fin techs accelerator for financial inclusion
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FinTech can address many of the constraints to FI –
informational, cost, risk.
Are policymakers and regulators adjusting their toolkit
and approach fast enough?
So far, the use of technology has primarily been for
improved/lower cost access to digital payments e.g.
through mobile money services, cards.
This is a critical first step –
how do we accelerate move to full FI?
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Credit Registries, Bureaus
Secured Transactions Frameworks,
Credit Guarantee Schemes
Credit lines linked to Advisory Services,
Guarantee Schemes,
SME Exchanges, SME Funds
Financial Education
Extend branch networks
(State banks, rural branch requirements,
credit unions, specialized MFIs…)
Psychometrics, “big data” analytics,
digital footprints
Payments and credit through supply
chain (data availability due to electronic
transactions)
Crowdfunding, P2P lending,
Supply Chain relationships
Tailored information/messages, Personal
financial management, Automated advice
Digital ID and Payments open up low
cost access through PoS, ATMs, agents
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Financial inclusion means universal access to a wide range of financial
services provided in a safe, efficient, and appropriate manner.
Source: A Digital Pathway to Financial Inclusion, Gates Foundation.
Payments, remittances, mobile wallets. Savings, insurance, credit, etc.
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• New mobile financial services are moving beyond payments and transactions to include
insurance (e.g. Tigo Family Care in Ghana), credit (e.g. Safaricom’s M-Shwari in Kenya),
and savings (e.g. Equity Bank’s M-Kesho in Kenya).
• Some of these services have been enabled by innovations providing alternative credit
scoring methods (e.g. psychometrics, big data analysis, digital footprints), facilitating
remote account opening and handling (e.g. mobile-based KYC), and others.
The Oi-Paggo pilot in Brazil:
Cignifi partnered with Oi Telecom in Brazil on to pilot its credit scoring platform, built using
data from 2.7 million Oi prepaid users.
The scoring proved to be a significant indicator of loan default risk and client response to a credit offer.
$
Anonymized
information Scoring, phone
Offer
Acceptance Fee
Fee
Partner bank Client
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• Additionality and Leverage are critical: conventional responses need to
be rethought/revised, carefully targeted and designed. For example:
Provide critical mass/viability to accelerate roll out and uptake of new
channels and providers (India push)
Provide a safe and enabling regulatory environment for P2P lending/
crowdfunding (UK also providing subsidies to match SME finance)
Underwrite electronic platforms to match up SMEs with finance, and ensure
policy framework in place for online transactions, contract enforcement
Adapt data privacy laws, and oversight, to cover non-traditional data brokers
which ‘mine’ available social or transactions data
Leverage potential for low cost Fin Ed through automated financial advice
• NB ‘New’ risks need addressed through Policy and Legal Frameworks
Regulatory framework, supervisory capacity, industry standards, consumer
representation