Digital Frontiers

Collaboration, Business Models and Managing Change

ARTICLES

Case Study of a Banking MVNO

Providing mobile banking services allows banks to significantly enhance the convenience, flexibility, accessibility, and affordability of their banking services. Money has been moving to the digital ecosystem for the last 25 years, with the arrival of internet banking, banking applications, and even digital money. Banks need to create a digital and mobile extension to their existing service…

A New Banking Model For Africa: Lessons on digitization from four years of operations

From 2014 to 2018, IFC and the Mastercard Foundation conducted a longitudinal study with nine partner financial institutions (FIs) in seven Sub-Saharan African countries to understand if Digital Financial Services are a viable strategy for these institutions to expand financial access. More precisely, the study explains the strategic objectives of the institutions and describes how they planned and implemented their DFS rollouts.…

Data in FSP Decision Making. Findings From Six African Countries.

Insight2Impact partnered with FSD Africa and Oxford Policy Management, and they conducted an online survey which identified ways Financial Service Providers (FSPs) collect, store and use data. 333 companies from six countries (Ghana, Kenya, Mozambique, Rwanda, Tanzania, and Uganda) replied to the survey. The data was analysed into different types of FSPs (such as banks, MFI,…

Small Businesses and Digital Financial Services

Micro, Small, and Medium-Sized Enterprises are the backbone of vibrant and dynamic economies. But they are sometimes hard for financial institutions to identify because of the methods they use to conduct their transactions. This report from IFC discusses predictive data models to help a mobile network operator, identify MSMEs in its market and better understand…

Changing Change Management: Adapting Internal and External Culture in Times of Digital Transformation

Successful implementation of digital channels is not just about the technology – these new approaches also require a good change management plan. The softer or interpersonal aspects of digitising can be forgotten and they can strongly contribute to the success or failure. This guidance produced by IFC has been developed following the four-year observation of nine financial…

How to Succeed in Your Digital Journey: A Series of Toolkits for Financial Service Providers – Toolkit #6: Become a Digital Provider

This toolkit from UNCDFP describes different paths for a financial service provider (FSP) to become a provider of mobile banking services that clients can access from their mobile phones. In this model, the ultimate objective is to digitize all operations, from collection of client data and credit applications to disbursement and repayment of loans and collection…

Open banking How to flourish in an uncertain future

Research shows that the threat to the traditional banking business model is real. But while the threats to incumbent banks are greater than ever, so are the opportunities. In an extreme scenario, some banks could be relegated to the background as infrastructure providers while other entities – FinTechs, tech giants and price-comparison websites (PCWs), for…

How Financial Institutions and Fintechs Are Partnering for Inclusion: Lessons from the Frontlines

This report examines how partnerships between mainstream financial institutions (e.g., banks, insurers, and payment companies) and fintechs are addressing financial inclusion challenges and expanding access to the formal financial economy for underserved segments of the global population, particularly in emerging markets. It incorporates insights from 24 in-depth interviews with people at the frontlines of this…

Digital Finance Interoperability & Financial Inclusion A 20-Country Scan

A 20-country scan that assesses the state of interoperability in select markets. The study is focused on payments from and to small-value transactional accounts that are accessible to mass-market consumers. For comparability, the scan defined interoperability as the ability for a digital financial service account to make specific kinds of transactions across two or more…

Innovation in Financial Services: The Elastic Innovation Index Report

By assessing innovation inputs (or capabilities), as opposed to innovation outputs (new products or new services), the Elastic Innovation Index  measures capability and readiness to change rather than measuring what has been achieved in the business execution process. The Index goes beyond the typical focus on the start-up ecosystem as a potential engine of disruptive…

Getting to grips with counterparty risk

Counterparty risk stalks the financial system. In this article from McKinsey, the authors outline a four-step approach to help banks and other financial institutions manage and mitigate this pervasive risk.

Convergence of banking and telecoms

Telecom operators and retail banks have been converging for years. As remaining barriers vanish and extrinsic factors push further convergence, banks will see increasing competition from telecom operators, which will aggressively enter into financial services, especially in transactional lines of business. This Viewpoint explores the opportunities for competition or co-opetition between these industries that are…

Are Banks and Microfinance Institutions Natural Partners in Financial Inclusion?

In India, the business case of the BC model is yet unclear. The main limiting factor is very low customer activity rates. Low usage is compounded by the prevalence of unduly low pricing models on the basic savings proposition, which is based on a perception that customers have low willingness to pay for savings services.…

Banking the Poor Through Everyday Stores

This paper by Ignacio Mas reviews the opportunities and strategic choices facing banks considering branchless banking options. Technology, and in particular the spread of real-time mobile communications networks, permits financial service providers to delegate ‘last mile’ cash management and customer servicing functions to third-party retail outlets. By making basic deposit, withdrawal, and payment functions available…

Modelo Perú: A Unique Approach to Financial Inclusion

Peru is well regarded internationally for having a well-developed formal financial sector. However, more than 70% of Peruvians are excluded financially. This is for a variety of reasons, including high transaction costs, financial illiteracy, and lack of accessibility in remote areas. Through Modelo Perú – a unique collaboration between the country’s financial institutions, government, telecommunications…

Low-balance bank accounts, part 2: Must banks collaborate to succeed?

Low-balance transactional accounts on their own probably lose money for most large banks. There may, nonetheless, be a business case to issue them. Forms of collaboration among issuers may help to reduce losses, even though collaboration may not be necessary to achieve success. This paper reaches these conclusions based on reviewing evidence of South Africa’s…

Alternative Delivery Channels and Technology

This handbook, produced in collaboration with Software Group, aims to help financial institutions successfully implement alternative delivery channel projects in order to further financial inclusion. It provides a set-by-step, practical guide to building alternative delivery channels that links technology choices with the overall business process.

Money Creation in the Modern Economy

This article explains how the majority of money in the modern economy is created by commercial banks making loans. Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create…