does technological innovation equal financial inclusion? what … · 2016. 3. 29. · use of agents...
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Does technological innovation equal
financial inclusion? What would be the
role of financial education? May 2011
Denise Dias, CGAP
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What limits financial access?
Long distances & low pop density High bank costs relative to income
Low education & illiteracy Poor product/ channel design
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Ban
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Technology overcomes some constraints
Branchless banking is the delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail
agents.
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Does innovation equal inclusion? A
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New ways of doing business
Branchless banking: client-provider relationships
are:
• Remote – distance between point of service and
provider’s headquarters or branch
• Indirect – use of third parties (nonbank agents)
• Technology-based – mobile phones, prepaid
cards, POS devices, biometrics, internet…
How does education impact
adoption and success of new models?
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Inclusion can happen without education
Advantages of accessing formal services
through branchless banking
• Use previously unreachable services
• Less risky than existing informal alternatives
• More suitable services
• Improved price transparency and information
• Efficiency and effectiveness in G2P
programs
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But…
Some things can go wrong when using
technology
• Client not able to transact
• Personal information stolen or wrongfully accessed
• Unexpected fees from third parties involved
• Fees and prices not informed through electronic
channel
• Lack of cash at cash-out point
• Client required to buy another product to conduct
the financial transaction
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And also…
Models are successful in attracting clients but
much remains to be done in client retention
and increased product usage
Technology can help improving education,
awareness and reduce risks
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Cases: Brazil, Philippines and Kenya
Use of agents and mobile phones to access
financial services
- Clients satisfied with branchless banking
services
- Level of trust in the service and agents is high
- Range of services still limited, but evolving
- No evidence of widespread serious problems
- Creativity in usage: 21% clients say M-Pesa is
their “most important” way to save (2010)
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What’s the role of education?
- Increase adoption and usage of new models and
products through enhanced capability and better
understanding by clients, but also of clients
- Reduce problems with technology or the
consequences of problems with empowerment
and awareness of potential risks and redress
rights and channels
- Push for improvements in product offerings
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Education becomes more important as models
go beyond payments
Year Country Provider Initial offering Next wave
1999 Brazil bill payment savings and
credit
2004 Philippines money transfer savings and
credit
2007 Kenya domestic
remittances
savings and
credit
2009 Pakistan bill payment savings and
credit
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Education: a bridge to access through technology
Education helps
access through
technology
Technology helps
delivery and
improvement of
education
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Advancing financial access for the world’s poor
www.cgap.org
www.microfinancegateway.org