Responsible Finance Forum


Amy Stewart
12 Dec 2018

By Amy Stewart

An agent for Accion Microfinance Bank in Nigeria assists a customer. 

The market for lending is changing across the globe. A new category of digital lenders has emerged that uses digitized customer data, lower-cost digital channels, and advances in machine learning and analytics to offer better products to more clients in faster, more cost-efficient and engaging ways. The market opportunity is significant: the total transaction value is expected to show an annual growth rate of 18.2 percent between 2018 and 2022. And the IFC estimates the financing gap for small businesses in developing countries at more than US$5 trillion.

Around the world — and especially in emerging markets — these lenders are developing innovative business models that leverage technology to reach customers whom banks have largely ignored in the past. In Mexico, small businesses can now access funding within hours from Konfio, a fintech that use alternative data to better understand applicant behavior. In Ghana, the solar company PEG is enabling low-income customers in remote rural areas to use mobile money to affordably pay for solar units, gaining access to light, radios, and even television sets in their homes.

What does this mean for traditional financial institutions? These institutions historically have used a “high touch” approach to serving the low-income segment, relying on an extensive network of loan officers who canvass regions and build personal relationships with their customers. While effective, this manual approach is expensive and has been a key roadblock to providing personalized financial products at scale.

Improvements in infrastructure and access to technologies have provided all lenders — including traditional institutions — with a new and compelling alternative. Digital technologies allow for more customized products and experiences at a fraction of the cost of physical delivery. One key component of this opportunity in emerging markets is the improvement of mobile network coverage and the proliferation of low-cost smartphones. GSMA predicts the number of unique mobile subscribers will reach 5.9 billion by 2025, with growth driven by new customers in India, sub-Saharan Africa, and Latin America. Another factor is government action; policymakers around the world are setting digital and financial inclusion agendas that offer increased regulatory and infrastructure support for digital lending.

In addition, customers in emerging markets are becoming more tech-savvy. More than half own a smartphone, and many use digital services on a daily basis — in Kenya, almost two-thirds of the adult population makes or receives payments using mobile phones. And global exposure to multinational brands like Facebook and Amazon has heightened customer expectations around product design and service. Financial institutions that don’t offer a similar customer experience risk losing customers to new digital competitors.

Digital lending offers great promise, but it is not a magic bullet. If not well-designed and delivered, digital products can negatively impact both providers and customers. On the customer side, poorly-executed digital lending can lead to over-indebtedness, aggressive digital collections practices, and, in extreme instances, even financial exclusion. For example, in 2017 Microsave reported that 2.7 million people in Kenya were blacklisted for non-repayment of digital credit in the three years prior, with 400,000 blacklisted for loans of less than $2. These negative impacts are often the result of overly aggressive sales tactics or not ensuring the customer understands (or needs) the product. To avoid these effects, digital lenders must offer financial products with transparency and customer protection at the core of their design.

While fintechs will continue to drive much of the innovation in digital lending, it is essential to recognize that they are only part of the picture. It is the traditional financial institutions that have built strong regional brands, hold banking licenses, offer a wide variety of financial products, and importantly have access to capital that can enable scale. And microfinance institutions have been successful at reaching the unbanked, particularly because they use physical touch points to engage, educate and support their customers.

Arguably the biggest opportunity for scalable digital lending innovation sits at the convergence of fintechs and traditional financial service providers. There are promising signs that through partnerships, fintechs and traditional lenders are harnessing their respective strengths to design customer-centric products that can sustainably drive financial inclusion. If resourced and managed well, these partnerships have the potential to drive significant scale of digital lending in emerging markets — resulting in increased access and inclusion.

This post was originally published on Accion’s website


Graham Wright
10 Dec 2018


In 2010, Equity Bank called in MicroSave to help with their digital transformation. Today more than 97 percent of Equity Bank’s transactions in Kenya are conducted outside their branch network, and more than 70 percent are self-initiated by their clients on mobile phones. Can you imagine what that does to their cost structures? The International Finance Corporation (IFC) calculates that it reduces the annual cost to serve a customer by 80 percent – one reason why the business case for digital transformation is compelling.

As financial services providers increasingly embrace this transformation, we are at a watershed moment for financial, and indeed social, inclusion. The digital revolution is already underway, and our decisions now will determine whether we create a digital divide between the more affluent and the poor – or whether we create truly inclusive economies and societies.

Technology presents the financial services sector with four huge opportunities – and also three significant threats.


Increasing revenues and reducing costs

McKinsey estimates that digital transformation of financial institutions could add 45 percent to their annual net revenues: 15 percent from enhanced product uptake, and 30 percent from reduced operational costs. Equity Bank in Kenya has demonstrated how full digital transformation can radically change a bank, and as user-initiated transactions climb further, we can expect its operational costs to reduce still further.

But it was not easy or cheap to do this. MicroSave worked alongside the bank from 2010 to help develop the strategy, refine the products, build the agent network management system, think through marketing and communication and coordinate the change management process. Eight years later, the bank is completely transformed. It is truly a digital bank now – efficient, customer-responsive and flexible enough to respond to individual customers’ needs.

Leveraging relationship banking

Traditional microfinance institutions (MFIs) and banks have important competitive advantages over fintechs. They have valued, historical relationships with millions of customers; they have data on those customers’ financial behaviour; they have the infrastructure to provide the human touch that low-income customers crave. Furthermore, traditional financial institutions have the right regulatory clearances and compliance to offer financial services – something that fintechs often lack.

Providing personalized customer experience

Traditional financial institutions need to be cognizant of the changing demographic and cultural context – namely, the rise of millennials and the mobile-first generation – to develop and deliver a first-class, personalized user experience. A great user experience involves solutions and delivery channels that mimic the behaviours and attitudes – the mental models – of the customers. This can significantly reduce the client churn that MFIs routinely face.

Delivering with renewed purpose

Looking into the medium term, the tech revolution allows us to answer the elephant-in-the-room question: “Financial inclusion for what?” Tech allows us to link pure financial services to the real-world economy. For example, MicroSave is working to develop “precision agriculture” in India by linking farming with finance. Under this project, data is collected on a farmer’s land holding and soil quality; as well as the seeds, fertilisers and pesticides he or she has purchased. This allows AI-powered chat bots to provide tailored coaching to optimise both yields and the prices the farmer gets in the market.


Outdated, inflexible models

Many MFIs are still using the basic model of group lending, in an age when agile fintechs are offering individually tailored products, delivered more quickly and conveniently. At best, most MFIs are digitising their disbursement and collections processes and using or establishing mobile money agent networks to recover their loans. I am afraid that this is not enough.

On the horizon, and entering MFIs’ markets, are a wide array of fintechs offering personalised services, and flexible financial tools that reflect low- and middle-income consumers’ mental models and money management strategies. These fintechs manage their credit risk using sophisticated data analytics, and are often backed by deep pockets in Silicon Valley and elsewhere. Also, we should not forget the super platforms such as AliPay and Amazon that are gradually expanding their reach, and have nearly unparalleled data and financial resources at their disposal.

The explosion of digital consumer credit

Two years ago in Luxembourg at the European Microfinance Week conference debate, I cited newspaper articles saying 400,000 people were negatively listed (i.e. identified as credit risks) in Kenya. MicroSave worked with one of the country’s Credit Reference Bureaus to analyse the problem. In March 2017, we found that there were 2.7 million people negatively listed for unpaid digital credit loans, of which 1 million had defaulted on loans of less than $10. By May 2018, 3.6 million people – 13 percent of the adult population of Kenya – were negatively listed. So, the digital credit revolution sweeping Africa is clearly reducing credit discipline.

But it is also increasingly serving small businesses, and offering the flexibility that clients crave and are unable to get from traditional MFIs and banks. About a third of digital credit loans in Kenya are now used for business purposes, according to the recent CGAP telephonic survey. Furthermore, a growing number of digital credit providers are reducing the interest rates on loans to high-performing customers with a good track record. In addition to this, there are a growing number of specialised digital lenders focused on using MSMEs’ data, other proxy indicators captured from the mobile phone and psychometric assessments to make loans. These digital credit loans are easy to access, quickly processed and easy to repay using mobile money. As one digital credit borrower said to me, “Why would I go back to my MFI when I can get a loan at any time in 5 minutes? And I can pay using my phone from my business whenever I want, instead of attending endless long group meetings.” We safely assume that many MFI customers are thinking the same way – or looking at peers who have made the move to digital credit providers.

The emerging Digital Divide

There is a clear and present threat of a yawning digital divide – and with it the demise of many MFIs unwilling, or unable, to make the transformation to operate in the digital world. Fintechs are building their customer base in urban and peri-urban areas with the connectivity, the smartphones and the ability to buy data packages. They are serving the high-value customers. Thus, MFIs will be left trying to serve rural communities with poor connectivity, no smartphones and not enough money for data packages – the low-value customers.

This means that MFIs will not be able to cross-subsidise services to their rural, lower-value customers with the profits from services to their urban, higher-value customers. And fintechs will not be able to reach rural customers without access to 3G data services and smartphones – even if they were interested in doing so.

This could spell the demise of financial services for the rural poor, because the business case is so difficult – particularly compared to the diverse, low-cost opportunities to serve the higher-value, connected urban market. In short, this could end years of progress towards financial and social inclusion.


MFIs face an existential threat from digital technology. This is because fintechs are disrupting traditional financial services markets. So MFIs must embrace digital transformation. They must harness the potential of their legacy of experience and relationships. They must work with fintechs to deliver personalised, digitally-enabled services. And they must work through staff and agents to provide the human touch and assistance that so many still seek.

The digital revolution offers us the chance to deliver rapid, responsive and differentiated financial and social services to low-income people in a way that we have never been able to do in the past. We can empower them to manage their household finances in line with their mental models for money management. We can empower them to set their own savings goals, to choose their own loan and insurance packages tailored to their specific needs, and to buy or use assets on a pay-as-you-go basis.

And perhaps most importantly, we can use the digital revolution to support their farms or businesses with two-way flows of specific advice to optimise their returns.

The digital age is upon us, the train is in the station, the ticket is not cheap or easy, the journey will be exciting and the final destination is still unknown. But not boarding the train would be a profound strategic error.

Graham A.N. Wright is the founder and Group Managing Director of MicroSave.

Photo courtesy of John O’Bryan/USAID.

Originally posted on NextBillion’s website


13 Nov 2018

Photos by Dominic Chavez/IFC

HARHUA, India—In this sleepy village on the outskirts of the ancient city of Varanasi, Irawati Devi stands proudly under the bael tree that shades her home. Goats scour the ground around her mint-green food carts, searching for traces of the fried noodles and samosas she sells.

“When we first moved to Harhua,” Irawati, 58, recalls, “we wrapped saris around bamboo poles until we could afford to build walls.” With one small loan after another, averaging $290 at a time, she gradually managed to replace her home’s makeshift partitions with brick walls. She then bought the food carts, pots, and utensils to start the business that now supports her family.

Irawati’s story of using small loans to lift herself and her seven children out of poverty is one that could be told by millions of people across India. Lending to microfinance borrowers, mostly women in rural areas, has increased by 900 percent over the last six years—from $2 billion in 2012 to $20 billion 2018. With these funds, millions of marginalized families have started and expanded businesses, purchased essentials during emergencies, and supported their children’s education.

With small loans, Irawati Devi managed to make improvements to her home and start a small business.

Over the past decade, IFC has helped create a market for microfinance in India by investing $564 million in equity and debt—including $5 million in Utkarsh, which now has 400 micro-banking offices that serve 1.7 million borrowers, including Irawati. Today, IFC has investments in more than a dozen financial institutions that together represent nearly half of all micro-lending in the country—reaching up to 70 million people, directly and indirectly.

The numbers are impressive, the stories inspiring. That was why, on a recent day, Utkarsh’s Chief Executive Officer Govind Singh appeared on Irawati’s doorstep. He spent part of Utkarsh’s ninth anniversary in Harhua, the village where he and 11 employees began issuing the company’s first loans. In 2010, when Utkarsh consisted of little more than three chairs in a dusty room, Irawati was one of its first customers.

“Thank you for your money,” Irawati says, standing beside her youngest son.

“It’s not my money. It’s yours,” Singh replies, thanking her for using the loans to support her family.

Improving the Governance of a Growing Sector

At the time of Utkarsh’s founding, a crisis of confidence had struck at the heart of India’s microfinance industry. Amid allegations of abusive practices by some lenders in the southern state of Andhra Pradesh and a campaign encouraging borrowers to default on loans, the central bank in 2010 introduced restrictions and regulations that virtually shut down the industry—lending to microfinance institutions decreased from $2.4 billion in 2011 to $835 million in 2012. IFC adopted a comprehensive view of the sector during this period. Investing in and providing advisory support to several well-managed microfinance institutions, including Utkarsh, helped restore confidence among market players.

“During the crisis, IFC not only supported us; they also created structures that could be used by all microfinance institutions,” says Singh.

One of IFC’s most significant contributions to the fledging sector was a framework to manage risk. It focused on borrower welfare and provided new protections to help ensure that clients understood the terms of their loans. Before this, “there was hardly any focus on risk management for microfinance institutions,” Singh recalls.
IFC also worked with the World Bank to develop a code of conduct that established a common framework for responsible finance; more than 90 percent of the microfinance sector adopted these practices. “These were two very critical products…that gave confidence to the regulators and to the government agencies,” says Singh. “Things became much better for the microfinance industry as a whole.”
With this support, Utkarsh trained and hired staff, opened new bank branches, and better tailored its financial products to meet the needs of women, who make up 97 percent of Utkarsh’s borrowers.

Strengthening Communities

The markets of Varanasi, on the banks of the Ganges River, are a sensory overload: a feverish din of auto-rikshaw drivers and livestock herders, amid crowds of vendors selling everything from hand-knotted carpets to jasmine garlands. The aroma of pakoras, legumes, and ground spices wafts from family-run food stalls.

Microfinance institutions are important for an economy like India’s, where more than 80 percent of people work in the informal sector. Local banks aren’t typically an option for these entrepreneurs because the fees are too high. In some cases, people lack the documents required to open an account, such as identification cards and proof of income.  Or they cannot read and write well enough to fill out the paperwork.

Utkarsh’s core mandate is to strengthen communities and empower women, says CEO Govind Singh.

Singh has these people in mind when he speaks of Utkarsh’s core mandate to strengthen communities and empower women like Irawati, who is part of a lending group of 30 women. This group acts as a guarantor for the repayment of each individual’s loan in lieu of physical assets like cars or homes.

Every two weeks, the group convenes for an early morning meeting with an Utkarsh credit officer to exchange business ideas and make payments on their loans. Millions of women to whom Utkarsh lends money participate in this process of group lending and collective liability.

Many of the borrowers establish bonds with the members of their lending groups. “I now have a support network that I never used to have outside of the family,” says Pramila Devi, while frying green chilies in her shop in the neighboring village of Bahutera. “There’s a feeling of sisterhood. I know that if I’m having trouble, someone will support me.”

Not only has Pramila Devi been able to open a small tea store, nearly doubling her family’s monthly income, but the center meetings have also given her a sense of pride because her lending group calls her pradhan, the Hindi word for leader.

Utkarsh supports its borrowers in other ways as well. Employing only women at some of its micro-banking branches, including at Harhua, helps ensure it is a welcoming space for new clients.

“They feel comfortable talking about their challenges,” says Sabhya Yadav, manager of Utkarsh’s Harhua branch.  She was the first woman from her hometown, Billia, to leave the village for formal employment elsewhere. “They would hesitate, or maybe not even enter, if men were involved.”

Expanding the Definition of Financial Inclusion

Utkarsh’s success is partly due to its ability to combine lending with other initiatives, such as education and health care. Utkarsh’s charitable foundation, which receives 2 percent of the company’s profits, offers a range of services to help women maximize the impact of their loans—from financial-literacy classes to skills and vocational training.

“The definition of financial inclusion is changing,” says Umanath Mishra, the head of Utkarsh Welfare Foundation, while walking through Puranapul Village to oversee a class on savings. “If you have a savings account, but don’t understand the technology or concept, you are still excluded. We teach them when to borrow, how to borrow, and the terms of borrowing.”

The foundation, which serves 450,000 women, also helps connect women to nearby marketplaces so they can increase their income—a step that paves the way for greater social mobility.  It’s why lending to the poorest people in India—190 million of whom do not have a bank account—will remain a priority for Utkarsh.

Malti Devi, an Utkarsh client, speaks to neighbors and members of her lending group in the village of Belwa.

To have an even greater impact, in 2017 the company transitioned from a microfinance institution to a small finance bank.  It now delivers critical funding to small- and medium-sized companies, known as India’s “missing middle.”  These are an important source of jobs and economic growth. Eight million of these companies lack access to the financing they need to grow—but $230 billion would be required to fill this gap.

Utkarsh’s transition allows the company to accept deposits from its microfinance clients, a move that encourages customers to save.  It can also issue loans at lower interest rates.  Since Utkarsh began operating in this sector, its more than 50 general-banking branches have provided first-time credit to 15,000 companies, with loans ranging from $500 to $6,000.

While Utkarsh continues to expand, “microfinance will remain our focus,” says Singh, looking over the fields and rice paddies that surround the Harhua branch. “This is what we know best. These are the people who need it most.”

Join the conversation: #Invest4Tomorrow

Originally posted on IFC’s website


Yasmin Bin-Humam, Juan Carlos Izaguirre, Emilio Hernandez (CGAP)
12 Nov 2018

By Yasmin Bin-Humam, Juan Carlos Izaguirre, Emilio Hernandez (CGAP)

Digital financial services (DFS) have played a major role in increasing people’s access to financial accounts globally, but access to these services has been uneven for men and women. According to Findex, between 2014 and 2017 women’s mobile money account ownership rates jumped from 8 to 15 percent in low-income countries. Yet men’s ownership grew even more, from 12 to 21 percent. To highlight some of the starkest inequalities: In Burkina Faso, where 33 percent of adults currently have a mobile money account, the gender gap is 18 percentage points. And in Bangladesh, where 21 percent of adults own a mobile money account, the gender gap is 22 percentage points.

A farmer uses her mobile phone in rural India.

Policy is an important lever for addressing these growing inequalities, and there are some specific policy areas that can help ensure women benefit from financial inclusion . In May 2018, CGAP published a report that describes four basic regulatory enablers of DFS that have guided our in-country policy work across Africa and Asia over the past 10 years. Below are some of the important ways these enablers can improve women’s access to and use of DFS when implemented through a gender lens. Unless policies consider gender, we risk leaving behind the most vulnerable in society, particularly women, limiting our ability to achieve the SDGs.

Enabler 1: Nonbank e-money issuance
The first enabler — diversifying DFS ecosystems by allowing nonbanks to issue e-money — has already brought many women aboard. About 80 percent of women in developing countries own a mobile phone. Nonbanks like FinTechs and mobile network operators with large female customer bases often market DFS to women and others who are underserved or excluded by banks. Expanding e-money issuance to more of these nonbanks will make it possible for many more women to own financial accounts. In Côte d’Ivoire, which has allowed nonbanks to issue e-money since 2006, women are now more likely to own a mobile money account than a bank account.

Enabler 2: Use of agents
The second enabler aims to expand outreach of all DFS providers by responsibly allowing them to use a wide range of third-party agents — for example, retail shops — to facilitate customers’ access to and use of DFS. This enabler can create employment opportunities for women to serve as agents and bring greater financial inclusion. Zoona’s Girl Effect pipeline, for example, has set up an award-winning training program to help more female high school graduates become Zoona tellers, kiosk owners and community leaders.

Women agents of a microfinance institution in India show the devices they use for collections.
Photo: Sudipto Das, 2013 CGAP Photo Contest

Women agents can also benefit financial services providers (FSPs), as they have strong potential to boost providers’ performance. An IFC study across nine African countries showed that women agents were significantly more successful than male agents, with both higher volume and value of transactions. Increasing the number of women agents could attract more female clients due to social norms and safety concerns that women may have about interacting with male agents. In Bangladesh, IFC surveys found that although 52 percent of women customers preferred female agents, 97 percent were using male agents due to female agent scarcity. Women who visited female agents reported a higher median number of transactions than those who visited male agents.

To expand the number of women in agent networks, development practitioners should focus on building the business case for women agents, starting by understanding key capital and training constraints faced by the types of businesses women are likely to own in many developing countries, such as hair salons and food stalls. Governments should develop regulation that balances safety and inclusion when determining who is eligible to become an agent.

Enabler 3: Risk-based customer due diligence
The third enabler is proportionate risk-based customer due diligence (CDD). People with low incomes, especially women, often lack access to an official identification document. Traditional CDD requirements that do not consider these constraints deeply affect whether women are able to access formal financial services. In Togo, where 62 percent of women and 47 percent of men lack an account, 30 percent of financially excluded people cite lack of identification as one of the reasons they do not have an account, according to the 2017 Findex. Regulation that allows for simplified CDD in lower-risk scenarios and recognizes the types of identification documents that women typically have should help to bring more women into the financial system.

Enabler 4: Consumer protection
A strong provider commitment to customer protection is important for a healthy, inclusive market in which women trust financial services providers. Women often feel sidelined and discriminated against by formal financial institutions, and they have lower rates of digital and financial literacy. MNO Tigo Ghana found that women usually require 5 to 10 interactions before they feel confident enough to use its mobile money service and initiate transactions, whereas men require just 3 to 5. Moving away from lengthy forms toward more behaviorally informed disclosure practices is one way to help women access and more effectively use DFS. In Kenya, improved mobile disclosure for digital credit reduced delinquency rates.

Data protection is also becoming a key factor shaping DFS access and use, especially by women. CGAP’s research in India has revealed many instances in which women rely on male family members and more educated people for advice on how to protect their personal data, such as photos and social media messages. Moving forward, it will be important to obtain more insights on effective data privacy and protection approaches that contribute to responsible financial inclusion of women.

A gender lens must be applied across the entire range of regulatory enablers for DFS.  Simply focusing on one enabler will be insufficient. Policy makers are already convinced of the case for financially including women. The challenge now is working together to achieve it.

Originally published on CGAP’s website.


Fabian Reitzug
05 Nov 2018

By Fabian Reitzug, International Finance Corporation (IFC)-Mastercard Foundation Partnership for Financial Inclusion. Responsible Finance Forum Blog October 2018.

Ms. Muyenga owns two grocery stalls and a catering business in a Zambian Copper belt town. She earns too little to open a bank account, but discovered that with digital financial services, she could save money on her phone. This enabled her to invest and successfully grow her fritter business.[1]

The success story of Ms. Muyenga is one among many – digital financial services (DFS) have benefitted millions of women all over the African continent and enabled them to start and grow their businesses. Beyond the anecdotal, quantitative research from Kenya clearly demonstrates the benefits of mobile money for female-headed households, enabling women to escape poverty and move from agriculture into commerce (Jack and Suri, 2016).

Promoting the financial inclusion of women is part of responsible finance and should be embedded into business functions such as customer acquisition, product design, and delivery channels of financial service providers (FSPs). But how concretely can FSPs expand access to women and close the gender gap in DFS?

This post argues that gender-lensed data analytics can contribute to women’s inclusion by informing the delivery and design of services that are responsive to women’s needs and concerns. An IFC data analytics project in Congo (DRC) showcases how this can be achieved.

Using customer transaction data to understand gendered usage patterns

The gender gap in DFS has two facets: uptake and usage. In a recent post in this blog series, Richard Chamboko succinctly summarized the challenges women face in DFS adoption. These include lower socio-economic status and education, access to mobile phones (where there is a 15% gap in Sub-Saharan Africa), lower digital and financial literacy, and lack of awareness of DFS. Evidently, closing the gender gap requires doing away with the account ownership gap: In the eight African countries with highest share of mobile money accounts, the gender gap in combined financial institutions and mobile money accounts still ranges between 5 and 15 percentage points (World Bank Global Findex, 2017).

But a gender gap exists not only in access to banking services. Even if women adopt DFS, they tend to use them less than men. Analyzing customer transaction data can help to understand how and why usage patterns for female users differ from men, and what FSPs can do about it.

Applying gender-lensed data analytics in DRC

Gender-lensed data analytics requires the availability of relevant data. A 2016 survey by the Alliance for Financial (AFI) inclusion shows that 79% of AFI members collect some form of gender-disaggregated data. FSPs can avail themselves of such existing information to implement gender-lensed data analytics. By showcasing a project in DRC, this post provides a glimpse into the practice-relevant insights such analysis can generate.

For the IFC project presented here, data from 1.3 million customer transactions of a bank-led DFS service in DRC were used to better understand women’s interaction with DFS. Available information included customer and agent demographics, transaction characteristics, and location data.

Insights from the data

The data analytics results shed light onto the gendered usage patterns of DFS in DRC. 

  1. Gender gap among DFS clients: The analysis quantifies the usage gap among the banks’ clients. Females represent 36% of DFS clients, but just 25% of all transactions and their median transaction value is 40 USD – 10 USD below the median value for men. Thus, women use DFS less frequently and make lower-value transactions.
  2. Preference for female agents: Women have a predisposition for transacting with agents of their gender. Women agents have 6 percentage points more female customers than male agents (Figure 1). The preference for female agents is particularly pronounced for high value transactions: If a transaction is over 200 USD, women are 13 percentage points more likely to visit a female agent. The difference shrinks to a mere 2 percentage points for transactions below 10 USD. A possible explanation is trust – females seem to place higher confidence in women agents and transact with them more – especially when it matters, i.e. when amounts are large.
  3. Few female agents: While women have a clear preference for female agents, women agents are relatively scarce. Their share within the bank’s network varies between market areas (see Figure 2), but on average, only 25% of agents are women. The likely consequence: women have to travel further to transact with an agent of their gender – and travel is costly in terms of money and opportunity costs. Hence, the lack of female agents may represent a barrier for women’s usage of DFS.

The practical implications for FSPs

The gender-lensed insights from DRC can be put into service for advancing women’s financial inclusion. Results suggest that agent networks where women have the opportunity to transact with a female agent in proximity can facilitate usage of DFS. The straight-forward operational implication is that FSPs should strive for sufficient female representation among their agents. Recruiting more women for agent positions may require careful reconsideration of existing hiring requirements. Because women are less likely to meet conditions such as minimum capital requirements, having a bank account and a registered business, they are often not on equal footing with men when it comes to registering as an agent.

The data analytics insights also suggest that trust is a factor that impacts women’s usage of DFS. This finding squares with ethnographic research by the IFC-Mastercard Foundation Partnership, showing how trust affects usage, perceptions, and attitudes towards DFS. As a result, educating women about financial services and ensuring that their needs are met, represent promising avenues to foster women’s trust and usage of DFS.


IFC’s work in DRC provides a concrete example of how data analytics provides insight into gendered usage patterns, generating knowledge to support FSPs in making decisions that narrow the gender gap in DFS. Improving women’s usage should complement equally important strides to reduce barriers to DFS adoption. Gender-lensed data analytics highlights the central role of women agents and trust for service use. The project provides a use case for how FSPs can leverage data to advance responsible finance and financial inclusion. This will enable Africa to have more empowered women like Ms. Muyenga in the future.

[1] Ms. Muyenga’s story is part of an ethnographic study on DFS perceptions conducted by the IFC-Mastercard Foundation Partnership. The study is available here.

Note: More case-studies and guidance on how data analytics can be used to advance DFS adoption and use is available in the Data Analytics and Digital Financial Services Handbook (June, 2017 ( For detailed insights on gender and DFS, stay tuned to the forthcoming report from the IFC-Mastercard Foundation Partnership for Financial Inclusion: Women and digital financial services in Sub-Saharan Africa.



Ruth Goodwin-Groen
15 Oct 2018

By Ruth Goodwin-Groen, Managing Director, BTCA

As world leaders met at the U.N. General Assembly in New York, many discussions focused on how to ignite greater progress toward the Sustainable Development Goals (SDGs). Increasingly, digital financial inclusion is emerging as a key answer.

Today, two in three adults worldwide, more than ever before, have access to mobile money, formal accounts, electronic payments and fintech apps, making it easier to reach those who had previously been excluded from the formal economy. When deployed responsibly, digital financial services can be an important part of the solution for critical issues, including hunger, health, clean energy and climate change.

That’s why, around the world, many public, private and development sector players are shifting from cash to digital payments to achieve efficiency, transparency and financial inclusion – advancing many of the SDGs in the process. This includes governments from India to Kenya, global brands like H&M and Gap Inc., and international organizations like the U.N.

Here are a few of the growing number of governments and companies that are leading by example.

Building a better foundation

Kenya - Widespread use of digital financial services helped lift around 1 million people out of extreme poverty between 2008 and 2014.

In Kenya, the spread of mobile money lifted roughly 1 million people out of extreme poverty in just six years – the equivalent of 2 percent of the population. This impact was mostly driven by changes in financial behavior. Access to mobile money increased financial resilience and savings, and improved labor market outcomes. As a result, many women moved out of agriculture and moved into business – allowing for a more efficient allocation of labor, effectively reducing poverty.

In Indonesia, Raskin, a subsidized food assistance program, had become the country’s largest social transfer for poor families. However, nearly half of the procured rice was lost and never made it to the targeted households. It was impossible to identify where in the delivery chain the rice went missing. Last year, the government shifted to card-based vouchers for the country’s 1.4 million recipients of subsidized rice. Since then, 9 out of 10 beneficiaries receive better quality, quantity and regularity of food.

In India, reported requests for bribes from officials decreased by 47 percent when the government switched from cash to smart cards for pension payments in Andhra Pradesh between 2010 and 2012. The likely reason was that the beneficiaries no longer had to interact with intermediaries to access their funds.

And at the height of the Ebola crisis in Sierra Leone a few years back, payment-related strikes put the effort against the disease at risk. Cash payments to response workers were slow, inaccurate and open to graft and theft. When officials made the move to pay workers digitally, payment processing times were cut from over one month to around one week, which eliminated worker strikes. Digital payments also saved more than US $10 million by eliminating double-payment, reducing fraud, and saving on cash logistics and security. Ultimately, this helped save countless lives.

Improving opportunity for all

A field experiment in Nepal showed that when low-income, women-headed households were given access to digital savings accounts, they were able to save and dedicate 20 percent more of their funds to their children’s education.

Digital financial inclusion of women doesn’t only empower them at home, it also improves their economic condition outside of the household. Similar to the case of Kenya mentioned above, the likelihood of South African women participating in the labor market increased by 92 percent points when the government used digital cards for safety net transfers.

And in Mexico, small retailers increased sales revenue by up to 30 percent after working with Grupo Bimbo to adopt digital payments. Grupo Bimbo also provided these small merchants with trainings and added-value services such as managing expenses.

Preparing for the future today

Worldwide, there are 690 million registered mobile money accounts, enabling new business models for affordable and clean energy companies. Pay-as-you-go solar power companies have used digital finance to provide 10 million people with affordable, modern energy in the off-grid sector. The pay-as-you-go business model allows companies to avoid losses by ensuring high collection rates. In turn, the use of mobile money gives them the opportunity to avoid the costs of handling cash – such as transport, security, collection and reconciliation – and frees up agents’ time to focus on other activities.

Rwanda still card

In Rwanda, bus operators were able to meet growing demand after a switch from cash to digital payments for bus riders, which increased bus revenue by 140 percent in just one month. This happened mostly by reducing leakages. The increased revenue enabled operators to open more routes, and the digital payments provided data and insights on when and where these new routes were needed most.

Meanwhile in China, a digital finance platform is allowing users to monitor the environmental friendliness of their potential purchases, helping them adapt their purchase decisions. These nudges have prevented 150,000 tons of carbon emissions in just nine months.

A way forward

The digital revolution can help us reach the 2030 Sustainable Development Goals more quickly. But the key to unlocking digital financial inclusion’s many benefits rests with decision-makers in government, business and civil society. This means prioritizing financing for building digital infrastructure, working to digitize payments in every sector, and passing regulations to ensure that digital financial services can be used by everyone.

With less than 12 years to go before 2030, we can spark greater progress on the SDGs if we collectively embrace digital financial inclusion as a solution today.

Read the new compendium, “Igniting SDG progress through digital financial inclusion.”

This post was originally published on BTCA’s website


Shafique Jamal
10 Oct 2018

By Shafique Jamal, IFC-Mastercard Foundation Partnership for Financial Inclusion


In Ghana, Digital Financial Services (DFS) providers are increasing financial inclusion. The Partnership for Financial Inclusion is working with one bank, for example, to expanding its presence geographically, to better reach the unbanked and under-banked. To this end, carefully planning where to recruit and place agents in various parts of the country.  The bank is specifically targeting areas with low rates of financial inclusion. Having a vast network of effective agents will also allow their branches to focus on higher value activities, further strengthening their financial ecosystem. The Partnership is also working with a mobile network operator (MNO), undertaking initiatives to increase the adoption of mobile money among its customers and wants to have measures of the local likelihood of mobile money adoption for each cell tower.

In both cases, these IFC clients have found value in having an interactive map that plots the entities of interest (like concentrations of unbanked individuals) and data associated with those entities (like rates of cell phone ownership).  This information shows where to focus efforts to increase financial inclusion at specific geographic points. A picture is worth a thousand cells in a spreadsheet, and an interactive tool that visualizes location-tagged data in ways that are specific to a client’s needs is worth much more. The interactive mapping tool informs strategy and operations to support outreach campaigns.  These types of tools equally support responsible financial services, precisely by helping providers to better understand their markets and how to deliver more inclusive offerings. Data-driven DFS providers are implementing tools like these to understand their markets and scale access to new customer segments. More information about similar case studies can be found at the Data Analytics and Digital Financial Services Handbook.


The IFC team needed to support the client to visualize the locations of branches, potential banking agents, target customer areas, existing customers, and survey areas for planning surveys of retail outlets and target customers. Initially the team used Google Maps to create these maps, but limitations of Google Maps made using this solution difficult. The team therefore created this application to generate more customized maps with fewer limitations. Over the course of the engagement, the maps were refined in consultation with the client and added additional capabilities based on the availability of supplementary survey data. With the added data and capabilities, the client increasingly found the application more useful and requested that it be made available to them on their computers.


The Geomapping Application is a geovisualization dashboard that allows the bank to visualize the locations of various entities of interest – its branches, proposed agents, target customers, existing customers, survey areas, surveyed persons, as well as retail outlets, which include competitors and potential agents.

Figure 1: Derby avenue area in Accra, with outlets, branches, and agents show. Agent details are shown for one of the agents.

The mapping tool answered the following important questions to inform the roll-out:

  • Where are the existing branches and agents? Where are the competitors?
  • How many agents were within 3 km from a given branch?
  • What are the survey areas? (where are they, what are the boundaries?)
  • Which branches, agents, and outlets are in the survey areas?
  • What kinds of outlets are in areas where our target market is located (type of businesses)?
  • What is the density of the existing and target market in any given location in Ghana?
  • Where are the customers that were surveyed? Which were unbanked, under-banked, and banked?

Figure 2: Kumasi area in Ashanti, showing details (including a photo) for one of the surveyed outlets.

In the above plots, the customer’s category is reflected in the color of the small circle for the customer. The large blue icons represent agents, and the large orange icons represent branches. The dark blue pins represent surveyed outlets.

Having ready access to this information allowed the bank to better plan their agent recruitment efforts to have agents in the best locations for reaching the unbanked and under-banked. For example, the bank can be sure that during the initial roll-out it will not have too many agents near the same branch, so that the branch is not overwhelmed with having to support too many agents. Also, the bank can make sure it has agents in areas of high density of their existing and target market.


DFS providers are undertaking initiatives to reach the unbanked and under-banked with products to promote responsible financial services. These initiatives can be better informed by an interactive, well-designed picture of where relevant entities are located, along with important information about them. Customized mapping tools provide DFS providers with the information necessary to reach those who would benefit most from responsible finance products.

This post was authored by Shafique Jamal, IFC-Mastercard Foundation Partnership for Financial Inclusion, for the Responsible Finance Forum Blog September, 2018. Additional case-studies on how data analytics can be used to advance the adoption and use of DFS are presented in the Data Analytics and Digital Financial Services Handbook (June, 2017).


Richard Chamboko
31 Aug 2018

By Richard Chamboko, IFC-Mastercard Foundation Partnership for Financial Inclusion, for the Responsible Finance Forum Blog August 2018

 Increasingly, evidence is showing that the use for Digital Financial Services (DFS) especially among women is bearing massive benefits. A recent study conducted in Kenya demonstrated that access to mobile money services helped women-headed households to reduce extreme poverty and provided opportunities to change livelihoods from farming to other retails services (Suri and Jack, 2016). Despite the compelling evidence on the importance of financial inclusion for women, especially with digital financial services, the gender gap in financial inclusion remains unchanged since 2011, with 65 percent of women compared to 72 percent men having an account. Inclusion is a key aspect of responsible finance. It is therefore essential for any financial system to ensure that efforts are made to allow the participation of marginalized groups including women. Embracing and advancing the use of data and analytics is one way financial services providers (FSPs) can increase the inclusion of women and harness the benefits thereof.

The use of data and analytics can help to nuance and enhance the understanding of clients and markets, which in turn can help a provider to develop products and services that are aligned with customer needs. Gender lensed insights can help to reveal the needs and perspectives of women, and how these differ from those of men to inform the design of targeted products. The same can also be applied to get to the roots of what drives or hinder women from taking up and using DFS as well as understanding the nature and patterns of use (financial behavior) to better tailor services. In this post, we highlight some of the gender lensed insights that FSPs in the region need to be cognizant of when designing and providing DFS to onboard women.

What drives the up-take and use of DFS differ between men and women

Social economic status (education and income) remain low among women. In many instances women cite the lack of money as the primary reason why they do not engage financial services, which reflects the labor force participation of women in the region. Besides, the level of education or literacy and technological appropriation also impact the ability and level of comfort when engaging digital financial services. This emphasizes the fact that including women who in many instances are less educated than men would require simple, sms-based financial transactions and not app-based ones.

Access to phones and connectivity remain a challenge for women in SSA. As websites, mobile phones and apps are increasingly being used to access financial services in SSA, especially to make payments, it is unfortunate that women are still left behind on access to such technology. Specifically, there is a 13% gender gap in mobile phone ownership in Sub-Saharan Africa. Besides, when women own mobile phones, their terminals tend to be older and cheaper than those used by men and have limited access to internet than men. This holds an important lesson for FSPs seeking to include women – the services offered need to be tailored to the type of terminals and technology women are more likely to own and use.

Women in SSA are less aware of DFS than men and rely on social networks for information. Men and women in the region rely on different sources of information on the existence and functioning of financial products. Women tend to rely more on friends and family for information about mobile money and are less likely to get that from the radio or TV compared to men. Evidence from various countries point to the fact that men are more likely to be informed about mobile money and other financial services than women. FSPs therefore need to understand these information gaps, the mediums and consider utilizing the networks through referrals, testimonials or ratings to onboard more women.

 The extent, nature and patterns of DFS usage differ between men and women

Besides having low account ownership among women in SSA, when women sign up for mobile money services, they use these services less frequently than men. This could be partly because women also engage with informal financial services more than men. We also find that women are more likely to use mobile money to receive money than men and are less likely to use it to send money compared to men. This pattern reflects the limited participation of women in the labor force in the region and the seasonal migration to urban areas or mining towns for work by men leaving wives and children at the village. In terms of savings, evidence shows that women tend to deposit money and save with mobile money more than men. However, we also find that women are less likely to borrow from formal institutions than men. When they do so, due to a low asset base for collateral, women experience difficult loan conditions than men including shorter terms and high interest rates, yet they are less risker than men. This brings to the fore that the real competition for digital loans among women lies in informal lending products. We therefore stress that understanding women’s needs and use cases is pivotal to the design of products and services that are appealing to women.


Even through great strides have been made to advance the inclusion of women, especially with the advent of DFS in SSA, the gender gap remains. Addressing gender bias is fundamental to close the financial inclusion gender gap and doing so is not only a social good, but it is also good practice and responsible finance. One way for institutions to do so, is to rely on data. Gender data and gender lensed data analytics offer insights into how and who is using financial products and make the case for customized products for women.

Note: Detailed case-studies on how data analytics can be used to advance the adoption and use of DFS are presented in the Data Analytics and Digital Financial Services Handbook (June, 2017). For detailed insights on gender and DFS, stay tuned to the forthcoming report from the IFC-Mastercard Foundation Partnership for Financial Inclusion- [Women and digital financial services in Sub-Saharan Africa].




Oleksiy Anokhin, based on original case authored by Minakshi Ramji
30 Jul 2018

by Oleksiy Anokhin, based on original case authored by Minakshi Ramji

Smartphone users are overwhelmed with access to information through multiple channels – websites, social media, and messages. As a result, people can become inured to numerous everyday messages, which they may perceive as spam. How can a provider approach their customers using these digital channels without irritating them? The case of Juntos, a Silicon Valley technology company that partnered with DFS providers, demonstrates how to reach out to DFS customers through personalized messages in a way that helps to increase their activity and identify a potentially more active customer base.

Personalized outreach can be an important potential solution for DFS providers, who try to build their business as responsible finance actors. More direct and personal two-way communication can help develop mutual trust and respect, allowing customers to feel as if they’re being treated fairly. Moreover, two-way communication helps customers feel included and that their opinions are valued, which can help build trust in the product and provider. Finally, such digital outreach can be combined with other more traditional methods, such as ATL (Above The Line) and BTL (Below The Line) marketing campaigns and generic messages for more effective work with existing and potential customers.

Globally, many DFS providers experience high inactivity and low engagement. This discourages providers, whose investments may not be seeing sufficient financial return and whose customers may have access to services without sufficiently realizing the benefits of those. Juntos offers a solution to this problem by using personalized customer engagement messages based on data-driven segmentation strategies that deliver quantified results. Good data underpin this approach. First, Juntos conducts ethnographic research to better understand customers in the market. Engagements are always informed by quantitative data provided by the DFS partner, qualitative behavioral research done in-country and from learnings drawn from global experience. Having developed an initial understanding of the end user, Juntos conducts a series of randomized control trials (RCTs) prior to full product launch. These controlled experiments are designed to test content, message timing or delivery patterns, and to identify the most effective approach to customer engagement. To begin, messages are delivered to users, and users can reply to those messages. This develops the required trust relationship. More importantly, those responses are received by an automated Juntos ‘chatbot’ that analyzes the results according to three KPIs:

  • Engagement Rates: What percentage of users replied to the chatbot? How often did they reply?
  • Content of Replies: What did the responses say? What information did they share or request?
  • Transactional Behavior: Did transactional behavior change after receiving messages for one week? One month? Two months?

These experiments enable Juntos to understand which inactive clients became active because of Juntos message outreach, and to understand which messages enabled higher, more consistent activity. For example, a control message is sent to a randomly selected group of users, such as, “You can use your account to send money home!” Others might draw from service data to include the customer’s name: “Hi John, did you know that you can use your account to send money home?” Other data may be incorporated within the message: “You last used your account 20 days ago, where would you like to send money today?” These are merely examples, but they show how a generic message compares with a personalized message with a time sensitive prompt. Juntos’ baseline ethnographic data improve its qualitative understanding of customers, helping build the hypothesis around which messages are likely to resonate, then putting those messages to statistical test. The first question is whether the test messages yield statistically better results compared with the generic control message. When the answer is “yes,” it is important to dive one step deeper and ask about the respondent and surveying across segments such as rural or urban; male or female; income range; and usage patterns, merging this information with ethnographic data on consumer sentiment. By testing a wide variety of messages, Juntos is able to segment user groups according to messages that show statistical improvements in usage over time. This means that high engagement messages can be crafted for everyone from rural women, to young men, to high-income urbanites. The Juntos approach is tailored for each context and is continuously tuned to nimbly accommodate customers who change their interactions over time.

The success of Juntos’ case demonstrates that a data driven approach can be one of the options of working with customers for any DFS provider. Using various methods of data collection leads to more accurate and targeted customer outreach. Moreover, additional analysis of clients’ feedback and involvement helps to improve the initial approach and segmenting of customers more precisely in future. Finally, personalized engagement might help to build mutually beneficial and transparent relations, based on respect and trust between providers and their clients, positioning the former as responsible finance actors.

Adapted from a case study (prepared by Minakshi Ramji) presented in the Data Analytics and Digital Financial Services Handbook (June, 2017), this post was authored by Oleksiy Anokhin, IFC-Mastercard Foundation Partnership for Financial Inclusion, for the Responsible Finance Forum Blog July, 2018.


Oleksiy Anokhin
28 Jun 2018

by Oleksiy Anokhin, adapted from a case study by Dean Caire


Digital Financial Services provide an enormous opportunity to deliver formal financial services to underserved individuals.  Large obstacles remain toward meeting this goal, such as customers who lack identification cards; or, for example, on the national level, inadequate credit bureaus.   These types of barriers push users to seek financial services from the informal sector, which can carry higher risks and costs. Data analytics can help close these gaps, to build bridges between the industry needs and existing business solutions.  Services that help bring underserved segments into the formal sector, reducing these risks and costs, also promote the principles of responsible finance.

This blog post describes a data analytics solution, which allowed a team to overcome some formal barriers for potential customers, using modern data driven tools and techniques. Lenddo combined social media data of clients with information, received from survey data received from loan applicants.  The data were refined to drive models; and the outputs resulted in increased efficiency of processes as well as reduced fraud risks and costs for the lender. In addition, it ensured the growing transparency of customer protection together with proper sensitive data management.

Lenddo co-founders Jeffrey Stewart and Richard Eldridge initially conceived the idea while working in the business process outsourcing industry in the Philippines in 2010. They were surprised by the number of their employees regularly asking them for salary advances and wondered why these bright, young people with stable employment could not get loans from formal FIs. The particular challenge in the Philippines was that the country had neither credit bureaus nor national identification numbers. If people did not use bank accounts or services – and less than 10 percent did – they were ‘invisible’ to formal FIs and unable to get credit. In developing their idea, Lenddo’s founders were early to recognize that their employees were active users of technology and present on social networks. These platforms generate large amounts of data, the statistical analysis of which they expected might help predict an individual’s credit worthiness. Lenddo loan applicants give permission to access data stored on their mobile phones. The applicant’s raw data are accessed, extracted and scored, but then destroyed (rather than stored) by Lenddo. For a typical applicant, their phone holds thousands of data points that speak to personal behavior:

  • Three Degrees of Social Connections
  • Activity (photos and videos posted)
  • Group Memberships
  • Interests and Communications (messages, emails and tweets).

More than 50 elements across all social media profiles provide 12,000 data points per average user:

Across All Five Social Networks:7,900+ Total Message Communications:

·       250+ first-degree connections

·       800+ second-degree connections

·       2,700+ third-degree connections

·       372 photos, 18 videos, 27 interests, 88 links, 18 tweets

·       250+ first-degree connections

·       5,200+ Facebook messages, 1,100+ Facebook likes

·       400+ Facebook status updates, 600+ Facebook comments

·       250+ emails

Data Usage

Confirming a borrower’s identity is an important component of extending credit to applicants with no past credit history. Lenddo’s tablet format app asks loan applicants to complete a short digital form asking their name, DOB, primary contact number, primary email address, school and employer. Applicants are then asked to onboard Lenddo by signing in and granting permissions to Facebook. Lenddo’s models use this information to verify customer identity in under than 15 seconds. Identity verification can significantly reduce fraud risk, which is much higher for digital loan products, where there is no personal contact during the underwriting process. An example from Lenddo’s work with the largest MNO in the Philippines is presented below.

Lenddo worked with a large MNO to increase the share of postpaid plans it could offer its 40 million prepaid subscribers (90 percent of total subscribers). Postpaid plan eligibility depended on successful identity verification, and Telco’s existing verification process required customers to visit stores and present their identification document (ID) cards, which were then scanned and sent to a central office for verification. The average time to complete the verification process was 11 days. Lenddo’s SNA platform was used to provide real-time identity verification in seconds based on name, DOB and employer. This improved the customer experience, reduced potential fraud and errors caused by human intervention, and reduced total cost of the verification process. In addition to its identify verification models, Lenddo uses a range of machine learning techniques to map social networks and cluster applicants in terms of behavior (usage) patterns. The end result is a LenddoScore™ that can be used immediately by FIs to pre-screen applicants or to feed into and complement a FI’s own credit scorecards.


This case study demonstrates that formal barriers of financial inclusion for potential customers can be overcome sometimes with the help of modern data driven solutions. Analyzing activity of future clients indirectly through contemporary approaches and tools in certain environments with less traditional formats of access to financial services create opportunities for all interested parties. Such solutions help lenders mitigate their risks, decrease costs, and improve own efficiency, following the best practices in customer protection regulation and its transparency, responsible pricing and respectful treatment of own clients; in turn, borrowers, receive access to financial resources which were not previously available to them due to strict formal rules of a traditional financial sector.

Adapted from a case study (prepared by Dean Caire, IFC)  and additional content presented in the Data Analytics and Digital Financial Services Handbook (June, 2017), this post was authored by Oleksiy Anokhin, IFC-Mastercard Foundation Partnership for Financial Inclusion, for the Responsible Finance Forum Blog June, 2018.