21 Jul 2016
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.
30 Jun 2016
The CPMI-World Bank Group Task Force on the Payment Aspects of Financial Inclusion (PAFI) started its work in April 2014. The Task Force was mandated to examine demand and supply side factors affecting financial inclusion in the context of payment systems and services, and to suggest measures that could be taken to address these issues.
This report is premised on two key points: (i) efficient, accessible and safe retail payment systems and services are critical for greater financial inclusion; and (ii) a transaction account is an essential financial service in its own right and can also serve as a gateway to other financial services. For the purposes of this report, transaction accounts are defined as accounts (including e-money/prepaid accounts) held with banks or other authorised and/or regulated payment service providers (PSPs), which can be used to make and receive payments and to store value.
The report is structured into five chapters. The first chapter provides an introduction and general overview, including a description of the PAFI Task Force and its mandate, a brief discussion of transaction accounts, and the barriers to the access and usage of such accounts. The second chapter gives an overview of the retail payments landscape from a financial inclusion perspective. The third chapter forms the core analytical portion of the report and outlines a framework for enabling access and usage of payment services by the financially excluded. Each component of this framework is discussed in detail in the report.
22 May 2016
Personal finance trends across emerging Asia have seen a visible shift towards digital banking over the past five years. The region’s favourable demographics, high mobile adoption rate and deepening internet penetration have opened opportunities for banks to leverage on technology for bridging a widening financial inclusion gap. Convenience banking has assumed priority, with banks offering a gamut of financial services through web portals and mobile apps while redesigning their backend technology architecture. However, still at an incipient stage, EM Asia’s digital banking transformation process has led to a new set of challenges for policymakers in terms of redefining the regulatory framework; and traditional banks are striving to convert customers to the digital platform in the wake of stiff competition from new age ecommerce companies. Against this backdrop, this watch examines the current state of digital banking transformation across emerging Asian economies, the challenges it presents for various stakeholders to overcome and its future prospects, especially in light of the region’s efforts to deepen financial inclusion.
29 Apr 2016
India’s financial inclusion agenda has witnessed a paradigm shift over the last decade, away from an emphasis on credit to a more comprehensive approach toward financial services (e.g., opening bank accounts and offering basic financial products, such as insurance). This paper describes the structure of banking and microfinance institutions in India relevant to the developing model of financial inclusion, as well as relevant regulatory structure and modes of delivery. It explains the current state of financial inclusion, as well as regulatory changes necessary to make the new architecture for inclusion viable, including a critique of some of the recommendations of the Mor Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households. The paper then reviews modes of delivery and the regulatory structure being contemplated or recently introduced. It assesses the suitability objective envisaged as critical for inclusion, associated challenge of revamping consumer protection laws, and imperative of improving financial literacy. The paper also discusses the case of micro, small, and medium-sized enterprises in the given context
22 Apr 2016
The objective of this study is to address these issues by providing clarity on the impact of DFAs by examining the business case, implementation process and effects for three MFBs around the world. Additionally, we provide lessons learned from the DFAs reviewed which could serve as guiding principles for other financial institutions.
Another major goal of this study was to develop and analyze the business case associated with deploying a DFA. To achieve this, we reviewed implementation costs and assessed the benefits that accrued to each institution. We then created a business case which is explained in detail, and is also available as a standalone tool.
The study of these three early DFA adopters revealed that although the primary motivation for implementing DFAs was to improve effciencies and processes surrounding loan processing, the institutions also experienced a variety of benefits that went beyond their core objective. While all three MFBs recognized that DFAs can be used to support activities such as savings mobilization, social impact measurement, and insurance coverage, their initial usage focused on credit offerings. Therefore, this study reveals findings associated with the impact of DFAs on loan application processing. The study breaks down this impact across the dimensions of client and institutional benefits, and uses these as a foundation to outline the business case.
11 Apr 2016
Because digital social payments (DSPs) recipients are a fast-growing, yet often overlooked, digital financial services (DFS) segment, acknowledging and addressing the most common and consequential consumer risks they face should be a priority for any program or provider seeking to unlock the potential benefits of DSPs for the poor.
Low-income recipients of cash transfers—whether government to person (G2P) or donor to person (D2P), and whether conditional or unconditional—increasingly receive their payments digitally. This digitization trend is expected to continue. The value of electronic transfers that are delivered into store-of-value accounts and accessible via debit cards or mobile money wallets, referred to here as “digital social payments,” is estimated to more than triple between 2010 and 2017 to over US$194 billion (Riecke 2014).
03 Apr 2016
This paper is the first attempt in the microfinance sector to address the area of environmental – or green – performance monitoring in a comprehensive way. It begins with an overview of the qualitative green performance indicators available to microfinance institutions (MFIs) that wish to assess their green management performance, track progress over time, and identify current and future trends. The tools that are presented here include MIX’s green performance indicators, the Green Index, the Green Performance Agenda, and the forthcoming Progress out of Energy Poverty Index.
The paper then sheds light on the fact that, while the sector abounds with a diverse set of qualitative tools for green performance monitoring, it falls short when it comes to quantitative measures. The second part elaborates on a survey designed by MIX and a subgroup of the European Microfinance Platform (eMFP) Microfinance & Environment Action Group that explores quantitative green microfinance indicators in the areas of environmental strategy, internal and external risk management, and green opportunities with the aim of assessing their ease of use and relevance for decision making. The findings from a sample of 87 MFIs that participated in the survey reveal that data on green loans is the easiest indicator to track, followed by the environmental footprint of an MFI’s operations. Tracking awareness-raising and training activities for clients and the community comes in third place, while monitoring the environmental risk of loans pre- or post-disbursement was identified as the most challenging area to track.
The paper concludes that (1) a comprehensive interpretation of quantitative figures often goes hand-inhand with qualitative information, (2) an important gap persists between the usefulness of an indicator and an MFI’s capacity to track it, and (3) institutions do not always have sufficient incentives to track indicators even when they have the capacity to do so. It also offers strategic recommendations for facilitating the integration of green quantitative microfinance indicators into reporting standards
02 Apr 2016
Digital credit—offering quick small loans remotely over digital channels—is a rising trend in low-income countries, especially in sub-Saharan Africa. The most visible example is the rapid success of the small value credit and savings service M-Shwari in Kenya launched in late 2012 (Cook and McKay 2015), but an increasing number of new deployments is going to market each year.
This Brief provides an introduction to the fast-evolving landscape of digital credit and illustrates common features of this new digital finance offering. The focus is on digital credit services that leverage customers’ existing access to a mobile phone, though there are also digital credit models building on a person’s connection to the internet. This Brief uses 10 case examples to describe the digital credit trend, recognizing that there are many more pilots and products under design than are covered. Many of the case examples are new and have not reached scale yet, while a few already have portfolios reaching 800,000 to 1.8 million active borrowers.
22 Mar 2016
This study has been commissioned by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), on request of the National Insurance Commission (NIC) which is the regulatory and supervisory authority of the insurance sector in Ghana. The support is part of a component of the German and Ghana Governments’ ‘Programme for Sustainable Economic Development (PSED)’ which is dedicated to promoting the development of insurance in Ghana (PromIGH) Ghana. The objective of the study was to carry out a detailed risk assessment of the mobile insurance landscape in Ghana and develop a risk assessment framework, to be used for improving the regulatory guidelines for m-insurance products in Ghana.
Mobile insurance (m-insurance) is an innovative line of insurance products, whereby the mobile networks are used to deliver one or multiple components of insurance for the mass market. In Ghana, m-insurance plays an important role in the microinsurance sector. Approximately 60% of lives (as of 2014) are insured by microinsurance products delivered via mobile insurance. Mobile insurance models could be either strategic (Mobile Network Operator (MNO) ofers insurance under its own branding) or transactional (MNOs provide the platform only for a purely transactional role).
The present study is focused on the analysis and risk assessment of the strategic model for the following reasons:
a. Products via the strategic m-insurance model are economically more significant for the microinsurance sector in Ghana (over 5m GHS in premiums in 20141) than the transactional model.
b. In a strategic model the regulatory factors are more complex, due to the active role played by multiple stakeholders in product development, delivery and maintenance: MNOs, Technical Service Providers (TSPs), and financial institutions. Hence, close collaboration among regulators (insurance, mobile network and banking regulators) is required in order to ensure adequate consumer protection, client value and financial sustainability for the products.
c. In a transactional model, the MNO plays a more passive role in simply providing a platform for diferent insurance processes, such as premium collection and claim payment. Hence, the regulatory environment and regulations developed by the insurance regulator may be sufcient for this model.