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

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

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

Webinar: Making Digital Credit Truly Responsible

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

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

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

Client Voices: Rwandans Speak on Digital Financial Services

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

Webinar: Meet the 2019 CFI Research Fellows

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

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

Why Big Data Is a Big Can of Worms

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

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

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

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

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

Tiny Loans Big Questions: Client Protection in Mobile Consumer Credit

Matthew  Schaar

Kenya

Pakistan

South Asia

Sub-Saharan Africa

Tanzania

Access Usage Gap

Challenges and Crises

Consumer Protection

Credit

Delivery Channels

Digital Credit

Digital Financial Services

Enabling Environment

Entrepreneurs of MSMEs

Financial Service Providers

Fintechs

Human Centered Design

Impact Investing

Mobile Banking

MSME/SME Finance

Payments

Responsible Digital Finance

Responsible Investing

Telcos

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

Around the world, especially across the African continent, people in underserved communities rely on local agents and merchants for basic financial services like cash-in-cash-out payments, airtime top-ups for mobile phones, and bill payments. Though these agents and merchants are the primary way people in these communities make essential financial transactions, up to 20 percent of these transactions fail due to a lack of electronic float (the digital money agents have available to conduct transactions). This is inconvenient for both parties: It means that agents face massive liquidity gaps, limiting their ability to extend financial services to communities, and customers are left without an immediate liquidity option.

This is where Kuunda comes in, and today, Accion Venture Lab is <a href="https://www.accion.org/kuunda-is-proud-to-announce-the-closing-of-2-25-million-in-seed-funding-in-december-2021-to-expand-access-to-liquidity-for-the-underserved" target="_blank" rel="noopener noreferrer">excited to announce our participation in their seed funding round</a>.

<a href="https://www.kuunda.com/" target="_blank" rel="noopener noreferrer">Kuunda</a>, an API-based lender, aims to provide liquidity services to agents, micro-merchants, and consumers across the world. There are currently over 300 mobile money platforms globally, half of which are active in Africa, which host approximately 6 million agents who provide financial services on behalf of larger institutions. Working as an agent can significantly impact the income of families. <a href="https://www.gsma.com/sotir/wp-content/uploads/2020/03/GSMA-State-of-the-Industry-Report-on-Mobile-Money-2019-Full-Report.pdf" target="_blank" rel="noopener noreferrer">One study from 2019</a> found that within a subset of 1.4 million agents, $1.1 billion in commissions was paid to agents, resulting in an average of $841 in additional annual income for each agent.

In addition to supporting mobile money agents, Kuunda’s lending model also supports micro, small, and medium-sized enterprises (MSMEs), primarily focusing on reaching micro-merchants. MSMEs in emerging economies, especially microbusiness owners, struggle to get the financing they need to operate and grow their businesses. Kuunda aims to help close the gap in funding for MSMEs — <a class="Hyperlink SCXW112690076 BCX8" href="https://www.smefinanceforum.org/data-sites/msme-finance-gap" target="_blank" rel="noreferrer noopener">an estimated $5 trillion in unmet financing needs</a> — by providing financial services to underserved microbusinesses.  

Finally, Kuunda’s flexibility and ease of implementation has been applied at an individual customer level: In perhaps its greatest testament to this aspiration, Kuunda’s consumer overdraft product now serves over one million individual customers on the M-Pesa Tanzania network.

Andrew Milne, Sam Brawerman, and Morne van der Westhuizen — all veterans of the African mobile money sector — founded Kuunda in 2018 to reimagine liquidity management for underserved agents and micro-merchants. Kuunda’s solutions, including overdraft for airtime, mobile money, bill payment float, and credit products, address a critical pain point. Kuunda’s APIs simplify access to capital by allowing agents to top up their e-float with exact amounts needed for specific transactions, all seamlessly done at the push of a button within apps they already use to manage their businesses. Kuunda’s technology can also predict when an agent or merchant will need additional liquidity and can pre-determine their ability to repay or transact based on the agent’s credit score.

After initially launching in Tanzania, Kuunda has since expanded into Pakistan and plans to launch in Malawi, Zambia, Uganda, Kenya, DRC, Mozambique, Nigeria, and Egypt in the next 18 months. Kuunda’s model is well-positioned to succeed as the global economy pushes toward digitization and financial inclusion while leveraging the existing networks of mobile money agents and MSMEs in their communities. Accion Venture Lab is excited to invest in Kuunda for several reasons:
<h3>Partnerships that reach agents and MSMEs with critical financing at scale</h3>
Through their partnership model, Kuunda connects to large platforms that reach hundreds of thousands of agents and merchants. Kuunda’s seamless integration allows these MSMEs to gain access to credit and thus better serve their community. These corporate partners are trusted entities that agents interact with daily, so using a white-labeled lending service that sits on their own platform allows Kuunda to leverage preexisting tools that agents already use in a meaningful way. The ability for Kuunda to serve both telco-based agents as well as MSMEs is a key aspect of their growth in Pakistan. While the telecom sector is deeply fragmented in the country, Kuunda is building partnerships with several MSME service providers to build seamless and accessible financial services.
<h3>Superior technology that opens access to financing</h3>
We’ve seen several telcos and platforms attempt to launch their own lending product for agents or merchants and fail due to poor product design, ultimately leading to agent churn and a large loss of capital. With Kuunda’s deep experience in this space and nimble API plug-ins, they can help partners quickly and efficiently embed financing, cutting out the need for new product development on the partner’s side. This approach has helped reduce the time to launch a lending product from years down to a few months, and hopefully soon, it will be done in weeks. Through Kuunda, we’re excited to see embedded financial products managed at scale that ultimately increase retention of MSMEs on partner platforms. So far, we’ve seen that by increasing the number of transactions agents can process (and therefore, increasing the commissions they make), Kuunda increases agent retention and usage on partner platforms, offering a clear value proposition to all stakeholders in its ecosystem.
<h3>Unique, data-driven approach to design, price, and distribution</h3>
Kuunda sits between these B2B corporate partners and lending partners, allowing them to request, capture, and interpret unique data to better design, price, and distribute lending offerings. During the contracting phase, Kuunda works closely with their B2B partners to ensure they are gathering the right kind of data from that client’s platform to design credit offerings for either agents or merchants. From there, Kuunda liaises with the lending partners to ensure that portfolio quality will remain high. Once the product launches, Kuunda feeds data and insights back to their B2B and lending partners for ongoing project management and any future enhancements to the products.

In many communities around the world, MSMEs are the primary way for people to purchase food and essentials, withdraw cash, pay their bills, and purchase airtime for their phones. Solving MSMEs’ liquidity challenges means that more community members can reliably access to these critical financial products and services. We’re proud to support Kuunda’s journey as they leverage technology — and existing, robust networks of mobile money agents and partners — to help agents and MSMEs become more resilient, earn more income, and grow their businesses.