be with their mothers. Titled “<a href="http://cfi-blog.org/2008/11/04/microfinance-keeps-families-together-the-sorrow-behind-the-explosion-in-remittances/" target="_blank" rel="noopener">Microfinance keeps families together: The sorrow behind the explosion in remittances</a>,” here’s my post on the ever-pertinent Enrique’s Journey.

<img class="alignright size-full wp-image-15518" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/07/enriques-journey.jpg" alt="" width="156" height="238" />The explosion of remittance transfers from people who have migrated to developed countries to their poor relatives back home has led to new wealth creation and a better standard of living for many. And this is, on the face of it, very positive.

But I believe that there is a particular sorrow behind a considerable percentage of remittances that demands greater scrutiny and perhaps some kind of remedial action. The transfer of money is often made by families living under the great stress of separation—such as an absent mother supporting the small children she has left behind—an abandonment from which some never recover.

<a href="http://www.enriquesjourney.com/" target="Blank">Enrique’s Journey</a>, (2006) by Pulitzer Prize winning journalist Sonia Mazarin, is the harrowing story of a teenage Honduran boy who embarks on a dangerous journey, riding the tops of freight trains, to reach the United States in search of his mother Lourdes, whom he has not seen since he was five years old. He is, says Mazarin, one of an estimated 35,000 migrant children each year who sneak into the United States (many others are turned away at the border) with the dream of reuniting with a mother they hardly remember.

Like countless other impoverished, single mothers, Lourdes left Honduras for the United States with the best interests of Enrique in mind. Hers is an agonizing decision, driven by economic necessity and the dream of a better future. Lourdes does find work, remits money regularly, and within a year or two plans to return to Honduras. But that last, critical piece of her plan is not possible.

As a five-year-old, all Enrique understood was that his mother had abandoned him. His loss ultimately drives him to risk everything and head north to find her. But, after years of separation, the kind of perfect bonding he longs for with his mother is not achievable, leaving him bitter and confused.

When impact studies are done about the value of remittances, it is inevitable that proxies for success like school attendance and increased consumption are used. And that makes sense. But poor people are as psychologically complex as the rest of us, and increased material well-being afforded by remittances may be counteracted by the profound social dislocation and loss that children like Enrique suffer. (And what good is school attendance if a child cannot concentrate anyway?) As a first step, a public health campaign to educate migrant mothers about how best to communicate with the children they have left behind, in order to minimize the psychological damage, would be well advised.

Transfers of money are no substitute for the daily reassurance of parental love that allows children to flourish, and that means doing more to keep families together. Microfinance institutions focus on serving people where they are. Made explicit in the mission statements of microfinance institutions might be something like the following: Working capital loans to the self-employed poor sector make it possible for mothers and fathers to stay with their children.This is a very impressive achievement of the microfinance revolution that, in my opinion, should be highlighted more and is surely an impact that we should design studies to measure. It certainly is another powerful argument for exponentially expanding the reach of microfinance.

Reading recommendation: Readers of this blog might also be interested in Edwige Danticat’s memoir, <a href="http://www.amazon.com/Brother-Im-Dying-Edwidge-Danticat/dp/1400041155" target="Blank">Brother I’m Dying</a>, which is filled with poignant passages about separation, loss, and the role of remittances in the lives of the Haitian poor.

Image credit: <a href="http://www.gettyimages.com/detail/news-photo/immigrants-who-have-been-caught-crossing-the-border-news-photo/452198062" target="_blank" rel="noopener">Pool/ Getty Images</a>

Have you read?

<a href="http://cfi-blog.org/2011/02/01/remittances-a-key-driver-of-economic-reform-in-cuba/" target="_blank" rel="noopener">Cuba &amp; Remittances: Can the 'Money in the Mail' Drive Reform?</a>

<a href="http://cfi-blog.org/2014/04/18/unexpected-benefits-of-mobile-money/" target="_blank" rel="noopener">Beyond On-Ramps and Uptake: Exploring Surprising Benefits of Mobile Money </a>

<a href="http://cfi-blog.org/2013/10/18/mobile-money-domestic-remittances-innovations-in-savings-top-picks-of-the-microfinance-blogosphere/" target="_blank" rel="noopener">Mobile Money, Domestic Remittances, Innovations in Savings - Top Picks of the Microfinance Blogosphere</a>

In Light of the U.S. Border Crisis, Revisiting ‘Enrique’s Journey’

Honduras

Mr. Provocative

Payments

Remittances

Jose Amaya

Agricultural and Rural Finance

Microfinance

Rural Populations

Article

When people ask me why I’ve worked for one organization for nearly 15 years, I usually give an answer about how great Accion is. But there’s more to the story.


[caption id="" align="alignleft" width="503"]<img class="graf-image" src="https://cdn-images-1.medium.com/max/1080/1*kyDTTQfcq5T-9thcjnKlCg.jpeg" alt="Jose Amaya at 12, growing up in El Salvador" width="503" height="466" /> Me at 12, growing up in El Salvador[/caption]
I come from a very poor family in El Salvador. I was born in 1981, at the beginning of a bloody civil war that lasted 12 years. Some days we had no food to eat, and my mother (God rest her soul) would walk long miles searching for food, sometimes with no luck. On those days, everybody would go to bed hungry, hoping the next day would bring better luck.
The small village where we lived had about 30 huts. The land was owned by one of the 14 families in the oligarchy that controlled most of El Salvador. When the war broke out, many of these landowners fled the country, and the land became a communal space for all the people who lived on it. A governing body was formed, and everybody worked the land together.
Then reforms came, and the land was divided equally among all the co-op members. My family got about 10 acres and a cow.
As new landowners and cattle raisers, my family’s biggest challenge was obtaining money to work the land on our own. That’s when we found out about agricultural microfinance.


[caption id="" align="alignnone" width="640"]<img class="graf-image" src="https://cdn-images-1.medium.com/max/1080/1*Qu8hg-kW0AxIr3CrPaTPjg.png" alt="People from Jose's village planting maize. Agricultural microfinance brought opportunity to his village." width="640" height="320" /> People from my village planting maize.[/caption]
My uncle was the first one to start “working with the bank.” He took out small loans to buy fertilizers, pesticides, and to pay his laborers. With the help of a technical assistant, he was able to expand his crops beyond maize, sorghum, and beans. He planted rice, sesame, and other, more profitable products.
In a few short years, my uncle went from living in a hut to living in a brick house. Everyone wanted to emulate him, including my father. And although we never got to the point of building a nice brick house, my family became self-sustaining. Our cows multiplied, and we worked our own land instead of laboring for somebody else.
I came to the United States when I was 16, and dazzled by this big city called Boston, I almost forgot about my little village. I started taking English classes, and the teacher helped me enroll in high school. Then someone gave me an old desktop computer as a present, and it became my object of fascination. I took it apart and put it back together many times. After finishing high school, I went to a vocational school for computer science.
I worked at a dry cleaner while I studied. Soon after I graduated, I came across an internship opportunity on the Accion website. So I called. A kind lady answered the phone, and after a short conversation in Spanish, I was invited for an in-person interview.
I arrived a few minutes early for the interview. While I waited at the reception desk, I started looking at the objects on the walls. It all came back to me. The Latin American decorations all over the office brought me back to my friends and neighbors in the village I had left behind. I realized right then that Accion was unique.
I ended up getting the internship. That was 2004, and here I am, still amazed by this place, and highly optimistic that we are making a difference in the world.
When the occasional drudgery of a busy day gets to me, and I start questioning my purpose, I reflect back on my little village, I feel nostalgic, and then I find my groove again.
As our CEO Michael Schlein said in a recent meeting, “It's so rewarding to work for an organization where you can help make a <a href="http://www.accion.org/can-we-make-the-digital-revolution-work-for-everyone/">positive impact in people's lives</a>.” It means even more knowing that the lives we’re improving are people like my family and the neighbors in my village.

I know financial inclusion can change lives because it changed mine

Staff

El Salvador

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I know financial inclusion can change lives because it changed mine

From the Center for Financial Inclusion

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

Buena Paga, Mala Paga: An Incomplete and Personal History of Credit Reporting

In Light of the U.S. Border Crisis, Revisiting ‘Enrique’s Journey’