Technology and outreach

Formal financial service providers face high costs when attempting to bring services to remote rural areas. Low density populations and poor roads make transaction costs high and typically the local economies are characterized by low levels of cash liquidity, seasonality of incomes, highly segmented markets and increased covariance risk. However, new technologies are redefining the possibilities, and increasing numbers of financial institutions - commercial banks, development banks and some microfinance organisations – are experimenting with mobile banking, automated teller machine (ATM) networks, smart card operations and other methods of providing low cost services.

Library Resources

resource title type year resource
Blockchain, Fintechs and their Relevance for International Financial Institutions Paper 2019

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The purpose of this working paper is to provide a primer on financial technology and on Blockchain, while shading light on the impact they may have on the financial industry. FinTechs, the financial technology and innovation that competes with traditional financial methods in the delivery of financial services, has the potential to improve the reach of financial services to the broader public and facilitate the creation of a credit record, especially in the developing world. Some Blockchain applications like cryptocurrencies, could be problematic as cryptocurrencies cannot substitute traditional money due to the high risk of debasement, luck of trust and high inefficiencies relating to the high cost in electricity and human effort required to clear cryptocurrency transactions. Cryptocurrencies’ high volatility renders it a poor means of payment and store of value, while resembling a fraudulent investment operation. Yet, other Blockchain applications, like Blockchain securities, could facilitate the functioning of an International Financial Institutions (IFI) due to the volume of securities they issue as Blockchain securities enable an almost instantaneous trade confirmation, affirmation, allocation and settlement and reconciliations are superfluous releasing collateral to be used for other purposes in the market. IFIs could promote awareness and understanding about Blockchain technology among different IFI services and launch Blockchain labs in order to pilot projects that can improve governance and social outcomes in the developing world.

Author E. Davradakis & R. Santos
Publisher European Investment Bank
Number of Pages 40 pages
Primary Language English (en)
Region / Country Global
Keywords Capital Markets, Access To Finance, Mobile Banking
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Blockchain: Opportunities for Private Enterprises in Emerging Markets Paper 2019

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Blockchain is an emerging technology that offers the possibility of re-engineering economic models and enabling the creation of markets and products that were previously unavailable or unprofitable across emerging markets. This report is intended to introduce readers to current developments in distributed ledger technology, or blockchain, with the vantage point of possible benefits to emerging markets. The first six chapters were written a year ago, while the last three are more recent and bring the perspective of a year of development in the nascent technology. Chapter 1 provides an overview of blockchain technology, followed by a look at its unfolding applications in emerging markets in Chapter 2. Chapter 3 examines whether blockchain can be used to mitigate de-risking by financial institutions. Chapters 4 and 5 look more closely at the financial services sector, including an overview of how blockchain fits into the spectrum of financial technology (fintech) innovations and the resulting provision of financial services (Chapter 4), and an analysis of blockchain’s contribution to reaching the unbanked and underbanked in various emerging markets, including in Latin America, Asia, and Sub-Saharan Africa (Chapter 5). Chapter 6 looks beyond fintech to explore how developments in applied blockchain technology can impact agribusiness, drug safety, and more generally provide enforcement tools to promote the reach of sustainable and inclusive business. Chapter 7 discusses the proper regulatory environment needed to stimulate competition and investment in blockchain technologies in emerging markets and beyond. Chapter 8 examines the potential of blockchain to accelerate the transition to low-carbon energy solutions in these countries. Chapter 9 offers a review of legal issues associated with the use of blockchain and how these can be addressed.

Author Miller, Douglas; Mockel, Peter; Myers, Gordon I.; Niforos Marina; Ramachandran Vijaya; Rehermann Thomas; Salmon John;
Publisher International Finance Corporation (IFC)
Number of Pages 88 pages
Primary Language English (en)
Region / Country Global
Keywords Distributed Ledger Technologies; Blockchain
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Pathways to a Better Life: The Intricate Role of Digital Finance in Reaching the Sustainable Development Goals Paper 2019

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Under the Impact Pathways project, UNCDF set out to explore the connection between financial service use cases and the Sustainable Development Goals (SDGs), in the hope of illuminating the multiple ways that formal financial service users might be experiencing impact. This focus note discusses the logic, conceptual framework, caveats and detailed methodology behind this new approach to mapping the thorny trail between the use of financial services and the SDGs.

Ultimately, the goal is that this conceptual framework and methodology offers a way to envision the journey from usage of financial instruments to achievement of the SDGs and can show the pathways by which financial inclusion efforts are improving the lives of low-income people. For many stakeholders, this framework and measurement methodology might be a way to both establish potential pathways and measure progress along them, providing increasing evidence as to how finance can ultimately help improve peoples' lives.

Author Daryl Collins, Liz Larson & Abby Butkus
Publisher United Nations Capital Development Fund (UNCDF), BFA
Number of Pages 13 pages
Primary Language English (en)
Region / Country Global
Keywords digital financial services
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Blockchain and Associated Legal Issues for Emerging Markets Brief 2019

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Blockchain, or distributed ledger technology (DLT), is a tamper-evident and tamper-resistant digital ledger implemented in a distributed fashion.1 This emerging technology, which enables direct transactions within a ledger without need for a central authority or trusted intermediary, has the potential to re-engineer economic models and enable the creation of markets and products previously unavailable or unprofitable across emerging markets. However, in considering the potential benefits of blockchain, organizations must also consider the associated risks and how they can be managed.

These risks include jurisdictional challenges, crypto assets, privacy and data protection, double spending, and distributed denial-of-service (DDoS) attacks. Several risks have been identified and overcome at similar innovative leaps in the recent past, including the commercialization of the Internet and cloud computing. It is essential that enterprises understand all risks inherent in blockchain systems, including being able to clearly identify who is accountable and legally responsible.

Author John Salmon and Gordon Myers
Publisher IFC
Number of Pages 8 pp.
Primary Language English (en)
Region / Country Global
Keywords Distributed ledger technologies
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Growing With Pain: Digital Financial Inclusion in China Paper 2018

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Current status and future outlook for the digital finance industry

Active users of digital financial inclusion (DFI) have reached almost 1 billion in China. Due to various socioeconomic factors or personal reasons such as lack of financial literacy, however, DFI has yet to achieve universal coverage. A significant portion of the low- and medium-income population has yet to benefit from digital finance but has to resort to a hybrid of traditional and digital means to access financial services and still some people have no access to any financial service at all.

This report introduces the current industry status, accomplishments and challenges, regulatory efforts and future outlook for each of the five elements of DFI, namely internet financing, digital credit service, digital payment, digital wealth management and digital insurance.

Exploring New Frontiers in Fintech Investments in East Africa Report 2018

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Even with the robust growth in FinTech, some questions remain unanswered - what spurred the FinTech growth? Is it scaleable? Is it sustainable? How are global economies such as India and China accommodating the FinTech disruption? This report traces back the evolution of FinTech on one of Africa’s early adopting regions, East Africa and covers the views of various voices in the ecosystem, each providing the uniqueness of the emerging sector, sub-models, their value propositions and feasibility, in an attempt to demystify this complex ecosystem. The report’s core explores the funding options currently available for the sector ranging from debt offering, grants and equity provision. With the increased success of FinTech players in East Africa, investors are keen to understand the opportunities available for capital deployment in East Africa’s FinTech space. Here, we have assessed the financing options currently available in the market for target investors. We have also explored the risks associated with the sector and how other investors deal with this. Finally, the report has explored returns available for FinTech investors in East Africa, to provide guidance on the region’s earnings potential.​

Author Himanshu Bansal; Vineeth Menon; Nikhil Jambawalikar; Anthea Muthusi
Publisher EAVCA
Number of Pages 118 pp.
Primary Language English (en)
Region / Country Africa
Uganda, Tanzania, Rwanda, Kenya, Ethiopia, Burundi, South Sudan
Keywords Access To Finance, Mobile Banking, FinTech
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Driving Digital Financial Services through High-Volume Payments Report 2018

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The future success of inclusive digital finance depends on finding better and more affordable uses for digital wallets that will encourage low-income customers to use them regularly and repeatedly. High-volume payments (HVP) have gained industry attention as a means to drive or diversify usage, particularly among low-income customers. To better understand the prerequisites to implement HVP digitally and to unlock the opportunity of digital finance, the UN Capital Development Fund (UNCDF) has sought greater clarity on the requirements necessary for HVP to drive active account usage as well as the roles and activities of different actors involved in the digitization effort. This report combines the key observations, hypotheses and recommendations from this research. It draws on information available and insights from projects that UNCDF has implemented with partners between 2015 and 2017.

The Tech Touch Balance: How the Best Fintech Startups Integrate Digital and Human Interaction to Accelerate Financial Inclusion Paper 2018

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Digital technology continues to drive massive change throughout the financial sector. Acting strategically, inclusive fintech startups can use technology to increase access to, improve the quality of, or reduce the cost of financial services for the underserved. However, in too many instances, fintech startups make the same mistake time and again: they build technology for technology’s sake. These fintech models are great on paper but don’t consider the needs and preferences of their customers. They do not use new technologies strategically and fail to transform finance into a sector that works for everyone.

This paper highlights the innovative approaches eight of Accion’s portfolio companies use to balance tech and touch. These case studies offer insights into how companies approach this question, the factors that affect their decision-making, and the outcomes that result from balancing tech and touch correctly. The companies profiled offer a range of services, work in different markets, and serve various customer segments around the world, but are all committed to delivering high-quality, affordable financial services.

Author Coryell Stout; Amee Parbhoo
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
Keywords FinTech, digital finance
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G20 Digital Identity Onboarding Paper 2018

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A unique, legal identity is necessary to allow all individuals to participate fully in society and the economy. The ability to prove one’s identity underlies the ability to access basic services and entitlements from healthcare through to pensions and agriculture subsidies. This is especially true for marginalized segments of society such as women, poor rural farmers, refugees and also extends to MSMEs (micro, small and medium enterprises). The importance of legal identity has been acknowledged by the international community through agreement of target 16.9 of the Sustainable Development Goals, which calls for all UN member States to “provide legal identity for all, including birth registration” by 2030.

Author World Bank Group; Global Partnership for Financial Inclusion
Number of Pages 89 pp.
Primary Language English (en)
Region / Country Global
Keywords digital services, Digital identity, Identity for development
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Using Satellite Data to Scale Smallholder Agricultural Insurance Brief 2018

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How can satellite data help to reduce delivery costs of area-yield index insurance?

Smallholder families that use agricultural insurance can increase investments in more productive farming and nonfarming ventures as they feel more confident in managing related risks. However, significantly scaling the use of agricultural insurance among smallholders has been difficult in many parts of the world, especially in Africa.

Increasingly, satellite data are being explored to drive further innovation in smallholder agricultural insurance, as illustrated by a collaboration in Nigeria and Kenya between CGAP and Pula, an insurance and technology company that targets smallholders in Africa and Asia. This brief shares lessons from this collaboration and suggests a practical way that satellite data can be used to significantly reduce delivery costs of area-yield index insurance offered to smallholder families in Africa.

Exploring Blockchain Applications to Agricultural Finance Paper 2018

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The rapid pace of technological transformation across the developing world has important implications for the financial inclusion of the world’s poor. Amid this change, new technologies that enable inclusive agricultural finance have garnered heightened interest. From mobile phones to drones, digital tools may one day overcome longstanding barriers to reaching the world’s 500 million smallholder farming households.

Toolkit: Access to finance for renewable energy technologies Toolkit 2018

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Access to affordable, reliable and sustainable energy is often associated with economic development and considered as vital to alleviating extreme poverty. Yet access to clean sources of energy is still a challenge for many smallholder farmers, their families and other rural entrepreneurs. Recent advancements in renewable energy technologies (RETs) have started to make the achievement of Sustainable Development Goal 7 possible – “Ensure access to affordable, reliable, sustainable and modern energy for all”.

Beyond technology development, the challenge now is to make these technologies accessible to rural populations. As RETs require some upfront investment, access to end-user finance is a key component to facilitate their wider adoption. In recent years, donors and financial service providers (FSPs) have increasingly been investing in demonstration projects to facilitate access to financial services for RETs. Recent experimentation offers key lessons for the design and delivery of suitable renewable energy finance options for rural populations.

The toolkit focuses on end-user finance for renewable energy technologies for rural households, smallholder farmers, and rural micro, small and medium enterprises.​

Author Michael Hamp, Marion Allet, Kerman Wildberger
Publisher IFAD - International Fund for Agricultural Development
Number of Pages 32 pp.
Primary Language English (en)
Region / Country Global
Keywords Inclusive rural finance, Renewable Energy, Financial Inclusion
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Harnessing the chances of digitalisation for rural development Guideline 2018

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A practical guideline for projects and planning officers to:

  • Introduce important aspects such as equal access to ICT for women and young people
  • Capture and share lessons on applying digital solutions
  • Recommend to project managers how to plan and implement sustainable ICT4Ag business models

The new release draws from 52 ICT4Ag solutions, which have been developed for 29 GIZ projects operating in 34 countries in Africa and Asia. It includes inspiring examples and ideas from within GIZ, lines out entry points and recommendations to fellow SNRD projects all with the aim to better integrate ICT4Ag solutions.

It covers technical requirements and institutional considerations for integrations to stand a chance for sustainable success. At the end of its 110 pages, the guideline lists various existing ICT4Ag solutions with their respective purposes.

Financial Inclusion in the Digital Age Report 2018

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How are technological innovations fostering creative new approaches to improve financial inclusion?

This report highlights some of the central frictions that prevent greater financial inclusion and financial well-being, and associated technological innovations that are fostering creative new approaches to mitigating these frictions for individuals and small businesses globally.

The innovations outlined in the report highlight different solutions to the three core problems across countries at different stages of development: (1) access, (2) product market fit, and (3) cost. The report does not aim to be complete but rather uses select examples of what can be achieved for financial inclusion by applying innovative business models and technology to different types of financial services for individual consumers and small businesses.

At the end of the report, authors provide a list of 100 Fintech companies globally that are supporting “Financial inclusion in the Digital Age” across four main verticals of impact: payments, lending and related ecosystem, savings and financial planning, and  insurance.

Global Microscope 2018: The Enabling Environment for Financial Inclusion and the Expansion of Digital Financial Services Report 2018

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The Global Microscope is a benchmarking index that assesses the enabling environment for financial inclusion in 55 countries. Now in its 11th year, the Microscope is the global standard for financial inclusion policy in developing economies. The 2018 Global Microscope on Financial Inclusion, with a revised research framework, offers a forward-looking focus on the digital financial services now and in the future, and the critical role for financial inclusion envisioned in the Sustainable Development Goals.

The 2018 Global Microscope sets a model for an enabling environment for financial inclusion across five domains: government and policy support, stability and integrity, products and outlets, consumer protection, and infrastructure. The Microscope evaluates the regulatory and policy environment for key players in the financial inclusion space including banks, non-bank financial institutions, e-money issuers and cross-border payment providers. It also focuses on the role of inclusive insurance, financial agents, financial technology (fintech) firms, and credit information providers.

The Global Microscope is produced by The Economist Intelligence Unit (The EIU), with policy guidance and financial support from leading organizations in the field, including CFI.

Primary Language English (en)
Region / Country Global
Keywords Consumer Protection; Financial Inclusion
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A primer on blockchain technology and its potential for financial inclusion Paper 2018

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The invention of Bitcoin in 2008/2009 gave consumers and businesses the possibility to transfer money nationally and internationally on a truly peer-to-peer basis (i.e. without a trusted central party such as a bank). Few people realised the full potential of the technology in the early days, but today blockchains are often referred to as the “internet of trust”. This term relates to the universal potential of blockchain technology, which goes beyond payment systems and enables people that do not trust each other to directly exchange (digitally representable) goods and services with each other. Today’s variety of blockchain technologies, including many crypto currencies, is impressive. Start-ups and IT incumbents are constantly reducing the speed, cost and effort it requires to transfer crypto currencies globally, while also increasing transaction capacity and offering services that go beyond payments. This discussion paper characterises the 10 biggest crypto currencies in terms of market capitalisation and explains the functioning principles of their underlying technologies. These variants of the technology are also essential for non-financial applications.
A focus of this paper is the potential of blockchain technologies to improve (international) payments and land registries. Bitcoin-enabled payments were the first application of blockchain technology, and frictionless (international) payments are an essential part of financial inclusion. In contrast, improving land registries is a more innovative use of the technology, but the connection to financial inclusion is not straightforward. However, land registries may indeed play an important role in fostering access to credit for financially underserved people.
Almost any technology comes with new risks, and blockchains are no exception to this rule. Although blockchains can provide a very high level of safety and immutability, it depends on the concrete design of the implementation whether this potential is realised. In addition, some blockchain technologies are very energy-intensive, which is an environmental risk. Finally, the high levels of volatility of most crypto currencies represent an economic risk for their users. National and international regulators are challenged by the rapid evolvement of the technology and should aim to mitigate its risks without compromising its potential.

Author Ohnesorge, Jan
Publisher German Development Institute
Bonn
Number of Pages 43 pp.
Primary Language English (en)
Region / Country Global
Germany
Keywords Blockchain, Financial Inclusion
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Finance for All: Wedded to Fintech for Better or Worse Report 2018

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While technology opens the way to huge growth in the provision of financial services, it is expensive and complex, and contains risks of its own. Chief among these is the risk that providers will fail to understand it effectively and place themselves at risk. It could lead to irresponsible borrowing and debt difficulties as tech helps avail credit to more people. Technology may also attract providers who are more interested in commercial gain than in the social goals of financial inclusion, or those who are unable or unwilling to design products specifically for the excluded.

In addition to technology, the survey also identifies risks that are seen to be rising in this market. Chief among these is political risk, such as interference by government in the form of interest rate caps on loans, debt waivers and subsidized competition. The risk of bad debts is also seen to be growing as the problem of indebtedness among low income populations persists. Weakness in the governance and management of service suppliers continues to be a concern. The risk of crime, particularly fraud, cyber crime and money laundering, is a growing worry. On a more positive note, risks that are seen to be receding include the state of the global economy thanks to growing signs of recovery, and the availability of funding for financial inclusion services, particularly in the form of impact investing.

Number of Pages 52 pp.
Primary Language English (en)
Region / Country Global
Keywords Financial Service Providers Risk Management Trends
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Big Data Could Mean Big Opportunity: Why We Should Stay Excited for Data Analytics in Smallholder Finance 2018

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This Learning Brief, the fifth in the Mastercard Foundation Rural and Agricultural Finance Learning Lab's research series, aims to provide a high-level understanding of how data analytics is used for smallholder farmers, introduce a new framework to understand the economics of data analytic investments, and highlight key innovators in the space.

With a $150 billion smallholder finance gap, the use of data analytics could be the game change we need to serve smallholders profitably and at scale. And while early signs are promising, there is still a lot of work to be done. To bring data analytics to the next level, it will require a concerted effort from all players. Financial service providers and digital service providers will need to work together on a commercial scale to prove the business case and develop blueprints of success. Meanwhile, donors and investors will need to continue funding more and better innovative solutions to increase the possibility of innovation.

Publisher The Mastercard Foundation Rural and Agricultural Finance Learning Lab
Number of Pages 21 pp.
Primary Language English (en)
Region / Country Global
Keywords Financial Inclusion; Data Collection; Spatial Data
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Responsible Digital Credit: What Does Responsible Digital Credit Look Like? Paper 2018

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Outlining the risks customers face and best practices for improving consumer protection

All over the world, small loans to individuals and very small businesses are increasingly made using digital channels, whether online, via a mobile device or through an agent. However, trust, confidence and responsible lending practices need to be in place to ensure this industry is successful and its customers are protected and empowered.

This publication outlines the digital credit landscape and the risks customers face, and examines the best practices, standards and initiatives that exist or should be implemented to improve consumer protection in digital lending. It argues that ultimately, it will take a village to ensure that digital credit clients are protected—including governments, regulators, industry players, advocates and consumers themselves. The study offers three main activities as key to the future of what responsible digital credit looks like:

  • Industry self-regulation.
  • Certification of digital credit providers.
  • Directly empowering consumers.
Basic Regulatory Enablers for Digital Financial Services Paper 2018

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Digital financial services (DFS) differ from traditional financial services in several ways that have major implications for regulators. The technology enables new operating models that involve a wider range of actors in the chain of financial services, from design to delivery. The advent of DFS ushers in new providers such as nonbank e-money issuers (EMIs), creates a key role for agents in serving clients, and reaches customers who have otherwise been excluded or underserved. This in turn brings new risks and new ways to mitigate them.

Through the research, authors aim to understand how a range of countries has addressed the four enablers in their regulatory frameworks and to see what lessons can be learned from their experience. The countries covered are Kenya, Rwanda, Tanzania, and Uganda in East Africa; Côte d’Ivoire and Ghana in West Africa; Bangladesh, India, and Pakistan in East Asia; and Myanmar in Southeast Asia.

Mobile Money in Emerging Markets: The Business Case for Financial Inclusion Paper 2018

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Mobile money systems offer a dual promise, as an engine for financial inclusion, and as an emerging markets business opportunity for providers. The scale of this opportunity is clearly understood; however, firms seeking to tap the mobile money opportunity are faced with a landscape of unknowns. How will the mobile money value chain work in practice? What do we know about consumer behavior?

To answer some of these questions, and understand how digital payments providers can capture the opportunities while benefiting those without access to financial services, this research has examined the actual financial and transaction data of a sample of mobile money providers, all on a blinded basis. The benchmarking analysis focused most heavily in East Africa, but also included representative companies from both West Africa and Southeast Asia. The main findings from this research include:

  • Scale enables ultimate profitability but requires significant up-front spend.
  • Regulation can accelerate or hinder ability to grow—or make scale a prize not worth attaining.
  • Opportunities for providers will increase as mobile money business models evolve.
  • To seize current and future opportunities, providers will need to partner or acquire new skills.
Author Philip Osafo-Kwaako, Marc Singer, Olivia White & Yassir Zouaoui
Primary Language English (en)
Region / Country Global
Keywords Mobile Services; Mobile Providers; Financial Inclusion
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Taming the Strange Beasts: Servicing and the Future of PAYGo 2018

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Millions of people in Africa and Asia have gained access to payments, savings, and credit through digital finance. But most of them are still not able to access financing for assets that would help them to grow their incomes, mitigate shocks, and improve their quality of life—assets such as solar electricity, clean cookstoves, vehicles, and processing equipment.

Pay-as-you-go (PAYGo) solar is the first of what we hope will be many industries that upend this dynamic. These companies provide financed solar home systems to off-grid households by connecting financing to use: when users make a payment, their system is activated to function during the amount of time purchased. At the end of that time, it shuts off. Once the customer has purchased the contracted amount of time, the system unlocks permanently and becomes his or her property.

Author Daniel Waldron; Geoffrey Manley; Emma Hawkins; Alexander Sotiriou; Mathilde Girard
Number of Pages 26 pp.
Primary Language English (en)
Region / Country Global
Keywords PayGo
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Digital Financial Services for Agriculture: Handbook Guideline 2018

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This handbook offers financial services providers (FSPs) an understanding of smallholder farmers and agricultural value chains, and practical guidance on how to develop and launch sustainable financial services for the agricultural sector. It surveys the current landscape in terms of existing DFS offerings in the agricultural sector, to share actual market experience and lessons learned from the pioneers in the market.

The handbook contains approaches, examples, and tools to help FSPs understand how to engage the agriculture sector and serve a range of rural customer segments through innovative digital solutions, from farmers all the way up the value chain. Throughout this handbook, case studies are interspersed to emphasize ideas and highlight findings. These studies draw content and context from actors currently working at the intersection of DFS and agriculture. There are also reference guides, worksheets, and other materials located in the annexes. These are designed to aid readers seeking to develop or advance project planning, research, or conversations around the topic of DFS and agriculture within their organizations.

Author Lesley Denyes, Nicholas Lesher, Meritxell Martinez, Hamilton McNutt & Mandana Nakhai
Number of Pages 236 pp.
Primary Language English (en)
Region / Country Africa
Keywords digital financial services, Rural and Agricultural Finance
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State of the Digital Financial Services Market in Zambia, 2017 Paper 2018

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This publication provides key insights into the state of the Zambian digital financial services (DFS) market, drawing on data collected through the 2018 UNCDF-MM4P Annual Provider Survey, and complemented by data from other sources such as GSMA and the Agent Network Accelerator Survey conducted by the Helix Institute of Digital Finance.

The survey was developed by the UNCDF-MM4P team and administered to providers that offer digital financial solutions, including mobile money operators, banks and third-party operators in Zambia. The survey included both quantitative and qualitative questions. Quantitative data were collected on the following indicators:

  • Total number of customers, registered and active (90 days).
  • Number of unique active customers by service type.
  • Volume and value of transactions conducted by customers through customer accounts. 
  • Volume and value of transactions conducted by customers at agent locations. 
  • Number of agents, registered and active (30 days).
  • Total volume and value of transactions at agent locations.
  • Commissions paid to agents.

Qualitative information was collected on the performance of the institutions interviewed along with their strategic focus areas, key challenges and engagement level with the UNCDF-MM4P programme in Zambia.

FinTech for Financial Inclusion: A Framework for Digital Financial Transformation Paper 2018

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Four pillars for a staged and progressive approach

The full potential of FinTech for financial inclusion may be realized with a strategic framework of underlying infrastructure and an enabling policy and regulatory environment to support digital financial transformation. Drawing from experiences in a range of developing, emerging and developed countries, this research suggests that the best approach is staged and progressive, focused on four main pillars:

  1. Building digital identification and e-KYC systems to simplify access to the financial system.
  2. Digital payment infrastructure and open electronic payments systems.
  3. Combining the promotion of account opening and access with the electronic provision of government services, particularly for public transfers and payments, to scale up the use of digital finance and related services.
  4. Design of digital financial markets and systems.
Building Inclusive Payment Ecosystems in Tanzania and Ghana Technical Note 2018

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Building Inclusive Payment Ecosystems in Tanzania and Ghana published by CGAP, offers insight into how Digital Financial Services (DFS) transformed the financial services ecosystem in Tanzania and Ghana. The frameworks of these two sub-Saharan countries are used as case studies to understand their approach to implementing DFS within their respective economies.

The stories are told through the lens of five key components of inclusive payment ecosystems identified by CGAP through research in each country: regulatory approach, executive commitment and investment, competitive landscape, interconnected services, and compelling use cases.

A Primer on Blockchain Technology and its Potential for Financial Inclusion Paper 2018

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The development of Bitcoin marked the advent of blockchain technology in 2008/2009. The pseudonymous developer of Bitcoin was the first person to solve the “double-spend problem” (i.e. the problem that simple digital files representing monetary units can be copied and spent twice). In conventional digital payment systems, the central actor (e.g. a bank) ensures that monetary units can only be spent once. By inventing a blockchainpowered solution to the double-spend problem, Bitcoin was able to create the first international payments network that does not need a central party. The crypto currency operates on a peer-to-peer basis.

In all blockchains, transactions (or other forms of data) are bundled in blocks, which are cryptographically interlinked. Due to this, the manipulation of a certain block is visible in every block that is created on top of this block. Additionally, the blockchain is stored on the computers of a large number of network participants, so manipulation is made even harder due to the sheer number of copies of the ledger. Since the advent of Bitcoin, blockchain technology has rapidly progressed, and today hundreds of functional crypto currencies exist. In fact, blockchains are today only a subset of “distributed ledger technologies”. All functional distributed ledger technologies guarantee a high level of immutability and are stored on many computers across the network. This is not always achieved by bundling transactions in blocks, however. Nevertheless, the shorter term “blockchain” is often (including in this paper) used when distributed ledgers are meant, and the differentiation between the two terms is not relevant for the argument being made. This discussion paper gives an overview of some important forms of distributed ledger technology, using concrete crypto currencies as examples. It thereby aims to equip the reader with an intuitive understanding of the different technologies as well as their benefits and drawbacks.

When aiming to use distributed ledgers to foster financial inclusion, it is essential to keep in mind the diversity of the technologies and their properties. Efficiency losses and a suboptimal user experience are the likely consequences of solely focussing on the most wellknown forms of distributed ledgers. Regulators should follow a proportionate approach that balances the benefits and risks of the many forms of this groundbreaking technology.

 

Author Jan Ohnesorge
Publisher German Development Institute
Number of Pages 43 pp.
Primary Language English (en)
Region / Country Global
Keywords Blockchain, Financial Inclusion
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A Guide to Supervising E-Money Issuers Guideline 2018

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Although a specialized regulatory window for e-money issuers (EMIs) has been recognized as a key regulatory enabler for inclusive digital financial services, regulation alone is not enough. It needs to be complemented by an efficient and effective supervisory regime to enforce compliance. While there is a solid body of evidence about how to regulate EMIs, much less guidance exists on how to supervise them. The role of supervision is to (i) ensure risks are identified, managed, and mitigated by EMIs; (ii) enforce compliance with regulatory requirements; and (iii) manage EMI crises. Proportional, risk-based supervision helps EMDEs keep e-money markets safe while advancing financial inclusion.

EMIs—which could be banks or nonbanks—have, by regulation, a much more limited scope of activities than banks. By posing less risk and being less complex, EMIs warrant a lower level of supervisory attention. A key regulatory provision is fund safeguarding rules that require EMIs to back e-money liabilities with safe and liquid assets. If such fund safeguarding requirements are effectively implemented by EMIs, the risk of clients losing their money is curtailed significantly. Hence, ensuring compliance with fund safeguarding requirements is a key aspect of EMI supervision.

This guide does not present a single recipe for the scope and depth of EMI supervision, as it recognizes the differences in risk depending on the EMIs’ scope of operations and scale and country-specific factors that may impact how EMI supervision is done. As in other areas of supervision, following a risk-based methodology is key, because it requires supervisors to allocate their scarce resources to areas of highest risk (i.e., on the most important EMIs and their highest risks). The level of supervisory intensity will vary across EMIs: offsite monitoring and enforcement of fund safeguarding rules might suffice for most EMIs while other (larger, systemic, or problematic) EMIs may require periodic, in-depth examinations. Country-specific factors such as concurrent supervisory priorities and available expertise also matter in achieving proportionality. Lastly, effectiveness in EMI supervision depends heavily on the availability of good data about EMIs and their operations.

This guide draws on the authors’ own experiences, interviews with EMI supervisors, and available literature to provide guidance to EMDE supervisors who wish to design a proportional approach to EMI supervision. While it does not provide detailed guidance on all areas of EMI risk, it can serve as a reference for drafting or improving EMI examination or offsite monitoring manuals in the following key areas of EMI supervision: fund safeguarding, operational risk, anti-money laundering and countering of financing of terrorism, and assessment of EMI performance. The guidance, particularly the detailed examination procedures described in this paper, should be used wisely in accordance with the risk-based approach to supervision adopted in each country.

Author Denise Dias; Stefan Staschen
Publisher CGAP
Number of Pages 53 pp.
Primary Language English (en)
Region / Country Global
Keywords E-Money supervising, digital money, mobile money
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Protecting Savings Groups Reached Through High-Tech Channels: Guidance from the New Client Protection Principles for a Digital Savings Product Paper 2018

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Desipte what now appears to be ubiquitous acceptance and excitement that the world’s poor are or soon will be transacting financially through their mobile phones, digital finance, and in particular digital savings, is still relatively new. For countries like Burkina Faso, there is still significant ground to cover in digital financial services. Seventy-one percent of the population lives in rural areas. In 2014, it was estimated that there were approximately nine internet users per 100 people in Burkina Faso, but almost 80 percent of the population had a mobile phone connection (this references the number of unique mobile subscribers, which risks double counting since it is based on the number of SIM cards, and one individual could have multiple mobile connections). The promise of digital services is significant for the rural unbanked in Burkina Faso. However, there are very few clear-cut best prac ces for designing these services. There are even fewer best practi ces when designing for client protection. This case study, from the Freedom from Hunger’s Bridge to Financial Inclusion project based in Burkina Faso, highlights the experiences of integrating client protection principles – the minimum standards microfinance clients should expect – into the initial design and roll-out of a digital savings product designed for savings groups.

Author Brusky, B; Gray, B; Loupeda, C; de Briey, V.
Publisher United Nations Capital Development Fund (UNCDF)
Number of Pages 42 pp.
Primary Language English (en)
Region / Country Africa
Burkina Faso
Keywords digital financial services, Savings Groups
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A New Kind of Conglomerate: Bigtech in China Paper 2018

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China is seeing the rise of a new kind of conglomerate, companies that occupy unprecedented roles in the world’s second largest economy. With business models built around advanced technology and data, and with the advantages of an immense domestic market, a supportive policy environment, and ample capital, these companies are constructing a new corporate model—one with reach into virtually every sector of the economy and state. This includes financial services and digital ID systems, areas that are directly relevant for financial inclusion.

This paper examines the role and reach of Chinese bigtech, with a view toward understanding implications of this new model for China and other markets. 

Author Dennis Ferenzy
Number of Pages 33 pp.
Primary Language English (en)
Region / Country Asia
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Digital Finance and Data Security 2018

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Mobile phones and networks are transforming the world of finance, creating opportunities 
for widespread financial inclusion, especially among neglected regions and groups. Security and privacy should be among the most important considerations when building digital finance systems.
Credit decisions are often based on sensitive information and online finance offerings are no exception. The sensitivity of this information gives rise to a series of critical questions for customers:

  • To whom am I giving my data? And who else do they allow to access it? For what purposes?
  • How do the companies protect data so that people who do not have legitimate access cannot use or steal it?
  • What rights and options do I have if something does go wrong?

The goal of this research, conducted by CFI Fellow Patrick Traynor, is to examine how well digital lenders are responding to these questions.

Somali: Rapid Growth in Mobile Money - Stability or Vulnerability? Report 2018

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Somalia’s economy grew by 2.3 percent in 2017. The economy remains vulnerable to recurrent shocks. Between 2013 and 2017, real annual GDP growth averaged 2.5 percent. Growth occurred despite adverse weather conditions that severely reduced agricultural output in late 2016 and early 2017. For Somalia to enhance and sustain economic growth and escape chronic poverty, it must increase its resilience to shocks. Growth recovery is set to continue beyond 2018, lifted by gains from ongoing reforms as well as improved security. Rising domestic demand, remittances, and donor inflows and consolidation of peace and security are expected to drive growth in 2019–20. Achieving higher growth will require acceleration of structural reforms, particularly in three areas: fiscal policy and public financial management, provision of basic services (to promote human development and inclusion), and improved resilience to weather shocks particularly in the agriculture sector. Mobile money is an essential part of Somalia’s economic ecosystem. Almost three-quarters of the population aged 16 and above use mobile money on a regular basis. It is now the main transaction instrument used by both individuals and businesses across the country: presenting an opportunity to increase access to finance, spur inclusive growth, and promote resilient communities. However, with increasing dependence on mobile money as a medium of exchange comes increased vulnerabilities.

Launching Into Space: Using Satellite Imagery in Financial Services Case Study 2018

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Can earth observation data be leveraged to improve smallholder finance?

To help close the credit gap for farmers, innovative FinTech companies are testing whether earth observation data can be converted into data that financial service providers can use in credit scoring models that assess a farmers' creditworthiness. Indeed, earth observation satellites, especially in rural areas, capture data that traditional means cannot—farm crop yields, mapping of crops, geotagging farmland to specific farmers, farm diversification, planting cycles, and trends in production—and that can help forecast revenues, potential repayment deficits, and timing of income. While still nascent, emerging evidence indicates that using satellite data can reduce the transactional costs of reaching rural farmers and, ultimately, make finance more affordable for smallholder farmers.

This case study explores the use of satellite imagery in financial services through the work of two FinTech organizations: Apollo Agriculture and Harvesting Inc. Specifically, this case study investigates how these organizations implemented earth observation technology and the journeys on which each organization embarked as they integrated satellite imagery into their business models and product offerings.

Digital Access: The Future of Financial Inclusion in Africa Report 2018

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The launch and growth of digital financial services has led to an unprecedented increase in the number of people enjoying access to formal financial services. Today, Africa is home to more digital financial services deployments than any other region in the world, with almost half of the nearly 700 million individual users worldwide. Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighborhoods where no bank had ever established a branch. This is, quite literally, banking at your fingertips – for everyone. It is revolutionary.

This publication brings to the fore the voices of Africa’s consumers, as well as those of financial services industry leaders. We believe that they offer deep and thoughtful analysis for everyone working in this area of international development. 

Author Ann Miles; Lindsay Wallace; Ruth-Dueck Mbeba; Sebastian Molineus; Martin Holtmann; Aliou Maiga; Riadh Naouar
Publisher IFC, MasterCard Foundation
Number of Pages 97 pp.
Primary Language English (en)
Region / Country Africa
Keywords Access To Finance, Mobile Banking
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Mobile Money in Emerging Markets: The Business Case for Financial Inclusion Paper 2018

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Mobile money systems offer a dual promise, as an engine for financial inclusion, and as an emerging markets business opportunity for providers. The scale of this opportunity is clearly understood; however, firms seeking to tap the mobile money opportunity are faced with a landscape of unknowns. How will the mobile money value chain work in practice? What do we know about consumer behavior?

To answer some of these questions, and understand how digital payments providers can capture the opportunities while benefiting those without access to financial services, this research has examined the actual financial and transaction data of a sample of mobile money providers, all on a blinded basis. The benchmarking analysis focused most heavily in East Africa, but also included representative companies from both West Africa and Southeast Asia. The main findings from this research include:

  • Scale enables ultimate profitability but requires significant up-front spend.
  • Regulation can accelerate or hinder ability to grow—or make scale a prize not worth attaining.
  • Opportunities for providers will increase as mobile money business models evolve.
  • To seize current and future opportunities, providers will need to partner or acquire new skills.
Author Philip Osafo-Kwaako, Marc Singer, Olivia White & Yassir Zouaoui
Primary Language English (en)
Region / Country Global
Keywords Mobile Services; Mobile Providers; Financial Inclusion
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Mobile Money in Somalia - Household Survey and Market Analysis Paper 2018

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73% of the population above age 16 use mobile money services, broken down as 83% in urban areas, 72% rural areas. Overall, Somalis praise Mobile Network Operators for providing much needed services in the entire country. However some do not trust them as the system remains unregulated. Mobile money is deemed fast and convenient by Somalis, with a 92% satisfaction rate. However Somalis think that mobile money can be prone to technical issues and mistakes. Users also deplore some problems with e-float management/cash-out and the lack of interconnectivity between the different mobile money services.

How to Succeed in Your Digital Journey: A Series of Toolkits for Financial Service Providers Toolkit 2018 English (en)

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This is the final toolkit in the series of six toolkits aimed at supporting financial service providers (FSPs) to integrate digital channels into their service delivery approaches. With this series of digital finance toolkits, a financial institution will be able to choose the best business model based on an assessment of its environment (political, economic, social, technological, and regulatory), objectives, capacity and readiness to carry out the efforts required.

The first two business models of this framework, Toolkit #1: Use Mobile as a Tool and Toolkit #2: Be an Agent, consist in using mobile as a service where basic transactions are performed by staff of the FSP using mobile devices. Toolkit #3: Leverage an Existing Agent Network and Toolkit #4: Develop Own Agent Network describe agency banking, where agents assist clients with the transactions if needed. Toolkit #5: Create Your Own Mobile Banking Channel describes mobile banking, where clients transact directly on their financial institution account, performing the operations themselves using their mobile phones.

Toolkit #6 describes different paths for an FSP to become a provider of mobile banking services that clients can access from their mobile phones. In this model, the ultimate objective is to digitize all operations, from collection of client data and credit applications to disbursement and repayment of loans and collection of savings.

http://www.uncdf.org/article/3322/dfs-toolkit-6-become-a-digital-provider  -  English (en)

Publisher United Nations Capital Development Fund (UNCDF), Mastercard Foundation, PHB Development
Number of Pages 87 pp.
Volume / Issue# Toolkit #6
Primary Language English (en)
Region / Country Global
Keywords Mobile Banking, digital financial services
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Responsible Digital Credit Report 2018

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All over the world, small loans to individuals and very small businesses are increasingly made using digital channels, whether online, via a mobile device or through an agent. However, trust, confidence and responsible lending practices need to be in place to ensure this industry is successful and its customers are protected and empowered.

In Responsible Digital Credit, CFI Fellow John Owens outlines the digital credit landscape and the risks customers face, and examines the best practices, standards and initiatives that exist or should be implemented to improve consumer protection in digital lending. Ultimately, John argues, it will take a village to ensure that digital credit clients are protected—including govenrments, regulators, industry players, advocates and consumers themsleves. He sees three key activities: 1) industry self-regulation, 2) certification of digital credit providers, and 3) directly empowering consumers, as key to the future of what responsible digital credit looks like.

This report is published jointly with the Smart Campaign and was made possible by support from Mastercard Foundation and other partners.

Publisher Center for Financial Inclusion
Number of Pages 48 pp.
Primary Language English (en)
Region / Country Global
Keywords Consumer Protection Credit Credit Provision Responsible Digital Finance
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G20/OECD INFE Policy Guidance on Digitalisation and Financial Literacy Paper 2018

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The digitalization of financial products and services, and the consequent need to strengthen digital financial literacy has become an important component of the global policy-making agenda. This guidance aims to identify and promote effective initiatives that enhance digital and financial literacy in light of the unique characteristics, advantages, and risks of digital financial services and channels. It also aims to support their evaluation and dissemination, and to promote a responsible and beneficial development of digitalization by building trust and confidence in the acquisition and use of digital financial services by the financially excluded.

This guidance note offers actionable steps in the design and implementation of financial education initiatives on DFS to strengthen the digital financial literacy of consumers and entrepreneurs, in five key areas:

  1. Develop a national diagnosis of the impact of digital finance on individuals and entrepreneurs.
  2. Ensure coordination between public authorities and private and not-for-profit stakeholders.
  3. Support the development of a national core competency framework on digital financial literacy.
  4. Support effective delivery of financial education through digital and traditional means.
  5. Facilitate and disseminate evaluation of financial education programmes addressing DFS.
Publisher Organisation for Economic Co-operation and Development (OECD)
Number of Pages 28 pp,
Primary Language English (en)
Region / Country Global
Keywords digital financial services, Financial Education, Policy
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Opportunities for Digital Financial Services in the Cocoa Value Chain in Côte d’Ivoire : Insights from New Data Paper 2018

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Côte d’Ivoire has the world’s largest cocoa sector, producing over 1.4 million metric tons of raw cocoa per year, accounting for thirty two percent of world production. Harvest payments often arrive late due to the complex logistics of cash-based payments and, it is not uncommon for the amount farmers receive to be somewhat below market value due to high commissions taken by chains of intermediary middlemen. Cognizant of these costs and inefficiencies, many actors in the cocoa value chain are exploring alternatives. One such alternative is paying farmers through Digital financial services (DFS). This research focuses specifically on mobile money accounts and discusses, first, how these have already expanded financial inclusion in Côte d’Ivoire and, secondly, how mobile money could help deliver products to cocoa farmers that meet their needs. The study is a knowledge product of the Partnership for Financial Inclusion, a joint initiative of IFC and The MasterCard Foundation to expand microfinance and advance digital financial services in Sub-Saharan Africa. It is organized as follows: The first section reviews the financial inclusion landscape in Côte d’Ivoire, revealing that DFS has unusually high penetration in rural areas. The second section analyzes the specific financial behavior of cocoa farmers based on new data collected by IFC,and is followed by a third section presenting a framework for how DFS could help improve farmers’ lives. The report concludes with a call to stakeholders to keep piloting and innovating with products and payment channels that cater to the financial needs of rural communities in Côte d’Ivoire and beyond.

Author Lonie, Susie Martinez, Meritxell Oulai, Rita Tullis, Christopher
Publisher The World Bank
Number of Pages 32 pp.
Primary Language English (en)
Region / Country Africa
Côte d’Ivoire
Keywords digital financial services, Cocoa
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Growing Big While Still Small: A Case Study on Kazang Prepaid 2018

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Sales and distribution is a difficult business because the small revenue margins mean successful companies need large operations to make a meaningful profit. Small companies that want to compete in this space must find clever ways to grow quickly with minimal staff and limited budgets. Being in this position is especially hard in an industry like digital finance, where third-party providers compete with large corporates (e.g., mobile network operators).

Focusing on a third-party provider in Zambia, Kazang Prepaid, this case study is part of the Global Learning Agenda series of the UNCDF MM4P program in digital finance. It explores Kazang’s approach to dealing with the classic challenges impeding the expansion of profitable and sustainable agent networks in Zambia.

Kazang has been scaling up aggressively, but the company wants to grow smarter by better understanding how to select and support successful agents as well as to offer more products. UNCDF MM4P partnered with the consulting firm HORUS Telecom & Utilities to help Kazang develop a strategy, one that includes a mobile-based application to collect information and better manage the recruitment and monitoring of its agent network.

Author Mike McCaffrey
Publisher United Nations Capital Development Fund (UNCDF)
Number of Pages 12 pp.
Primary Language English (en)
Region / Country Africa
Zambia
Keywords Agent Networks, Mobile Banking
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Digital Financial Services Price Transparency and Awareness in Malawi Paper 2017

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While traditionally considered an issue relevant to consumer protection and market conduct, the lack of pricing transparency of digital financial services (DFS) can hinder adoption and usage of digital financial products and services as customers will focus on what they have been ‘traditionally’ accustomed (i.e., cash or the use of alternative rudimentary ways to transfer money). Where consumers have difficulty understanding or accessing the price of products, they are unlikely to use the products and may be restricted in their ability to compare the offers available in the market across various providers. This situation may limit the uptake of DFS if customers (incorrectly) perceive the products as too expensive and could as well result in a lack of competitive pressure on providers to offer value for money and innovative products and services. Price transparency is therefore important for ensuring effective financial inclusion and competition. It is also a basic aspect of most DFS providers’ internal compliance for agents/outlets, so it is critical to understand whether or not relevant rules are being followed.

In Malawi, the Digital Financial Services Coordinating Group (DFSCG) Annual Workplan, developed by MM4P and approved by DFSCG members, included the development of a whitepaper on a topical DFS industry issue. At its Q1-2017 meeting, DFSCG identified the need for transparency and consumer awareness of transaction costs as one of the barriers for adoption of DFS in the country and thus agreed to develop this whitepaper on ‘Digital Financial Services Price Transparency and Awareness in Malawi’.

Mobile Technologies and Digitized Data to Promote Access to Finance for Women in Agriculture Report 2017

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The evidence that women both drive agricultural production and rely on it for their livelihoods means that greater financial and informational service provision to women, especially through digital channels, could increase the efficiency and effectiveness of their labor. While the numerous barriers to women’s access to Digital financial Services (DFS) are clear, clarifying the best methodologies by which to overcome these is both dependent on situational context and still subject to research and testing. This report provides the state of play of current and promising efforts that use mobile technology and digitized data to close the gap in access to finance for women in agriculture. It includes three components: 1) a review of the financial characteristics and needs of women in agriculture, based on an extensive literature review; 2) a stock taking of initiatives that use mobile technologies and digitized data for agricultural finance and women’s financial inclusion; and 3) an analysis of gaps in existing initiatives that would increase access to DFS by women farmers, laborers and women-owned agricultural MSMEs. The report also examines the regulatory environment around DFS and ways that regulators are working to increase responsible access to women.

Author Panos Varangis; Juan Buchenau; Toshiaki Ono; Rachel Sberro-Kessler et al.
Publisher World Bank Group
Number of Pages 88 pp.
Primary Language English (en)
Region / Country Global
Keywords Gender, Access To Finance, Digitized Data, Mobile Technologies
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The Role of Digital Payments in Sustainable Agriculture and Food Security Report 2017

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The report examines how shifting to digital payments can provide powerful solutions to help countries improve agricultural productivity and ensure food security, bringing higher incomes and greater financial inclusion.

The paper aims to help economies begin and accelerate their shift to digitize payments in their agriculture sectors. By providing data and recommendations, the paper is designed to assist countries in fulfilling their commitments towards Sustainable Development Goal #2: “End hunger, achieve food security and improved nutrition and promote sustainable agriculture” through digital payments.

Publisher The Better Than Cash Alliance, United Nations Capital Development Fund
New York
Primary Language English (en)
Region / Country Global
Keywords sustainable agriculture, digital finance, Food Security
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A Sense of Inclusion. An Ethnographic Study of the Perceptions and Attitudes to Digital Financial Services in Sub-Saharan Africa. Report 2017

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This study aims to understand what digital financial inclusion means in different African contexts in relation to historical, cultural and social factors. It is a comparative ethnographic exploration of the usage, perceptions and attitudes towards digital financial services in Cameroon, the Democratic Republic of Congo, Senegal and Zambia that ultimately aims to give a voice to both DFS users and non-users to provide insights for financial inclusion. It focused primarily on four key research questions: What is the contextual infrastructure of digital financial services in Sub-Saharan Africa? How is the meaning of money changing due to digitization? What are the factors informing people’s perceptions and attitudes towards DFS? What is the impact of DFS on financial inclusion, beyond the numbers that measure access to formal financial accounts? Ethnographic research is qualitative rather than quantitative in nature, and the findings of this study are based on field observations, interviews, focus group discussions and archive research carried out by the research teams in all four countries.

Author Anna Koblanck; S. Heitmann; G. Davico
Publisher International Finance Corporation (IFC),
Number of Pages 36 pp.
Primary Language English (en)
Region / Country Africa
Zambia, Senegal, Democratic Republic of the Congo, Cameroon
Keywords Access To Finance, Mobile Banking
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SMS Messages for Financial Inclusion in the Dominican Republic Report 2017

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This report was commissioned by the MIF’s Remittances and Savings Program. The objective of this regional initiative is to contribute to the reduction of household vulnerability in Latin America and the Caribbean through the design and distribution of financial products and services adapted to the needs and preferences of remittance clients. To this end, the program provides technical support to a variety of financial institutions and commissions studies to generate and disseminate information on best practices and successful models for the financial inclusion of remittance clients. The program is supported by the MIF and the Government of Australia.

Technology Inequality: Opportunities and Challenges for Mobile Financial Services Report 2017

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This study investigates existing and evolving technologies in MFS systems: mobile data “bearer” technologies, access platforms and user devices. The author unpacks the issues surrounding policy, pricing of bearer services, network access coverage, cost of devices, evolution of consumer-facing technology designs, security challenges, type and quality of devices being used, and the usability of various access devices. The report is meant to motivate providers, vendors and regulators to improve upon existing devices, system security and the regulatory environment as it affects the ability of BoP customers to access and use MFS effectively. It seeks to generate a discussion on the technical and related challenges faced by the MFS ecosystem and to spark action to solve these key challenges.

Data Analytics and Digital Financial Services Book 2017

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This is the third handbook on digital nancial services (DFS) produced and published by the Partnership for Financial Inclusion, a joint initiative of IFC and The MasterCard Foundation to expand micro nance and advance DFS in Sub- Saharan Africa. The first handbook in the series, the Alternative Delivery Channels and Technology Handbook, provides a comprehensive guide to the components of digital nancial technology with particular focus on the hardware and software building blocks for successful deployment. The second handbook, Digital Financial Services and Risk Management, is a guide to the risks associated with mobile money and agent banking, and o ers a framework for managing these risks. This handbook is intended to provide useful guidance and support on how to apply data analytics to expand and improve the quality of nancial services. 

Author Dean Caire, Leonardo Camiciotti, Soren Heitmann, Susie Lonie, et al.,
Publisher International Finance Corporation (“IFC”), The MasterCard Foundation
Number of Pages 160 pp.
Primary Language English (en)
Region / Country Global
Keywords digital financial services
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Banking in sub-Saharan Africa - Interim Report on Digital Financial Inclusion Report 2017

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This report summarizes the discussions held in the context of the Roundtable on Digital Financial Inclusion in Africa during the 2017 EIB Africa Day, which was co-organized in Berlin on July 6th, 2017 by the EIB, Afrika-Verein der Deutschen Wirtschaft and the German Federal Ministry for Economic Cooperation and Development. It aims at providing an interim thematic update in between two editions of the EIB’s Study of Banking Sectors in sub-Saharan Africa. The EIB roundtable on Digital Financial inclusion in SSA addressed how to engage the bottom of the pyramid, including female entrepreneurs and MSMEs. There is a need to strike the right balance between leveraging opportunities and managing risks. Issues of trust, financial capability, regulation, compliance and inter-operability loom large. The role that FinTechs and banks can play in inclusive finance crucially depends on the features of the market in which they operate. Reaching the bottom of the pyramid requires client-centred innovation and the design of products targeting minorities and vulnerable segments of society, including older and disabled people and recognising gender as an additional layer of inequality.

Author J-P. Stijns; S. Borysko; B. Marchitto
Publisher European Investment Bank
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Africa
Keywords Access To Finance, Mobile Banking
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Fintech in Africa: Unpacking Risk and Regulation 2017

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In May 2017, Bowmans hosted a conference in Johannesburg, South Africa, titled Fintech in Africa: Unpacking Risk and Regulation. The conference addressed the following themes: The African Fintech landscape in comparison with those of other jurisdictions; Developments and trends in Fintech regulation; Considering risk and managing fallout; Regulatory developments in relation to crowdfunding; Different jurisdictions’ experiences in relation to payment systems; Where to next for Blockchain? This document is a high-level summary of key points discussed and priorities going forward. The growing impact of digital technology in various sectors of the economy, specifically the financial services sector (as Fintech) is squarely on the agenda for regulators and supervisory bodies across the globe. In February 2017, Fintech was mentioned in the Budget Review published by the South African National Treasury and acknowledged as a relevant factor in the transformation of the financial services sector in South Africa. The fact that regulators and supervisory bodies across the world are creating ‘regulatory sandboxes’ as controlled environments within which innovation can occur is evidence that they acknowledge that Fintech presents both opportunities and challenges. Some of these challenges arise in the areas of risk and regulation.

 

 

Author Bowmans
Publisher Bowmans
Number of Pages 25 pp.
Primary Language English (en)
Region / Country Africa
Keywords Financial Infrastructure, Access To Finance, Mobile Banking, Legal Regulatory
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Banking in sub-Saharan Africa - Interim Report on Digital Financial Inclusion Report 2017

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This report summarizes the discussions held in the context of the Roundtable on Digital Financial Inclusion in Africa during the 2017 EIB Africa Day, which was co-organized in Berlin on July 6, 2017 by the EIB, Afrika-Verein der Deutschen Wirtschaft and the German Federal Ministry for Economic Cooperation and Development. It aims at providing an interim thematic update in between two editions of the EIB’s Study of Banking Sectors in sub-Saharan Africa.

The EIB roundtable on Digital Financial inclusion in SSA addressed how to engage the bottom of the pyramid, including female entrepreneurs and MSMEs. The panel addressed the key challenges and opportunities associated with digital financial inclusion from the perspective of consumers, SMEs, financial market players and policy-makers.

 

Mobile Infrastructure and Rural Business Enterprises Paper 2017

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Business enterprises and non-agricultural startups in rural economies play crucial roles in ending the vicious cycle of poverty. The propagation of business enterprises are, however, subject to a high degree of institutional frictions and vacuums e.g., information; but mobile infrastructure which has the externality of flowing information can help overcome most of these vacuums through reduced fixed costs, lower cost of information or search, and outreach to a broader customer base. This paper studies the effects of mobile infrastructure ("mobile use activity") on propagation of rural business enterprises in Niger. Instrumental variable estimates exploit the exogenous introduction of the 2013 national mandatory SIM registration reform which provides a quasi-experimental set-up for mobile use and activity. The mandate deactivated about one-third of all existing prepaid SIMs and led to a remarkable decline in mobile use activity. The results suggest that there is economically substantial effect of mobile infrastructure on propagation of business enterprises. Moving a household with mobile use activity to a no mobile use activity environment due to SIM deactivation results in roughly 33.1 percent points decline in the likelihood of engaging in non-agricultural business enterprises. Most of this effect come from three major sources: households' ownership of a business service or center; ownership of small income generating activities; and involvement in the transformation of agricultural products. There is suggestive evidence that the reform's impact is disproportionately larger for women. With the expansion of mandatory SIM registration reforms in developing countries, the findings have extended implications in these contexts.

Data Collection by Supervisors of Digital Financial Services Paper 2017

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Reliable, timely, complete, and readily accessible data are crucial for efficient and effective risk identification and assessment in financial sector supervision and enforcement. They are particularly important for financial supervisors in emerging markets and developing economies (EMDE) who face fast innovation and a regulatory perimeter that is getting bigger because of growing digital financial services (DFS) for financial inclusion in EMDE. Which data should the DFS supervisor collect? How frequently? In what format? Through which means? How should the DFS supervisor improve data? What aspects should be considered? Based on primary and secondary research, this working paper highlights practices in data collection for DFS supervision and the issues and emerging trends in regulatory data collection mechanisms that are relevant to DFS supervisors. It provides material for DFS supervisors to exploit opportunities created by developments such as RegTech and SupTech to rethink their approach to data collection, with the goal of strengthening supervision while fostering financial inclusion.

Author Denise Dias; Stefan Staschen
Publisher Consultative Group to Assist the Poor (CGAP)
Primary Language English (en)
Region / Country Global
Keywords Access To Finance, Mobile Banking, Legal & Regulatory Environment
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How to succeed in your digital journey: a series of toolkits for financial service providers Toolkit 2017

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PHB Development, in collaboration with UNCDF MicroLead, will release a series of practical toolkits to spur digital initiatives among financial institutions eager to make headway towards digital finance yet uncertain how to go about it. These toolkits complement and capitalise on existing research and publications available to digital financial service (DFS) providers, while leveraging more than a hundred digital financial services implementations worldwide. Further, these toolkits aim at filling a knowledge gap in the sector, as existing studies on digital finance tend to give emphasis to mobile network operators and East African models, while so few are available to the Francophone community. 

With this series of toolkits, a financial institution will be able to choose the best business model based on an assessment of its environment (‘macro-environmental’ (political, economic, social and technological) and regulatory), its objectives, capacity and readiness to carry out the efforts required.

 The goal of the toolkits is threefold:

  • Help financial institutions identify financially sustainable DFS business lines that fit their needs;
  • Provide practical tools (institutional assessment, checklists, etc.) that financial institutions can use in their journey towards digital finance to support the effective implementation of the most suitable business model; and
  • Present and learn from MicroLead partners’ and other financial institutions’ DFS experiences.
Digital Finance: new times, new challenges, new opportunities Paper 2017 English (en)

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Since the end of the great crisis of 2007-10, the financial services industry began a process of accelerating change. New business models based on convergent technological developments are challenging the status quo of a long-established and traditional industry. The purpose of this document is to consider the latest developments in the financial services industry and to discuss how they might affect the ability for firms--particularly small- and medium-sized enterprises (SMEs)--and individuals to access financing. It concludes that the transformative developments in the financial services industry will most likely improve and expand access of firms and individuals to finance, as well as increase formalization and financial inclusion. Some hurdles and risks that may hamper and/or delay the process are identified: the reaction of the industry incumbents, the lack of appropriate and timely regulation, the lack of access to good-quality and affordable digital connectivity (broadband access), and the unforeseen and seriously disruptive changes that might come from the payments space. To confront these risks, the public sector must define a set of proper and timely responses. The strategy for public interventions must be defined based on a deep understanding of the forces that are driving the change.

Digital Finance: new times, new challenges, new opportunities  -  English (en)

Regulatory Framework for Digital Financial Services in Côte d'Ivoire - A Diagnostic Study Paper 2017

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Regulation plays a critical role in the development and spread of digital financial services (DFS). This paper offers an analysis of the regulatory framework for DFS in Côte d’Ivoire, including its coverage, its conducive features, and its gaps and obstacles. Côte d’Ivoire is a regional leader in DFS, particularly in the use of mobile money. It is a lower-middle-income country that has nearly 8 percent annual GDP growth. It has a high rate of mobile phone penetration (estimated at 113 percent), and a more modest rate of formal financial inclusion (46 percent of adults, including bank, microfinance, postal, and mobile money accounts). Mobile network operators (MNOs) have been the lead players thus far. They account for three of the five mobile money deployments and the majority of agents. MNOs have mainly partnered with banks that issue e-money. However, in the wake of recent regulatory changes, MNOs are moving to establish e-money subsidiaries. Over-the-counter (OTC) services providers, who provide affordable transfer services to clients, including those without digital accounts, are also significant. Any discussion of legal or policy matters in Côte d’Ivoire must pay close attention to the rules laid down by the West African regional institutions of which that country is a member. In this paper, we are principally concerned with the West African Economic and Monetary Union (WAEMU), a currency union and evolving free trade zone. The WAEMU’s central bank, BCEAO (Banque Centrale des Etats de l’Afrique de l’Ouest), exercises exclusive authority over the money supply and is the primary authority (with the participation of the regional Banking Commission) for the regulation and supervision of financial institutions (FIs), payment systems, and digital finance.

Author Patrick Meagher
Publisher Consultative Group to Assist the Poor (CGAP)
Number of Pages 57 pp.
Primary Language English (en)
Region / Country Africa
Côte d'Ivoire
Keywords Access To Finance, Mobile Banking, Legal & Regulatory
Related Resources
Bringing E-money to the poor : successes and failures Study Guide 2017

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South Asia plays a key role in the global development arena, with the world’s largest working-age population, a quarter of the world’s middle-class consumers, the world’s greatest number of poor and undernourished people, and several fragile states of global geopolitical importance. This study aims to identify countries that have demonstrated notable success in applying new e-money technologies and innovative thinking in providing first entry points into the financial system for poor and vulnerable population segments. Case studies are used to emphasize detailed contextual analysis of certain critical conditions and their relationships to the success or failure of these interventions. Although new technologies and innovative methodologies in the finance industry are numerous, the study narrowly focuses on e-money initiatives such as mobile money, interoperable and multifunctional automated teller machines (ATMs), and prepaid debit cards for social grant programs as the first entry points to financial inclusion. The focus is on analyzing the provision of cost-effective, reliable, and safe access to basic cash-in/cash-out, utility, and bill payment services to financially unserved or underserved people through the selected e-money interventions. This study also aims to identify new approaches to improving financial inclusion in South Asia. It documents innovative uses of technology in the form of digital financial services operating within a balanced regulatory environment that can be key to improving financial inclusion

State of the Digital Financial Services Market in Zambia, 2016 Report 2017

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The 2016 State of the Digital Financial Services Market in Zambia provides key insights into the state of the Zambian DFS market, drawing on data collected through the 2016 UNCDF-MM4P Annual Provider Survey (APS), and complemented by data from other sources such as GSMA and the Agent Network Accelerator Survey conducted by The Helix Institute of Digital Finance.

The UNCDF-MM4P APS was launched to provide industry participants and observers with a more comprehensive picture of the state of the DFS market, regarding customer adoption, usage and trends of DFS in Zambia. On an individual basis, the APS will also give DFS providers insights into the performance of their products and services relative to the market.

The survey was developed by the UNCDF-MM4P team and administered to providers that offer digital financial solutions, including mobile money operators, banks and third-party operators in Zambia. The survey included both quantitative and qualitative questions.

Spore Magazine - Agriculteurs connectés Journal Article 2016 French (fr)

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Le dossier de l’édition mars-avril du magazine Spore a été consacré aux technologies permettant de connecter les agriculteurs aux marchés, aux services financiers et de santé, aux connaissances. Dans un 20ième siècle axé sur les connaissances, qu’est-ce qu’un agriculteur connecté ? Quels sont les types d’outils, d’aides et d’approches qui vont permettre aux producteurs de réaliser leur potentiel ? Le dossier est accompagné d’un reportage à Trinité-et-Tobago, sur une plateforme numérique appelée D’Market Movers, une initiative innovante qui établit une connexion directe entre les agriculteurs et le marché en permettant aux consommateurs d’acheter des produits alimentaires en ligne.

Lien vers la publication  -  French (fr)

Digital Financial Services and Risk Management Book 2016

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In 2016, the Mastercard Foundation and IFC’s Partnership for Financial Inclusion Program jointly published the Digital financial services and risk management handbook for any type of financial institution offering or planning to offer digital financial services, such as mobile money and agent banking. This includes microfinance institutions, banks, mobile network operators, or third party payment service providers. 

The handbook aims to help thes financial institutions understand the importance of and necessary steps to ensure their sustainability and reliability via the implementation of effective and responsible risk managementpractices.

 

Author Lesley Denyes; Susie Lonie
Publisher International Finance Corporation (“IFC”), The MasterCard Foundation
Primary Language English (en)
Region / Country Global
Keywords digital financial services
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Geodata and ICT Solutions for Inclusive Finance and Food Security Document 2016

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This paper presents an overview of the possibilities and challenges of using geo-data and ICTs to improve agricultural production and access to finance for smallholder farmers. Recent technological developments can assist in increasing agricultural production, adapting and mitigating the effects of climate change and further expand financial inclusion. The most important areas of ICT development for smallholders are:

  1. improving agricultural production;
  2. facilitating market access, and;
  3. improving access to financial services.

While these applications are very promising for improving agricultural production and growth in outreach of financial services; there are still few cases that combine the two aspects. The paper argues that such a combination would be able to trigger the much needed growth in agro-finance. An inquiry into the lessons learned identified several areas that are relevant for speeding up developments that benefit smallholder farmers and the financial institutions that serve them:

  1. A good policy and regulatory environment is needed to streamline actors and interventions.
  2. Design appropriate information packages for farmers
  3. Financial institutions, especially those operational in rural areas, need guidance and support to enter into the digital highway.
  4. New technology needs high upfront development costs.

From this paper, it becomes clear that innovative partnerships are required.

Author Mariel Mensink and Martijn Vranken
Publisher NpM Rural Finance, Rabobank Foundation, The Netherlands Space Office
Number of Pages 21 pp.
Primary Language English (en)
Region / Country Global
Keywords Ict For Development, Ict Solutions, Rural Finance, Financial Inclusion
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Responsible Digital Payments Guidelines Guideline 2016

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The Better Than Cash Alliance Responsible Digital Payments Guidelines identify eight good practices for engaging with clients who are sending or receiving digital payments and who have previously been financially excluded or underserved.
 
The focus of the Guidelines is on the common types of digital payments services provided to the financially underserved such as electronic money transaction accounts. For clients to adopt and use digital payments, they need to feel protected from risks such as loss of privacy, exposure to fraud, and unauthorized fees. This means that service providers need to proactively take steps to protect their clients and that regulators should ensure a sound consumer protection regulatory framework.
 
This is especially true for financially excluded and underserved clients and those with low financial and technological capability who are participating in a world of rapid innovation involving new types of financial services, providers, partnerships, and distribution channels. In an inclusive digital payments ecosystem, it is important for all the stakeholders to do their part to ensure that digital payments are made responsibly.
 
The Guidelines’ aim is to provide a helpful tool for all stakeholders supporting responsible practices in the move from cash to digital payments in order to reduce poverty and drive inclusive growth.
 

Digital Financial Services and Risk Management Handbook Report 2016 English (en)

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The research for this handbook included three components: interviews with approximately 30 practitioners, four in-depth case studies with Tigo Tanzania (MNO), FINCA DRC (MFI), Kopo Kopo Kenya (PSP) and Fidelity Bank in Ghana, and a two-day client workshop held in Cape Town in November 2015. The research objectives were to:  

  1. Clearly define and describe all types of risks that may be faced by financial service providers using digital financial services;
  2. Provide easy-to-use guidelines for conducting risk diagnostics, assessments, developing risk frameworks, and implementing risk management tools;
  3. Analyze how different types of financial institutions currently assess risk and implement risk management tools;
  4. Identify general lessons learned by financial service providers about DFS risk management that are relevant to other markets and organizations on such issues as integration with exiting institution-wide risk frameworks, key risk indicators, most common types of risks faced, how to best mitigate risk, and best practices for DFS risk management. 
Digital Financial Services and Risk Management Handbook  -  English (en)

Author International Finance Corporation (IFC) , The MasterCard Foundation
Publisher International Finance Corporation (IFC) , The MasterCard Foundation
Number of Pages 116 pp.
Primary Language English (en)
Region / Country Global
Keywords Risk Management, digital financial services, Financial Services
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Guide to the Use of Digital Financial Services in Agriculture Study Guide 2016 English (en)

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The goal of this Guide is to identify specific challenges in value chains that can be addressed by improved payments or financial services, and then to identify corresponding DFS solutions to these specific challenges, with the aim of improving the ability of value chains to increase farmer incomes. In doing so, it is possible to increase farmer household access to a transaction account that builds household resiliency and offers access to payments and financial services long after an aid project or intervention is complete. Ultimately, this will move us closer to Feed the Future’s joint high-level objectives of inclusive agricultural sector growth and improved nutritional status. 

Guide to the Use of Digital Financial Services in Agriculture  -  English (en)

Author Martin, C., Harihareswara, N., Diebold, E.; Kodali, H., Averch, C.
Publisher United States Agency for International Development (USAID)
Number of Pages 70 pp.
Primary Language English (en)
Region / Country Global
Keywords Agriculture, digital financial services, Financial Services
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The Long-Run Poverty and Gender Impacts of Mobile Money Paper 2016 English (en)

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Mobile money, a service that allows monetary value to be stored on a mobile phone and sent to other users via text messages, has been adopted by the vast majority of Kenyan households. We estimate that access to the Kenyan mobile money system M-PESA increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty. The impacts, which are more pronounced for female-headed households, appear to be driven by changes in financial behavior—in particular, increased financial resilience and saving—and labor market outcomes, such as occupational choice, especially for women, who moved out of agriculture and into business. Mobile money has therefore increased the efficiency of the allocation of consumption over time while allowing a more efficient allocation of labor, resulting in a meaningful reduction of poverty in Kenya.

The Long-Run Poverty and Gender Impacts of Mobile Money  -  English (en)

Conferencia Centroamericana y del Caribe de Microfinanzas 2016 Website 2016 Spanish (es)

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Tecnología: Competitividad e Inclusión Financiera

La Asociación Nicaragüense de Instituciones de Microfinanzas (ASOMIF) y la Red Centroamericana y del Caribe de Microfinanzas (REDCAMIF), celebrarán la “VIII Conferencia Centroamericana y del Caribe de Microfinanzas”, con el lema “Tecnología: Competitividad e Inclusión Financiera”, actividad que se llevará a cabo en Managua, Nicaragua,  del 3 al 5 de agosto de 2016, en el Centro de Convenciones Crowne Plaza.

REDCAMIF, organiza cada dos años la “Conferencia de Microfinanzas”, en la cual participan profesionales de las entidades de Microfinanzas, proveedores de servicios vinculados a las microfinanzas, funcionarios de gobierno, representantes de organismos financieros internacionales y de cooperación Internacional, consultores, académicos, investigadores, inversionistas sociales y microempresarios que llevan a cabo actividades comerciales y sin olvidar a los diversos patrocinadores que promueven sus productos durante el evento, con el fin de vender sus servicios y conocer las necesidades de sus potenciales clientes de la industria microfinanciera.

De acuerdo al equipo organizador para su preparación “se requiere una amplia planificación y una serie de preparativos, ya que cada evento se desarrolla en torno a una temática y un objetivo en el que se basarán cada Conferencia Magistral y Paneles de discusión”.

El evento atraer cada dos años a participantes de todas partes del continente Americano, Europa y áfrica, en el que se inscriben profesionales de las entidades de Microfinanzas. La “Conferencia de Microfinanzas”, es una de las actividades más importantes a nivel nacional e internacional que celebra REDCAMIF, debido a la variedad de información sobre el sector y las experiencias que se comparten de los nuevos productos, servicios y métodos de créditos habilitados para satisfacer las diversas necesidades microfinancieras, a las personas de bajos ingresos a nivel de Latinoamérica.

Link a la pagina de internet  -  Spanish (es)

Publisher REDCAMIF / ASOMIF
Primary Language Spanish (es)
Region / Country Global, Americas, Central America, Caribbean
Nicaragua
Keywords Tecnologia, Competitividad rural
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Digital finance for all: Powering inclusive growth in emerging economies Report 2016

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This report draws on the findings of field visits to seven emerging economies: Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan and more than 150 expert interviews. The research finds that widespread adoption and use of digital finance could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025. Stakeholders across these countries would benefit in terms that around 1.6 billion unbanked people could gain access to formal financial services, out of which more than half would be women. Also, an additional $2.1 trillion of loans to individuals and small business could be made as providers expand their deposit bases and have a newfound ability to assess credit risk for a wider pool of borrowers. The resulting increase in aggregated demand could create nearly 95 million new jobs across all sectors. However, to achieve this opportunity joint effort by business and government leaders is needed.

Designing Successful Distribution Strategies for Digital Money Document 2015 English (en)

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This paper documents the variety of ways in which digital financial service providers in developing countries have assembled and managed networks of retail stores as their agents for cash in/cash out payments and for account and product sales. The seven case studies are used to illustrate how optimal channel structures differ and develop in changing markets in order to meet the strategic objectives of diverse institutions. This paper aims to help providers understand the strategic considerations involved in the design of an agent network and the different models that are currently being used in the market. It also demonstrates the dynamic nature of agent networks, and illustrates how others have augmented them over time.

Designing Successful Distribution Strategies for Digital Money  -  English (en)

Author Ignacio Mas and Mike McCaffrey
Publisher The Helix Institute of Digital Finance
Canada
Number of Pages 36 pp.
Primary Language English (en)
Region / Country Global
Keywords digital finance, digital money, digital financial service, Financial Services
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Assessing Risk in Digital Payments Report 2015 English (en)

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This report aims to help accelerate this process, with a particular focus on digital payments serving the poor in developing countries. It has three primary objectives:

  • Provide a common language and framework to guide dialogue on risk associated with digital payments, and its bearing on financial inclusion
  • Examine whether inclusion of non-bank providers or development of innovative distribution channels creates new types of risk for consumers (particularly the poor), providers, or the financial system at large
  • Describe approaches for assessing the economic impact of risk in digital payments from the perspectives of consumers, providers, and the system

In working towards these objectives, we have built our framework so it can be extended to risks associated with digital financial services beyond payments and to risks associated with overall provider sustainability. The ultimate goal of financial inclusion requires strong risk manage- ment and deliberate regulation across these areas as well as in digital payments.

This report contributes to the discussion started by our Fighting poverty profitably: Transforming the economics of payments to build sustainable, inclusive financial systems (2013). That report offered an extensive analysis of the economics of payment systems around the world. It concluded that digital technologies can significantly reduce the cost of payment systems, and make them more efficient, sustainable, and accessible to poorer consumers, while at the same time boosting revenues for financial providers by supporting activities, both financial and non-financial, that generate non-payments revenue. Risk is a contributing part of the equation.

The authors have developed the perspectives in this report based on three primary activities. First, we drew on the latest risk management thinking in banking, payments, and other areas, in- cluding manufacturing and capital-intensive industries. Second, we assessed risk in digital payments in India and Kenya, two large markets with different payments system structures and levels of maturity. Kenya is the most developed mobile money market in the world. In India, emerging digital payments are linked largely to bank accounts, and increasingly en- abled by a universal ID system. To examine these two systems, we conducted field visits to more than 10 organizations across the value chain. Third, we supplemented our fact base with research on digital money and agent banking in Tanzania, Uganda, Nigeria, Ghana, Indonesia, Pakistan, Bangladesh and Brazil.

After a brief summary of the key findings emerging from this work, the body of this report first offers a framework for understanding digital payments systems and the risks inherent in them. Next, the report discusses three broad categories of risk. Section I covers opera- tional risk and Section II covers solvency and liquidity risk, both in digital payments. Section III provides an overview of other risks associated with digital financial services beyond payments and overall provider sustainability. The report concludes with some advice and implications for stakeholders who choose to embark on the journey to improving financial inclusion.

Assessing risk in digital payments  -  English (en)

Designing Digital Financial Services for Smallholder Families Document 2015

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This report presents the insight in how digital finance can work for smallholders. Digital tools offer great opportunities for the users, but cannot replace personal support, according to the new human centered design (HCD) research. Using human-centered design (HCD), CGAP and its partners found that in order for digital financial solutions to work for smallholders, financial service providers need to minimize the perceived risk of trying new technology and build personal support into financial products. Smallholders traditionally lack access to formal financial services and digital financial services are a logical and promising solution. However, smallholder farmers and their families face a number of challenges when it comes to discovering and using digital financial services, including poor mobile network connections, low penetration of mobile devices, and low rates of mobile literacy. For digital finance to work for these customers, the products and services must be tailored to their needs and combined with personal support. The research is based on the results from projects in Cambodia, Rwanda, Senegal and Zimbabwe.This report presents the insight in how digital finance can work for smallholders. Digital tools offer great opportunities for the users, but cannot replace personal support, according to the new human centered design (HCD) research. Using human-centered design (HCD), CGAP and its partners found that in order for digital financial solutions to work for smallholders, financial service providers need to minimize the perceived risk of trying new technology and build personal support into financial products. Smallholders traditionally lack access to formal financial services and digital financial services are a logical and promising solution. However, smallholder farmers and their families face a number of challenges when it comes to discovering and using digital financial services, including poor mobile network connections, low penetration of mobile devices, and low rates of mobile literacy. For digital finance to work for these customers, the products and services must be tailored to their needs and combined with personal support. The research is based on the results from projects in Cambodia, Rwanda, Senegal and Zimbabwe.

Author Max Mattern and Michael Tarazi
Publisher CGAP
Washington, DC
Number of Pages 44 pp.
Primary Language English (en)
Region / Country Global, Africa
Cambodia, Rwanda, Senegal, Zimbabwe
Keywords digital financial services, Financial Services, smallholder finance
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Cinco lecciones sobre las redes de agentes en Perú Paper 2015 Spanish (es)

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CGAP publica el estudio titulado “Cinco lecciones sobre las redes de agentes en Perú”, el cual sintetiza la experiencia de cinco redes de agentes en Perú, cuyo objetivo fue identificar los principales factores que ayudan a llegar exitosamente a la población rural pobre. Dicho estudio descubrió que las opciones en cuanto a diseño de las redes ejercen una significativa influencia en la capacidad de éstas de funcionar de manera viable en zonas más alejadas del país. A partir de la investigación se identificaron enseñanzas que pueden contribuir al trabajo en el ámbito de la inclusión financiera en el mundo. 

Cinco lecciones sobre las redes de agentes en Perú  -  Spanish (es)

Author Faz, X. & García Arabéhéty, P.
Publisher CGAP
Primary Language Spanish (es)
Region / Country South America
Peru
Keywords redes de agentes
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Combining Push and Pull Strategies for Greater Scale and Poverty Outreach Conference Proceedings 2014 English (en)

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Combining Push and Pull Strategies for Greater Scale and Poverty Outreach was one of four learning tracks featured at the 2014 SEEP Network Annual Conference on Scaling Impact in Inclusive Market Systems. Co-sponsored by USAID’s Microenterprise and Private Enterprise Promotion (MPEP) and Food for Peace (FFP) offices, six peer learning sessions included practitioners and researchers from multiple organizations. This track highlighted field experience in applying elements of a push/pull approach to facilitate pathways out of poverty for very poor households through engagement in markets. In particular, all sessions were asked to address how push and pull strategies intersected—in both theory and practice—and how these strategies can work together to create more sustainable and scalable impact.

Combining Push and Pull Strategies for Greater Scale and Poverty Outreach  -  English (en)

Author The United States Agency for International Development (USAID)
Publisher The United States Agency for International Development (USAID)
Number of Pages 29 pp.
Volume / Issue# No. 6.
Primary Language English (en)
Region / Country Global
Keywords Outreach, Push/pull strategies
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Serving Smallholder Farmers: Recent Developments in Digital Finance Technical Note 2014

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This Focus Note introduces some recent developments in digital financial services for smallholder farmers. The featured case studies (i) identify traditional pain points in serving smallholder farmers (such as the cost and risk of making payments to farmers and delivering subsidized credit), (ii) discuss how digital financial Services (DFS) are being used to overcome these pain points, and (iii) highlight some initial obstacles and successes.

Author Grossman, J.; Tarazi, M.
Publisher CGAP
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Africa
Zimbabwe, Nigeria, Kenya, Ghana
Keywords Mobile Banking, Rural Finance, Rural Outreach, Agricultural Finance
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Shifting Branchless Banking Regulation from Enabling to Fostering Competition Paper 2014

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Branchless banking solutions in most countries tend to be dominated by a few large players, and exhibit low levels of innovation. The paper argues that there is a need to evolve the regulatory framework for branchless banking from one that enables participation by banks and telcos to one that fosters competition by a broader range of players. Regulations on e-money issuers, retail agents and account opening need to be recast so as to reduce the cost of entry and give much more scope for service and business model innovation. In addition, there is a growing need for policymakers to ensure there is a level playing field across all players, and that mobile operators do not exploit their dominance in the mobile communications market to gain advantage in the new market for mobile financial services.

Author Ignacio Mas
Publisher University of Oxford; Tufts University
Number of Pages 29 pp.
Primary Language English (en)
Region / Country Global
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Digital Financial Services in Africa: Beyond the Kenyan Success Story Paper 2014 English (en)

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The paper explains the success factors of digital financial services (DFS) in Kenya and contrasts this with the challenges and opportunities for DFS in seven countries: Benin, Cameroon, Mozambique, Nigeria, Senegal, Uganda and Zambia. The study is based on the Mobile Money for the Poor (MM4P) methodology developed by UNCDF to assess the market potential for DFS. 

Digital Financial Services in Africa  -  English (en)

Author European Investment Bank (EIB) and UN Capital Development Fund (UNCDF)
Publisher European Investment Bank (EIB) and UN Capital Development Fund (UNCDF)
Number of Pages 66 pp.
Primary Language English (en)
Region / Country Global, Africa
Kenya
Keywords Financial Services, mobile money, digital financial service
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State of the Industry 2014: Mobile Financial Services for the Unbanked Report 2014

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Each year, the MMU publishes its annual State of the Industry Report on Mobile Financial Services, enabling readers to track the development of the MFS industry over time.

This report is designed to provide MFS practitioners with insights into the important developments taking place in mobile money, mobile insurance, mobile savings and mobile credit. It is also designed to provide other stakeholders, such as regulators, senior executives in the telecoms and banking sectors, and international development agencies, with an authoritative overview of the industry and its impact on the financial lives of unbanked and underbanked users.

Author The GSMA’s Mobile Money for the Unbanked (MMU)
Publisher The GSMA’s Mobile Money for the Unbanked (MMU)
London, United Kingdom
Number of Pages 77 p.
Primary Language English (en)
Region / Country Global
Keywords mobile financial services, mobile money, mobile savings, mobile insurance, mobile credit
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ICT uses for inclusive agricultural value chains Paper 2013 English (en)

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This study documents the various kinds of information and communications technology (ICT) initia- tive being implemented globally to improve agricultural value chains and agribusinesses. Many of the solutions presented entail improving access to reliable and timely information. Inequity in access to information allows those with information to take advantage of those without it (often farmers), even though much of the information is technically within the public domain. Because of the ever-lower costs and growing ubiquity of ICT, such as mobile phones and the networks needed to connect them, new avenues have been opened, offering critical information to farmers, fishers, small traders and business people. This document provides examples of three types of ICT solution, categorized in terms of the end result for the consumer: ICT for production systems management, ICT for market access services, and ICT for financial inclusion.

Document  -  English (en)

Author Calvin Miller, V.N. Saroja and Chris Linder
Publisher Food and Agriculture Organization of the United Nations (FAO)
Rome, Italy
Number of Pages 70 pp.
Primary Language English (en)
Region / Country Global
Keywords Ict, Agricultural Value Chains
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Mobile Money-Mobile Financial Services for the Unbanked Document 2013

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The GSMA Mobile Money for the Unbanked Programme (MMU) has been tracking the progress of the mobile money industry for the past few years. Each year, MMU’s State of the Industry Report contains key findings and insights on the growth of the sector. This year, for the first time, the scope of the report has been extended to include not only mobile money, but also mobile insurance, mobile credit and mobile savings. This report contains data from the MMU Deployment Tracker, which monitors the number of live and planned mobile money services for the unbanked across the globe. It also includes data from the MMU 2013 Global Adoption Survey of Mobile Financial Services (hereinafter the 2013 Global Survey), which had 110 participants from 56 countries. For some metrics, such as mobile money revenues, the amount of data reported is not as high as for the core metrics. Where it is sensible, estimates are made to complete the data set; in this report, numbers of mobile money accounts (both registered and active) have been estimated. We believe the findings in this report are truly representative of the industry overall.

Mini case studies on mobile financial services as well as particular mobile money best practices have also been included in the report, where they help to support or deepen the insights from the survey.

Partnerships in Mobile Financial Services: Factors for Success Report 2013 English (en)

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This paper provides an examination of partnerships, a critical aspect of MFS implementations that is particularly difficult to get right. Companies that are very successful in their respective banking, communications, and payment services businesses agree on suboptimal partnership arrangements often enough to merit an investigation of how and why this happens. This paper explores these relationships on the assumption that getting them right is key to the success of any MFS implementation. More specifically, this paper focuses on business relationships in which companies partner to create the core business and deliver the customer value proposition in an MFS implementation. This implies a distinction from a mere contractual relationship with a service provider: partners share risk or depend on mutual performance of defined roles for the success of the implementation.

This paper is organized as follows:

Section 1 briefly presents the structure of MFS implementations and in particular the four key roles which must be fulfilled.

Section 2 describes the case study implementations and the partnership arrangements between the key actors.

Section 3 describes the importance of aligning competitive forces, economic motivation and partner roles.

Section 4 presents key lessons related to the four underlying businesses of an MFS implementation, distinguishing between the direct and indirect revenue that can accrue to the core businesses of the partner organizations. It also presents key lessons related to the distribution of this revenue between partners.

Paper  -  English (en)

Author M. Fleming, A. Mitha, M. Hanouch et al.
Publisher IFC
Washington, DC.
Number of Pages 20 pp.
Primary Language English (en)
Region / Country Global
Related Resources
The Transformational Use of Information and Communication Technologies in Africa Report 2013 English (en)

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eTransform Africa: The Transformational Use of Information and Communication Technologies in Africa captures the existing use of ICT in six sectors (agriculture, climate change, education, health, financial services, government) and two cross-cutting themes (regional trade and integration, ICT competitiveness). It further examines the immediate potential that could be realized with further attention by both the private and public sectors and makes recommendations for policy makers and development practitioners. The detailed studies carried out for this report (available at www.eTransformAfrica.org) include twenty country case studies spanning the continent and an ICT data table that showcases country data for mobile and broadband indicators. The case studies show how ICTs can help overcome government failures in different sectors.

Please pay attention on two chapters: on chapter 2 which is on agriculture and chapter 6 on financial services. 

Document  -  English (en)

Author Enock Yonazi, Tim Kelly, Naomi Halewood and Colin Blackman
Publisher The World Bank
Washington, DC; USA
Number of Pages 166 pp.
Primary Language English (en)
Region / Country Global
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Using Mobile Technology to Expand Financial Inclusion: The Credit Union Experience Training Guide 2012

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The guide provides an overview of how credit unions use smartphones, point-of-sale (POS) devices and cellphones to provide increasing levels of financial access and convenience to the unbanked and underserved.

Credit unions employ these devices through regional, national and international business networks that allow them to pool resources and collectively bargain for low-cost mobile technology and services to expand financial inclusion beyond their branch offices. Credit unions use mobile devices to help people link electronic cash flows to interest-bearing savings accounts and other financial services closer to where they live and work — oftentimes in places where there are no other financial institutions.

This guide highlights how each device fits into Credit Union’s strategy for increasing financial inclusion, touching on specific credit union experience in different countries and contexts.

Author WOCCU
Publisher WOCCU
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Global
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ICT in agriculture : connecting smallholders to knowledge, networks, and institutions Book 2011 English (en)

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The livelihoods of the world's poor rise and fall with the fate of agriculture. Enhancing the ability of smallholders to connect with the knowledge, networks, and institutions necessary to improve their productivity, food security, and employment opportunities is a fundamental development challenge. Where once rural areas were largely disconnected from the greater world, today, networks of information and communication technologies (ICTs) enmesh the globe and represent a transformational opportunity for rural populations, both as producers and consumers. However, climate change and price fluctuations in the global food market remind us that realizing this opportunity requires a long-term commitment to mobilizing appropriate resources and expertise. It is for this reason that we are particularly pleased to introduce the ICT in agriculture e-sourcebook. This resource was designed to support practitioners, decision-makers, and development partners who work at the intersection of ICT and agriculture. The authors hope is that it becomes a practical guide in understanding current trends, implementing appropriate interventions, and evaluating the impact of those programs. It combines cutting-edge expertise in ICT with empirical knowledge of a wide range of agricultural sectors, from governance to supply chain management. As an online knowledge source, it will continue to evolve and be updated to reflect the emerging and changing challenges and opportunities facing the sector. This activity was carried out as part of the program on creating sustainable businesses in the knowledge economy, for which the Government of Finland provided generous support. The publication represents a partnership of infoDev and the Agriculture and Rural Development Department of the World Bank Group, with significant contributions from outside experts.

ict sourcebook  -  English (en)

Author The World Bank
Publisher The World Bank
Washington, D.C., U.S.A.
Number of Pages 428 pp.
Primary Language English (en)
Region / Country Global
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Linking up and Reaching out in Bangladesh: Information and Communications Technology for Microfinance Book 2010 English (en)

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The book offers an in-depth view of the microfinance industry in the country and identifies constraints related to insufficient use and availability of technology. Also, it provides lessons on the role ICT can play in addressing the constraints hindering the transformation and modernization of the microfinance sector in Bangladesh, a country that has one of the most effective and dynamic microfinance sector in the world. The book outlines specific technological and institutional design elements that are needed to establish an operational centralized ICT platform, which can enable all institutions and their respective decentralized units to be connected to each other and other actors in the financial sector, including credit bureaux and other financial infrastructure.

ict book  -  English (en)

Author Bagazonzya, H. et al.
Publisher The World Bank
Number of Pages 150 pp.
Primary Language English (en)
Region / Country Global
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Mobile Banking: The key to building credit history for the poor? Case Study 2009

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The success of mobile payment and mobile banking systems, such as M-PESA in Kenya, has exceeded expectations, with greater numbers of formal financial sector actors taking notice. With the exponential growth of mobile phone subscriptions in developing countries, and the increasing popularity of m-banking and m-payment providers, there is also an expanding volume of data accumulating in the databases of mobile network operators (MNOs). Captured in their databases are payment and transaction histories about users who many believe represent the unbanked population. This population segment typically has no formal credit history and therefore cannot access financial services at affordable interest rates. These payment and transaction records may indicate a person's creditworthiness, based on whether the transaction is a bill payment or whether any trends or patterns based on frequency, regularity and value of the transactions can be detected.

This research uses Kenya as a case study, because Kenya possesses a very successful mobile payment service offered by Safaricom called M-PESA, as well as two private credit risk management companies. Furthermore, the financial sector and banking regulator are makeing progress towards establishing licensed credit reference bureaus and buildign a credit bureau industry.

The objective of this research is to determine whether mobile transaction data provide enough of a foundation on which a credit information system for the base of the pyramid (BoP) can be built. An additional objective is to determine the level of interest in public-private partnerships (PPPs) on the part of various stakeholders.

Author Alice T. Liu and Michael K. Mithika
Publisher USAID
Number of Pages 44 pp.
Primary Language English (en)
Region / Country Global
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Expanding Outreach in Malawi: OIBM’s Efforts to Launch a Mobile Phone Banking Program Case Study 2009

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This case study explores the efforts of the Opportunity International Bank of Malawi (OIBM) to implement mobile banking (m-banking) for its microfinance customers. It shares OIBM’s experiences, challenges, and lessons learned from the implementation process. Finally, the case study offers recommendations to other MFIs considering launching m-banking services.

Author Estelle Berger
Publisher USAID; Opportunity Internationa; SEEP Network
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Global
Malawi
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Banking on Mobiles: Why, How, for Whom? Technical Note 2008

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This paper examines how banks can translate the potential of mobile phones into greater financial access for poor people. Although mobile phone operators have been able to use the mobile phone for mobile remittance and bill payment services in several countries, banks have had little success in using mobile phones as part of a growth or outreach strategy.

Also, this paper focuses on smaller banks or microfinance institutions (MFIs) that face a much higher cost-ofservice delivery because of the smaller transaction values they handle and the likely more remote and dispersed location of at least some of their customers. The opportunity seems particularly great for them, but implementation challenges also loom larger because of their small scale. This discussion assumes these banks and MFIs have adequate back office and transaction switching capability and sufficient internal controls, whether managed in-house or outsourced. Without that, mobile banking is not possible because it is fundamentally a front end to a financial institution’s information technology system.

Author Ignacio Mas and Kabir Kumar; CGAP
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
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E-Banking: The Next Revolution in Financial Access Article 2007

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E-banking has the potential to revolutionise access to financial services for the poor. There is growing consensus that e-banking offers a unique opportunity to address mainstream banks’ two major barriers to serving the low-income market: the need for a branch infrastructure and managing high volumes of low value transactions. The potential of e-banking to significantly extend the reach of financial institutions into rural areas, without investing in “bricks and mortar” branches, is widely acknowledged.

Author Wright A.N. Graham; Sharma Manoj, MicroSave
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
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Client-Focused MFI Technologies Case Study Report 2007

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In order to understand the potential use of client-focused technologies for creating new distribution channels and lowering transaction costs in microfinance, this study examines three technologies, which are defining the current technological efforts in the industry: personal digital assistants (PDAs), point-of-sale (POS) devices, and cell phones. Through a series of examples from different parts of the world, t the study outlines approaches to consider when examining the adoption of client-focused technologies in the daily operations of MFIs.

Furthermore, the study aims to address five key questions related to the use of the client-focused technologies for microfinance purposes:

  1. Does client-focused technology help MFIs reach scale and efficiency?
  2. Were the institutions’ expectations of these client-focused technologies met?
  3. What are the reasons for success or failure of the different business models used to deploy these client-focused technologies?
  4. Do MFIs have a quantifiable return on investment from implementing these technologies?
  5. What are the technical and non-technical prerequisites that an MFI will need to consider to start using one of these technologies?

The practical examples included in this study are as follows:

  1. Banco Solidario’s experience with PDA applications in Ecuador
  2. Colombian and Peruvian experience with the correspondent agent (CA) model using point-of-sale devices
  3. Remote transaction system (RTS) At Uganda Microfinance Limited
  4. Biometrics at Opportunity International Bank of Malawi
  5. K-REP Bank’s experience with mobile solutions in Kenya
  6. G-CASH – cell phone banking in the Philippines
  7. WIZZIT, a branchless bank which relies on cell phones in South Africa

Most of the examples presented in the case studies indicate that client-focused technologies do help microfinance organizations increase their scale and efficiency. For instance, the Banco Solidario’s PDA applications showed positive impact on the efficiency of loan officers by giving them a tool which improved the loan application process and also enabled them to organize their field visits better.

Similarly, POS and cell phone systems offer a unique opportunity to MFIs to increase their outreach in remote and rural areas. Based on the three POS examples, it is clear that POS-based systems are a less expensive solution, when the country infrastructure allows, for providing financial services to remote and rural clients when compared with the expenses associated with opening a new branch. However, as shown in the RTS example, the development of this type of solution can sometimes be slow and complex because they depend highly on a good communication infrastructure—not available in every country.

One of the insights gained from the examples presented is that MFI clients and unbanked people are willing to try new technologies once they understand the direct benefit of using them. For instance, most clients using the POS services appreciated the fact that it saved them travelling long distances to perform transactions. However, providing adequate and continuous training for clients is crucial to their success in adopting technologies. On the supply side factors such as institutional buy-in, the choice of technology provider, the state of local infrastructure, and regulations play a key role in the success of these technology projects.

Author S. Barton, C. del Busto, C. Rodriquez, A. Liu
Publisher USAID
Number of Pages 46 pp.
Primary Language English (en)
Region / Country Global
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Using Technology to Build Inclusive Financial Systems Article 2006

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This short note begins by arguing that banks will not aggressively target the poor as a market until they find ways to serve these customers profitably. It suggests that this will require delivery channels that are inexpensive to set up, a wider range of financial services to poor customers, and the ability to handle transactions at low cost. It notes that in developed countries, low-cost “direct banking” technology channels, such as Internet banking and automated teller machines (ATMs), process transactions at only one-fifth the cost of a branch teller.

This Focus Note attempts to answer the following questions through surveying the use of technology to deliver financial services to poor people in developing countries:

  • Can banking technologies, applied innovatively in developing countries, make microfinance profitable for formal financial institutions?
  • Would they reduce costs to such an extent that banks could profitably serve even those whom MFIs have mostly excluded to date, such as very poor and remote rural customers?
  • Will these customers be comfortable using technology?

Its main findings are that:

  • 62 banks and MFIs report using ATMs, POS terminals,8 and mobile phones to deliver services.
  • A handful of banks are reaching new customers by using ICTs to deliver services through retail outlets. But most banks simply migrate existing customers to technology channels to reduce costs.
  • Banks still have to build transaction volume and find ways to profitably lend in the informal sector using ATMs or POS channels.
  • Poor people are probably gaining access to services through these technologies, at least in Brazil and South Africa, but the service quality is uncertain. It is not known if poorer and remote people are benefiting.
  • Innovative channels are not possible without the right policies and adequate financial sector infrastructure in place. Managing cash security and liquidity at a wide network of terminals is the main operational hurdle.
Author G. Ivatury
Publisher CGAP
Number of Pages 19 pp.
Primary Language English (en)
Region / Country Global
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Issues in Mobile Banking 2: Regulatory and Technical Issues Brief 2006

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Regulation requirements – or in some cases the lack of understanding/interest of the central banks – remain one of the key barriers to implementing mobile banking by financial institutions. In addition, many financial institutions struggle with technology issues around selecting appropriate systems and delivery channels. This Briefing Note seeks to shed some light on these issues. For example, the Note explains that in some countries only a bank can participate in the national payments system and all instructions to make payments on behalf of a customer are deemed to be acceptance of deposits and can therefore only be undertaken by a bank. If this is the case then a non banking operator will need to either obtain their own banking license or else form an alliance with a bank so that deposits or ‘the business of a bank’ will be done within a division of that bank.

Issues related to anti money-laundering legislation and the use of agents are explained. Agents enable service providers to interact with large numbers of customers. However, the selection and management of agents will be restricted to those who can meet the specific regulatory requirements for the taking of deposits and management of documentation in the country of operation and this may add significantly to costs. Furthermore, regulation may be a factor in the services that can be offered by an agent and their ability to manage operational and reputational risks.

Finally the Note examines the issues surrounding the choice of system to be used, i.e. the computer platform, the enabling technologies such as the SIM toolkit or browser, the interactive technologies such as WAP, SIMToolkit and Java, and the transport channels on the mobile network such as voice/touch tone dialing (IVR), SMS or USSD. Decisions will be driven by various factors including:

  • The regulatory environment
  • The level of functionality required by the market
  • The availability of secure infrastructure such as SIM toolkit
  • The availability of features on handsets such as WAP, Java or the Simtoolkit GSM 03.48
  • The level of risk of transactions.
  • The sophistication of the market and affordability for the customer.
Author Jenny Hoffmann
Publisher MicroSave
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
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Catching the Technology Wave: Mobile Phone Banking and Text-a-Payment in the Philippines Paper 2006

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This short paper argues that mobile phone banking has the potential to extend financial services, through virtual accounts, to millions of poor people globally. Utilising mobile phone technology for microfinance significantly lowers transaction costs, while expanding outreach to rural areas. Change is being driven by falling costs of mobile phones including airtime, by competition and by the ability of electronic banking solutions to offer customers an enhanced range of services at a very low cost. Text-a-payment (TAP) builds upon the familiarity and comfort that people around the world have with sending text messages (or SMS) via their mobile phone. Instead of travelling to the bank to make their loan payment, clients can now text their loan payment directly to the bank; saving them both travel time and money. This is also beneficial for the bank, since it can increase its outreach to rural areas while reducing its costs.

The paper begins by providing a brief overview of the Rural Bankers Association of the Philippines Microenterprise Access to Banking Services (RBAP-MABS) program, which has recently launched new products and services including micro-agricultural loans and mobile phone banking services for microenterprises and low income clients. By way of useful background, it also discusses the advent of mobile commerce in the Philippines, which has often been referred to as the texting capital of the world. A brief outline of the two major m-commerce service providers is also given - Globe Telecom and SMART Communications - who provide mobile banking services through their products G-Cash and SMART Money.

Text-A-Payment is an innovative mobile technology product that uses the SMS technology of Globe Telecom to pay for microfinance loan payments of borrowers. TAP seeks to bring in new and low cost technology tools to improve efficiency and outreach. Small borrowers can utilize the service for payments of their microfinance loans. A pilot test was launched on February 2005 with four RBAP-MABS participating banks. As well as providing an illustration of the actual transaction messages received, the paper also sets out how the system works and looks at the key partners’ roles and responsibilities.

Before concluding, the paper highlights a number of challenges and recommendations for TAP and mobile phone banking applications using G-Cash. It also considers whether this technology can be replicated in other countries by noting the presence of certain success factors in the Philippines example – a large number of cell phone users including low income households who are familiar with text messaging, a strong relationship between “champions” at Globe and RBAP-MABS, the willingness of Globe and the rural banks to try something new and innovate, the existence of the “ecosystem” of merchants, clients and outlets, and most importantly, the willingness of the Central Bank to support innovation in the banking industry.

Author Owens, J and Bantug-Herrera, A
Publisher Chemonics International Inc
Number of Pages 5 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Information and Communication Technology and Microfinance: Options for Mongolia Paper 2006

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Recently, information and communication technologies (ICT) have emerged as a powerful tool to reduce operating costs, making it viable for financial institutions to expand into rural and low-income areas. Relevant ICT innovations include personal computers connected to the internet, mobile phones, automated teller machines (ATM) or point-of-sale (POS) devices located at a retail or postal outlet. Using these innovations may be less expensive for financial institutions than establishing branches located in rural areas and more convenient for customers. Unlike pure cash based transactions, ICT-based transactions can take place with less time or with no time required from a teller. Rather than hand over cash to a teller when making a deposit or loan repayment, a customer can give cash to a store clerk, swipe a debit card through a POS card reader, and input an identification number to authorize the transaction. The store’s account at the financial institution would be debited by an amount equivalent to the cash deposit, and the customer’s would be credited. Since the transaction is electronic, from the institution’s perspective, it is less costly to process.

It is this possibility of ICT solutions for expanding the rural finance frontier that has stimulated this paper. The main objective of the author was to review literature on the application of ICT solutions in microfinance and analyze the possible use of ICT solutions for expanding microfinance services to rural remote areas by looking at the challenges and issues in the case of Mongolia. Field work was conducted in September 2005 and focused particularly on XacBank, one of the leading microfinance institutions in Mongolia, to identify feasible and appropriate applications of ICT in rural areas. In the last section, the paper summarizes the key challenges and issues for microfinance institutions, donors and governments to consider in applying ICT for expanding the rural finance frontier.

The author concluded that the number of microfinance institutions that have gone beyond piloting ICT applications is still limited. They are primarily in countries which have economies of scale, a relatively developed financial services sector, and a more favourable communication infrastructure and regulatory environment. She also found that it will be a while until MFIs will be able to fully utilize all the potential of ICT. She thought it would be more realistic to take small steps in applying ICT in some functions of microfinance operations rather than make the full investment in complete ICT solutions. At least some of them may be able to invest in smaller-scale technology solutions that can result in concrete benefits worth the cost involved.

With regard to Mongolia, like in many other developing countries, there is a very poor connectivity in remote areas and a stable supply of power and reliable, lower cost connectivity are essential for ensuring uninterrupted transactions. Thus in order to implement any of the ICT innovations, a MFI must have addressed this issue. However, a wireless POS device using smart card does not require real-time connection. The smart card can store up to 1000 transactions offline. After that, the data has to be uploaded. This seemed to offer the best potential for Mongolia provided the potential scale of customers is large enough to ensure a critical mass for economic viability.

Author Hishigsuren, G.
Publisher ADB Institute
Number of Pages 34 pp.
Primary Language English (en)
Region / Country Global
Related Resources
The Enabling Environment for Mobile Banking in Africa Report 2006

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This report investigates the extent to which the expansion of mobile telephony is likely to lead to the expansion of access to appropriate financial services in developing countries, especially Africa. In particular, it seeks to answer two main questions:

  • Which models of mobile banking are emerging globally, and especially in Africa, and are they likely to be accelerate access?
  • Will it happen spontaneously or is enablement required for this to happen? If so, what forms of enablement?

To answer these questions, the report investigates emerging models and trajectories of development in m-payments and m-banking through interviews with emerging African providers and the use of secondary material. It assesses the policy and regulatory elements of an enabling environment for this sector based in part on the analysis of circumstances in two pilot African countries (Kenya and South Africa).

Author Porteus, D
Publisher Bankable Frontier Associates
Number of Pages 57 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Mobile Phone Banking and Low-Income Customers Paper 2006

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This paper presents the first public findings on how low-income people view and use m-banking, using results of a survey of 515 low-income individuals in South Africa. Three hundred of those surveyed do not use m-banking, while 215 are customers of WIZZIT, a startup mobile banking provider. WIZZIT targets the 16 million South Africans who lack or have difficulty accessing formal banking services. The study was conducted in South Africa because it is the only country where an m-banking service is targeted at low-income people and where there are enough identifiable low-income customers to construct an adequate sample.

Although the findings are not representative of all low-income m-banking customers and potential customers, they are encouraging. WIZZIT’s low income customers give m-banking high marks for its convenience, accessibility, and affordability. A WIZZIT account is as much as one-third cheaper as an account at one of South Africa’s big retail banks for the same basket of services.

The study also sets out to determine which low income segments are using WIZZIT. Many WIZZIT customers are indeed poor, but they are not among South Africa’s poorest people. They tend to have more income and assets and be more financially and technologically sophisticated than other low-income South Africans. Finally, the study sought to understand perceptions about banking, technology, and m-banking among low-income people.

Part one of this paper introduces WIZZIT. Part two details findings from the survey in South Africa. Part three puts this research into a broader context to assist banks, mobile network operators, and other parties interested in extending financial services to low-income people. The study was designed by the Consultative Group to Assist the Poor (CGAP) and produced through a partnership among CGAP, the United Nations Foundation (UNF), and Vodafone Group Foundation (VGF). FinMark Trust made important contributions to the study methodology.

Author Ivatury, G.; Pickens, M.
Number of Pages 19 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Issues in Mobile Banking 1: Implementation Choices Brief 2006

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As with any investment decision, the criteria for whether and how to establish a mobile banking business derive from the threats and opportunities of the environment and the strengths and weaknesses of the potential investor and/or operator. However, given that mobile banking is still a relatively new technology solution in the field of banking, the experience that has been gathered in early initiatives may be able to provide some generic guidelines as to the choices which need to be considered. This Briefing Note examines some of the key strategic issues for financial institutions considering implementing mobile banking based on the use of mobile phones. These are:

  • Market Potential - the target market segment needs to be quantified and socio economic data gathered in order to assess effective demand.
  • Substitute or Supplement - the mobile banking service may be a substitute or a supplement for existing banking services (or a substitute for informal financial services).
  • Operational Alliances - alternative relationships between banks and telecommunication companies.
  • Customer Hardware - options around the technology that can be used will depend on the level of accessibility of the required handsets to a broad enough market.
  • Systems - need to be appropriate to the banking environment being considered, e.g. where there is little or no electronic banking infrastructure then ‘stand alone’ systems are more appropriate.
  • Financial Model - how operational profitability is to be achieved.
Author Jenny Hoffmann
Publisher MicroSave
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Mobile Phone Based E-Banking Brief 2006

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There is growing consensus that e-banking offers a unique opportunity to address mainstream banks’ two major barriers to serving the low-income market: the need for a branch infrastructure and managing high volumes of low value transactions. In addition, e-banking systems hold the promise of being able to extend centralised banking systems deeper into rural communities. Despite this, examples of failed ebanking initiatives provide ample warning that adopting e-banking solutions is not an easy proposition.

In general initiatives do not fail because of technological problems but because they have not adequately addressed the customers’ needs not those of the intermediary agents who are an essential part of the system. This briefing note emphasises the importance of keeping things simple and being prepared to go through an iterative learning process. Providers need to involve users in the development process to ensure the service addresses their needs in a practical manner.

Successful introduction of this technology can be expected if service providers concentrate on areas where cash is inconvenient and the solution can do things that cash cannot. An example of this would be enabling small business people to pay suppliers and repay loans from their business premises.

Author Wright, G.A.N. et al.
Publisher MicroSave
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Use of agents in branchless banking for the poor: rewards, risks, and regulation Article 2006

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In a growing number of countries, banks and other commercial financial service providers are finding new ways to make money delivering financial services to "unbanked" people. Rather than using bank branches and their own field officers, they offer banking and payment services through postal and retail outlets, including grocery stores, pharmacies, seed and fertilizer retailers, and gas stations, among others. For poor people, “branchless banking” through retail agents may be far more convenient and efficient than going to a bank branch.

Two models of branchless banking through retail agents are emerging: one led by banks, the other by non-bank commercial actors. Both use information and communication technologies, such as cell phones, debit and prepaid cards, and card readers to transmit transaction details from the retail agent or customer to the bank. Branchless banking through retail agents appeals to policymakers and regulators because it has the potential to extend financial services to unbanked and marginalized communities. But it also raises a challenge: What are the risks of these new approaches, and are they different from those of conventional branch-based banking? How should we respond to these risks, so as to permit branchless banking with retail agents to operate safely and expand access to finance?

This Focus Note offers insights on these questions by examining the experience of five pioneering countries - Brazil, India, South Africa, the Philippines, and Kenya - where agent-assisted branchless banking that targets poor customers is already a reality. The Note begins with some background on branchless banking through retail agents and its two main models: the bank-led model and the non-bank-led model. It then examines the new or enhanced risks these branchless banking models raise and explains how banking regulators have responded to these risks so far in the five countries studied. It concludes with considerations for prudent but access-oriented regulators and policymakers regarding branchless banking for the poor.

Author T.R.Lyman, G.Ivatury, S.Staschen
Publisher CGAP
Number of Pages 20 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Banking the Unbanked: Technology’s Role in Delivering Accessible Financial Services to the Poor Paper 2006

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How can microfinance have macro impact in the world such that billions of today’s urban and rural poor gain access to financial services? By undertaking 3 pilot studies in Uganda, a consortium of private and public actors sought to determine the role technology could play in increasing the reach of microfinance. This paper discusses the findings of the studies.

It begins by highlighting the problem and considering the question: What are the problems keeping the industry from achieving greater scale? The study concludes that the key issues relate to over-dependence on donor funds for wholesale finance and operating costs, the absence of consistent, sector-wide operating standards and business practices, fragmentation within the sector, technical challenges and high transaction costs, and the need for flexibility to offer diverse financial services that meet local needs and priorities.

The paper sets out how the actors involved in the study then designed a technological solution in an attempt to overcome these issues identified. The technology was designed to process loan payments, savings deposits, withdrawals and transfers, based on a combination of smart-cards, point-of-sale terminals, a transaction server and connectors that send data directly to the MFIs’ accounting and general ledger systems.

Three key lessons that were drawn from the study are discussed in detail by the paper:

  1. Technology combined with business process change brings the greatest return
  2. Emerging markets require innovative, appropriate technologies that are designed for scale
  3. The costs associated with building the infrastructure to support this enabling technology is too high for MFIs to go it alone
Author Firpo, J
Publisher SEMBA Consulting
Number of Pages 10 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Mobile Banking: Knowledge map & possible donor support strategies Paper 2006

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Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to undertake financial transactions linked to a client’s account. M-banking is one of the newest approaches to the provision of financial services through ICT, made possible by the widespread adoption of mobile phones even in low income countries. The roll out of mobile telephony has been rapid, and has extended access well beyond already connected customers in developing countries. There is mounting evidence of positive social impact on poorer people and communities as a result.

There are sound reasons for the hope that m-banking could have similar impact. A mobile network offers a high technology platform onto which other services can be often provided at very low cost to deliver an effective result. Mobile data channels are often under-used and therefore may be offered at low cost by the network operator. M-banking services which use channels such as text messaging/ SMS can be carried at a cost of less than US1c per message. The low cost of using existing infrastructure makes such channels more amenable to use by low income customers. M-banking is new in most countries, and there has been limited donor support in the sector to date.

This report considers the case for donors to support m-banking as a sector, by assessing:

  1. The likely impact on the lives of poor people in theory and practice—the ‘why’ of donor intervention.
  2. The needs and gaps arising from the development of the sector to date, in the light of what donor-funded programs are already doing.

In the light of this assessment, the report considers strategies and particular initiatives which donors may take to respond concretely to the needs and gaps identified.

Author DFID
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Mobile Banking and Rural Outreach Editors Note 2005

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Author Houtman, R.
Region / Country Global
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