Many banks around the world have been successful by focusing their services around micro, small and medium enterprise (MSME) banking. However, there is a tendency for such banks to focus on the higher end of the MSME market, avoiding the risks and administrative costs that come with serving smaller businesses. Şekerbank in Turkey is an interesting case because it has targeted the lower end of the spectrum in its MSME banking line of business. Şekerbank classifies such businesses as craftsmen and “micro” businesses — referring to a business size in between the craftsmen and small business. The bank has been successful in reaching these sectors by tailoring its policies and credit procedures to these markets, as well as by developing products that address the needs of these very small enterprises.
Şekerbank provides an exciting example of a full service commercial bank that has chosen to specialize in serving smaller businesses in Turkey, specifically micro enterprises and craftsmen. These are collectively referred to as very small enterprises, or VSEs, in this publication. This case study is not an assessment of the full operations of Şekerbank. Rather, it is intended to identify the key choices that Şekerbank has made to serve these clients and keep the focus of the bank’s operations on them— instead of defaulting to the easier option of serving larger clients.
Innovations for Poverty Action (IPA) works to identify and rigorously evaluate innovative products and programs that enhance poor households’ access to and usage of improved financial services.
Across developing and advanced economies alike, low-income households need effective and affordable tools to save and borrow money, make and receive payments, and manage risk. In recent years, access to financial services has increased thanks to the expansion of digital finance and the efforts of service providers and governments to reach the unbanked. As access grows, however, we must ensure that the tools available to the poor are effective in helping them manage and grow their money.
IPA partners with service providers, governments, and researchers to design and test financial services and programs that help households better manage their finances. With over 125 completed and ongoing randomized evaluations in 29 countries, IPA’s Financial Inclusion Program seeks to identify effective solutions to promote healthy financial behavior and share results to inform the work of financial service providers and governments around the world.
Financial capability, as defined by the World Bank and in this report, is the capacity to act in one’s best financial interest, given socioeconomic and environmental conditions. It encompasses knowledge (literacy), attitudes, skills and behavior of consumers with respect to understanding, selecting, and using financial services, and the ability to access financial services that fit their needs (World Bank 2013d).
Financial capability has become a policy priority for policy makers seeking to promote beneficial financial inclusion and to ensure financial stability and functioning financial markets. Today people are required to take increasing responsibility for managing a variety of risks over the life cycle. People who make sound financial decisions and who effectively interact with financial service providers are more likely to achieve their financial goals, hedge again financial and economic risks, improve their household’s welfare, and support economic growth. Boosting financial capability has therefore emerged as a policy objective that complements governments’ financial inclusion and consumer protection agendas. To this end, policy makers are increasingly using surveys as diagnostic tools to identify financial capability areas that need improvement and vulnerable segments of the population which could be targeted with specific interventions.
In response to a request of the Bangko Sentral ng Pilipinas (BSP) and as part of a broader engagement on enhancing financial consumer protection and education in the Philippines, the World Bank has implemented a financial capability survey. Financial inclusion, financial literacy and consumer protection are important priorities for the BSP and the Philippines government. Consumer protection and education are critical elements in building an inclusive financial system and BSP seeks to identify sustainable methods of delivering financial education through effective partnerships. As the BSP’s financial inclusion initiatives are expected to usher in more Filipinos, including the previously marginalized sectors, to access a wide range of financial services from a variety of financial institutions, they need to acquire knowledge and develop skills to enable them to make better financial decisions. The proposed survey constitutes a key diagnostic tool that aims to guide BSP on the models for delivering financial education and to set quantifiable and concrete targets. Moreover, it serves as a baseline against which the effectiveness of future financial capability enhancing programs can be assessed. So far, no financial capability surveys have been conducted in the Philippines and it is one of the very first such experiences in the East Asia and Pacific Region (EAPF).
The key findings and recommendations presented in this report cover three main areas:
1. Financial Inclusion,
2. Financial Capability, and
3. Financial Consumer Protection.
The remaining chapters are structured as follows. Chapter 1 explores the 2 financial inclusion landscape in the Philippines. Chapter 2 gives an overview of Filipinos’ levels of financial capability, in particular about their financial knowledge, attitudes and behaviors. The last chapter investigates if the products which financially included individuals use are effectively meeting their needs.
A macro and micro view of MFI’s compliance to the Code of Conduct
Associations of Microfinance Institutions such as Sa-Dhan and the Microfinance Institutions Network developed a Code of Conduct (CoC) for Microfinance Institutions. They were supported in this effort by the Small Industries Development Bank of India and other institutions, after the Fair Practice Code that had been mandated by the Reserve Bank of India came into existence in 2013. The objective was to create acceptable standards and prescribe expected levels of responsible finance and lending by MFIs.
SIDBI took the responsibility for ensuring that MFIs implemented the Code of Conduct and Fair Practice Code seriously. Ever since SIDBI provided support for the Code of Conduct Assessment (COCA) studies, more than 50 MFIs, big and small, have been assessed and provided with inputs on their current state of play in terms of their compliance with the Code of Conduct and the Fair Practice Code. They have also been given guidance on the way forward. SIDBI commissioned MicroSave to consolidate reports of COCA studies of 50 MFIs done by five rating and evaluation companies. The objectives were to generate learning through insights that were gleaned from the sector, to streamline the future format of COCA reports and to reveal the overall lessons that could be learned from these individual assessments.
This report presents the consolidated findings of the Code of Conduct Assessment reports for 50 MFIs in India. The MFIs represent diverse legal structures and a range of business sizes and scales of operation. The MFIs are also representative of varying geographical presence, as they all varied in their outreach in different states across the country.
The reports have been analysed using a framework built on five key pillars that are critical to the implementation of the Code of Conduct. The five pillars are Integrating Social Value into Operations; Credit Processes and Policies; Human Capital; Transparency and Fairness; and Regulatory Compliance.
Can the world achieve full financial inclusion by 2020? It is an audacious question, but one well worth considering, especially in light of a recent wave of commitments by public and private actors.
Through the Financial Inclusion 2020 project, the Center for Financial Inclusion at Accion (CFI) has been examining this question for several years. In this report, CFI takes a quantitative look at recent progress around the world and makes forward projections to 2020. The headline is that every region, income level, and “slice” of the global population is moving toward greater financial access. According to the World Bank’s Global Findex data, the number of financially excluded people globally dropped from 2.5 billion to 2 billion in the three years from 2011 to 2014. At this rate, by 2020 there will only be about 1 billion excluded adults. With an added push, the World Bank’s goal of universal access to some type of financial account by 2020 seems within reach.
This report steps beyond the headline to ask several probing questions. Who will the excluded be in 2020? Where will they live, and what population groups will they belong to? Will financial access be meaningful for the newly included? Will they use their accounts actively? Will customers deepen savings and borrowing and improve their financial resilience? The report also examines the steps that public and private actors are taking to build a financial inclusion ecosystem. It reveals a level of vibrancy that makes us optimistic about continued or even accelerating momentum.
This event, which has been organized by DIN aims to ensure that financial literacy is prioritized within the regulatory frameworks for the financial markets in Nigeria and that financial institutions on their own part equally promote financial literacy as part of their good governance as it relates to their clients.
Although, there is no single, uniform definition of financial literacy, it is commonly accepted that it describes the ability to make informed decisions that can help to bring about improvements in financial well-being and security. It has been variously described as a ‘fundamental tool’ and ‘a measure of whether people understand the forces that significantly affect the quality of their lives.’ It is also evident from the range of programmes and initiatives that have been introduced in several countries that financial literacy is increasingly being regarded as a matter of the highest political relevance.
Digital finance is now widely recognized as one of the most powerful tools to reach financial inclusion targets at low cost, to create opportunities for people in remote communities, to provide them with the financial tools and services to grow their businesses, and to enable them to channel more household resources into education, health, and other key household expenses and investments.
As the market for digital finance expands, it is important to consider the consequences, risks and benefits of transitioning to such products in a manner that reaps benefits for the customers, especially the poor. While there is a great opportunity to leverage digital technology, there are a number of challenges to be considered. Such challenges include increasing fraud, process and distribution risks in managing innovative and branchless products, liability for mistaken and unauthorized payments, the formation of electronic contracts and disclosures, low financial and technology awareness amongst customers and inadequate training of agents. These challenges, if not met, may become barriers to financial inclusion per se as they lead to a lack of trust in the use of digital financial services, resulting in low product uptake and rising costs for businesses and customers. The Fifth Responsible Finance Forum held in Perth, Australia on 28-29 August aimed at filling the dialogue and evidence gap on consumer risks to digital finance. This event was particularly exciting since it is the first time that the various stakeholders—government, private sector, and consumer capability community (see Annex 2 for forum participants list)—came together to discuss what it means to ensure that digital financial services are delivered responsibly. This is particularly crucial as digital finance lives at the intersection of so many different industries and regulatory authorities. It is not enough to ensure that one set of players has practices in place to ensure that DFS is done responsibly. Because there are so many different players in the digital finance ecosystem, it is essential that there is a common understanding of what responsible digital finance looks like when implemented—and with all players. The forum was structured to facilitate an open and collaborative dialogue among many different players in the digital finance ecosystem.
The objectives of the Fifth Responsible Finance Forum on Responsible Digital Finance were to:
- Identify consumer risks that arise when financial services are delivered digitally;
- Explore the approaches to manage these risks;
- Examine the role that regulatory, industry and financial capability interventions/measures can play in minimizing the risks to consumers while maintaining the business case;
- Identify collective action and specific next steps to advance responsible digital finance;
- Launch the RFF Community of Practice Virtual Platform.
With support from the Bill and Melinda Gates Foundation, The MasterCard Foundation, and the Netherlands Ministry of Foreign Affairs, the RFF V was organized and further supported by the Better Than Cash Alliance, Consultative Group to Assist the Poor (CGAP), the German Federal Ministry for Economic Cooperation and Development (BMZ/GIZ), the International Finance Corporation (IFC), the United Nations Capital Development Fund (UNCDF) and the World Bank.
This report highlights the nature and content of an engaging and open two-day discussion on the current state and collective vision for responsible digital finance globally (see Annex 1 for forum agenda).
It has been five years since the report, Women and Mobile: A Global Opportunity, highlighted the disparity in mobile phone ownership between men and women in low- and middle-income countries and drew increased attention to the issue of women’s access to mobile phones. Since then, access to mobile phones has increased substantially, including for women. Mobile phone penetration rates are accelerating rapidly in the developing world, and new, more affordable handsets are increasingly available. A substantial body of knowledge about access and usage of mobile phones has also improved understanding of how women interact with this life-enhancing mobile technology. Despite the progress that has been made over the last five years, there are still challenges to be overcome in ensuring women are included in an increasingly connected and internet-enabled world.
Mobile phones are important tools for enhancing the lives of women in low- and middle-income countries. Mobile phones help women feel safer and more connected, save time and money, and access lifeenhancing services such as mobile money, or potential education and employment opportunities.
This report aims to build on the findings of the original study and the work of others in the last five years, highlight the progress that has been made, and identify new challenges and opportunities. The report examines how many women in low- and middleincome countries own mobile phones, how intensively they use them, and the barriers to mobile phone adoption and use compared to men.