Digital Frontiers

Microfinance, Credit, Savings and Insurance

ARTICLES

Mobile Money Saving Accounts: Helping the Bottom of the Pyramid to Save in Zimbabwe

 This paper on Academia discusses a serious problem confronting Zimbabwe, the savings gap, which essentially means that Zimbabwe as an economy cannot fund economic growth from domestic saving. There is a directly relationship between savings and income. Since savings largely depend on income, the low levels of income in the country translate into low levels of…

The Hidden Pitfalls of Digitalisation

This chapter of BIO’s digital survey looks at risks digital innovation could pose for financial inclusion.

Who are the Innovators, MFIs or Commercial Banks?

This chapter of BIO’s digital survey looks at digital products and services in relation to MFIs and commercial banks.

An Imperitive Need for a New Social Order in Microfinance Community – Towards Ushering in a Resilient Ecosystem in the Battle Against Corona Pandemic

The paper presented by Research Gate tries to understand the challenges that the Microfinance industry is facing during the pandemic, on the supply side, and the dynamics of social relations of the poor in the said bio war on the demand side, and suggest a new social order towards ushering in a resilient ecosystem in…

Digital Initiatives by Shakti Foundation for Disadvantaged Women: A Lesson for Progressive MFIs in Bangladesh

MicroSave Consulting has issued two case studies concerning Shakti Foundation’s digital initiatives for women. The first case study charts the journey of women clients of Shakti Foundation for Disadvantaged Women toward the adoption of voluntary savings products that ride on digital channels. While the second case study charts how Shakti Foundation for Disadvantaged Women utilized…

General Information on Client Protection Law and Regulation

This list is the result of desk research on law and regulation regarding client protection in microfinance.

Digital Savings Groups

The SEEP Network defines digital savings groups (DSGs) as “technologies and systems that digitize savings group records, procedures or transactions.” What is most exciting about the growing range of DSG solutions is their potential for scale – creating new incentives for market actors, reducing the cost of training, and dramatically increasing the potential for outreach.…

Microinsurance Case Brief: Mozambique

Mozambique faces high levels of financial exclusion, particularly among the two thirds of the population living in rural areas. Access to insurance is low and awareness and knowledge is low. NBC Mozambique was founded in 2014 and is currently the only licensed microinsurer in Mozambique. This Case Brief showcases their approaches to securing partnerships to…

VSLA and CARE Adaptations to COVID-19 and Past Crises

This brief from Care International includes examples of mitigating measures being put in place by VSLA members and CARE to lessen the impact of the pandemic on VSLA groups and their members. The brief also shares experiences of how VSLAs have adapted and delivered support through past epidemics and crises.

Savings at the Frontier – Getting closer

Savings at the Frontier (SatF) was set up in 2015 to promote formal financial service provision to savings groups and savings collectors (informal savings mechanisms (ISMs). It has partnered with nine financial service providers (FSPs) in Ghana, Tanzania and Zambia to explore viable business models for reaching “the financial access frontier.” This focus note describes…

Insur;Hack Report

The Insur;Hack (focusing specifically on insurtech) was a collaborative effort designed to provide competing teams with sector-specific training and mentorship, as well as the chance to win financial and physical resources that enable them to ideate, prototype and build digital products that can help to disrupt the insurance industry. The event sought to pioneer innovation in…

7 Strategies for Designing Successful Micro Pensions

This e-book on micro pensions will introduce seven strategies for designing successful micro pensions and its aim is for readers to have a better understanding of how micro pensions can benefit their organization and country.

Social Performance Management in Microfinance: Practices, Results and Challenges in Sub-Saharan Africa

Microfinance has an intrinsic social mission: it is generally described as a system which makes it possible to provide financial services to those who are vulnerable and have very few resources, and it has been developed to fill a need and to position itself as an alternative solution to the traditional banking and financial services,…

A Tale of Two Sisters: Microfinance Institutions and PAYGo Solar

The microfinance institutions of the future will not know every client personally. They will acquire and service customers through a variety of partnerships, products, and channels, as some providers are already demonstrating. This publication from CGAP traces the journey of two global microfinance groups, Baobab and FINCA, that have worked with their “sister” pay-as-you-go (PAYGo) solar subsidiaries…

Strengthening Resilience Through Savings Groups

In July and August 2019, members of the United Nations Capital Development Fund visited more than 30 different savings groups in the North-Western region of Kigoma, Tanzania, in order to conduct a socio-economic health assessment and explore what are the best practices that are used by different groups in refugee camps and host communities. These…

Gateway Guide to Digital Transformation of Microfinance Institutions

This Gateway Guide was written to help microfinance institutions (MFIs) on their pathway to digital transformation. It sums up the latest research and practical lessons, along with useful links and resources.  

Making Digital Credit Truly Responsible: Insights from analysis of digital credit in Kenya

Seven years since the launch of the first digital credit offering in Kenya, this analysis from the Smart Campaign and microsave gives observations, insights and an understanding of digital credit and users in Kenya.

Deposit Insurance Treatment of E-Money: An Analysis of Policy Choices

The expansion of digital financial accounts among poor customers has raised the question of whether e-money should be covered by deposit insurance and if so, how. This Technical Note examines the options while arguing that deposit insurance should not be the first line of defense, for two primary reasons. In many emerging markets where authorities have limited resources,…

World Insurance Report 2019

As new risks are impacting the insurance landscape, the World Insurance Report 2019 from Capgemini and Efma explores the opportunity for insurers to develop new, technologically-advanced products to provide comprehensive risk coverage and better manage shifting customer expectations.

Pay, Set and Match! Payment services for SMEs

Banking Circle is committed to continually investigating where the current banking offering is failing businesses and providing real solutions that FinTechs and PSPs can offer to real businesses. As such, the banking infrastructure provider regularly carries out detailed research, which it shares with the industry to encourage conversation and collaboration to find solutions. The latest…

State of practice: Savings groups and the role of government in sub-Saharan Africa

In recent years, governments across sub-Saharan Africa have deepened their engagement with savings groups, recognising the potential of the community-based microfinance model to contribute to national development agendas. This report, based on an extensive desk review and interviews with 46 government representatives from 22 countries, identifies and describes 74 government initiatives related to policies, regulation…

Insurtech Tracker

In light of the insurtech trends, Cenfri wanted to understand to what extent insurtechs in emerging markets are able to better serve the customer and provide more value to both the insurer and the end-user The initial work considered insurtech in microinsurance, types of insurtechs which are prevalent in emerging markets and the challenges they were…

Improving Distribution of Digital Financial Services in Rural Areas

UNCDF Senegal is supporting the fintech InTouch in an agent network expansion project to address the low penetration of digital financial services in rural areas of Senegal. The project which is one of UNCDF intervention strategies in Senegal, intends to promote prototypes that demonstrate the existing opportunities for digital finance in the country. Through an…

Responsible Digital Credit

This report from Centre for Financial Inclusion outlines the digital credit landscape and the risks customers face, and examines the best practices, standards and initiatives that exist or should be implemented to improve consumer protection in digital lending. Ultimately it will take a village to ensure that digital credit clients are protected—including governments, regulators, industry players,…

Making digital credit truly responsible- Insights from analysis of digital credit in Kenya

Digital credit is instant, automated, and remote, providing borrowers with quick access to short-term loans. The relative ease with which providers can reach the mass market has profound implications for the future of financial services. The potential for financial inclusion is unprecedented. However, it is up to all financial sector stakeholders to ensure that digital…

Credit Scoring in Financial Inclusion

Statistical models can help lenders in emerging markets standardize and improve their lending decisions. These models define customer scoring based on a statistical analysis of past borrowers’ characteristics instead of relying on the subjective judgments of loan officers. Evidence shows that statistical models improve the accuracy of credit decisions and make lending more cost-efficient. They…

How we can save (for) our future

The challenges to provide ageing populations with a financially secure retirement are well known. Recent trends in retirement system design and changing workforce dynamics mean individuals are taking more responsibility and risk to achieve adequate incomes in retirement. At the same time, many individuals do not have easy access to retirement savings vehicles. Society must ensure retirement systems are…

Making digital credit truly responsible

This video from Microsave gives a brief highlight of what we have learned so far about digital credit in Kenya over the last 7 years.

How digitized supply chain finance can help small merchants grow

This guide has been developed by Accion for institutions interested in developing a supply chain finance solution (CSF). SCF is the use of financing mechanisms that can optimize the management of liquidity tied up in supply chain processes. SCF solutions have long been offered by big banks to large corporations, such as fast moving consumer…

We Need to Talk About Credit

In the past five years, we have seen a lot of change in how credit markets are developing, not least because of the rapid growth in digital credit associated with mobile financial services. But how much do we actually know about digital credit? And how does it relate to other types of credit in the…

Microfinance Institutions: Prospects for B2B FinTechs?

This well researched blog post by Mondato summaries the evolution and future for microfinance and the challenges faced as their reach extends further to those at the base of the economic pyramid. The blog touches on the study by IFC and Mastercard Foundation which identified a priority framework for digitalisation of MFIs and discusses the challenges and…

The role of insurance for development

DFID, World Bank, FSDA and Cenfri partnered to conduct research to explore how and if insurance can contribute to sustainable development and inclusive growth. The research was conducted in Ghana, Nigeria, Kenya and Rwanda, and explored three perspectives: Building household resilience Supporting business resilience and enterprise development Capital market development

Insuring for a changing climate – A review and reflection on CARE’s experience with microinsurance

The impact of climate change is already having devastating effects on lives and livelihoods. Planning and programming to strengthen climate resilience is now commonplace in development interventions. As part of a set of disaster risk financing tools, insurance schemes are being championed as a way to finance the mitigation of negative effects that extreme weather…

The supply chain finance opportunity

Supply chain finance (SCF) offers high-quality, low-risk financing to the small merchants that tend to be underserved by traditional lenders. These microentrepreneurs often lack the credit data traditional lenders need and are seen as too costly to serve at scale. SCF leverages data generated by businesses when they buy from suppliers and sell to customers,…

Promoting Responsible Finance and Sustainability in Azerbaijan: Lessons for Emerging Microfinance Associations

This learning brief looks at lessons learnt from the microfinance sector in Azerbaijan, sharing approaches and ideas to build sustainability and credibility, and highlighting key players within the landscape. Recommendations made in the brief are relevant for emerging microfinance associations.

A Digital Credit Revolution Insights from Borrowers in Kenya and Tanzania

Digital credit has expanded rapidly in both Kenya and Tanzania, yet there is limited evidence on who is using it, how it is used, and the risks customers face. Two large-scale surveys conducted in Kenya and Tanzania help to fill in this evidence gap and the findings and recommendations are summarised in this report from…

Ex Post Impact Evaluation Framework

This paper outlines how the Financial Conduct Authority use ex post impact evaluation to assess the impact of their past interventions on consumers, firms and markets.

State of Practice: Savings Groups and the Role of Government in Sub-Saharan Africa

Savings Groups are community-based financial service providers that deliver basic financial services to millions of members in underserved markets worldwide. Traditionally, the promotion of Savings Groups has been led by national and international NGOs and a large extension network of community-based trainers. In recent years, governments across Sub-Saharan Africa have incorporated Savings Groups into public…

State of Practice: Savings Groups and the Dynamics of Inclusion – Main Findings

This state of practice report provides a comprehensive overview of the inclusion of vulnerable populations in Savings Groups. Over the past 25 years, development organizations have mobilized more than 700,000 Savings Groups in marginalized communities across 75 countries worldwide. Recent evidence, however, shows mixed results as to the effectiveness of SG programs in targeting and…

Digital Credit Market Monitoring in Tanzania

This presentation by CGAP summarises the findings of research studying the digital credit market in Tanzania. The market is growing rapidly, but there is little information about the uses and risks. The research looks at the size of market, loans and repayments, and customer behaviour, and gives six recommendations for ensuring ethical and inclusive practices.  

An Empirical Risk Assessment of Savings Groups

The purpose of this risk assessment is to identify and assess the main risks that affect Savings Groups – based on the frequency and severity of negative outcomes – and ultimately inform the development of targeted consumer protection initiatives for Savings Groups. The study – based on a survey of 1,600 groups, individual members, trainers…

Spotlight on mobile-enabled insurance services

This report by the GSMA provides an overview of the mobile-enabled micro-insurance industry, to support broader industry stakeholders to increase the utility and sustainability of mobile financial services. This publication is part of a series of deeper insights into selected topics based on the findings of the 2017 State of the Industry Report on Mobile…

Do agent networks help to boost savings?

Savings benefit both the providers of Digital Financial Services (DFS) and their customers. Customers who use DFS accounts to save money can improve their financial resilience, build a buffer against income shocks, and be in a better position to invest and engage in long-term financial planning. Financial Service Providers (FSP) that have more savers in…

Digital Transformation of Microfinance and Digitization of Microfinance Services to Deepen Financial Inclusion in Africa

Through a review of the literature and interview of key individuals in the space, this study looks at how technology can enhance microfinance services in Africa, and gives recommendations for policy and regulations that will help optimise this digital transformation to enhance financial inclusion. Download the report here.

A Personal Touch in text messaging can improve microloan repayment

Because payment delays and defaults significantly affect both lenders and borrowers in fragile economies, strategies to improve timely loan repayment are needed to help make credit markets work smoothly. Karlan, Morten and Zinman worked with two microlenders to test the impact of randomly assigned text message reminders for loan repayments in the Philippines. Messages improved…

Politics of aging: the risk of old age poverty in emerging countries

This paper looked at the risk of old age poverty. It found that there is a growing awareness in societies, amongst governments as well as amongst households of the risk of old age poverty and the need for savings and pension products and policies. However, at the same time we identified also some serious reluctance to change…

Building the Business Case for Housing Microfinance

Financial service providers are discovering that vast business opportunities exist within the lower-income housing markets of the developing world. Housing is a basic human need, and for the majority of households, their home (including land) constitutes their greatest financial asset. Market studies of the “base of the pyramid,” or BOP — defined as the approximately 4 billion people with incomes under US$3,000…

Demystifying Digital Lending

Digital lending can be a powerful force for financial inclusion. Innovations in digital lending are enabling financial service providers (FSPs) to offer better products to more underserved clients in faster, more cost-efficient, and engaging ways. This Accion Insights paper addresses common concerns, shares insights into new trends shaping digital lending, and distills emerging best practices…

Turning MFI Digital Strategies into Reality

Digital financial services can offer microfinance institutions (MFIs) the benefit of scaling up and extending services and allowing them to be delivered cost effectively and efficiently. However, digital strategies may not be the strength of MFIs and they may not have the knowledge or capabilities needed for successful implementation. The IFC and Mastercard Foundation conducted…

History of Insurance

A total of USD 4613 billion was spent globally on insurance in 2012. Modern life can hardly be imagined without this form of risk protection. And yet, comparatively little is known about the history of the industry, although it has played a major part in shaping today’s society and culture. Industrialisation, welfare, innovation, economic development,…

Index Insurance for Developing Country Agriculture: A Reassessment

With uninsured risk representing a major hurdle to investment, productivity growth, and poverty reduction in developing country smallholder agriculture, index-based agricultural insurance has offered the promise of overcoming the hurdles of traditional indemnity-based insurance for this context. In spite of extensive experimentation, take-up has been disappointingly low without large and sustained subsidies. This paper shows…

Tiny Loans Big Questions: Client Protection in Mobile Consumer Credit

Very small instant consumer loans have ballooned from 11 deployments in 2011, to 52 in 2016, with a particular concentration in East Africa. In just a few years, through models such as M-Shwari, M-Pawa, Tala and Airtel Money, tens of millions of people have borrowed tiny amounts over their phones. These services represent an enormous…

A Framework for Small Balance Deposit Mobilization

This framework for small balance deposit mobilization includes a research paper, Pulling Levers Toward Sustainability – A Framework for Small Balance Deposit Mobilization (above), and a four-part series of case studies which demonstrate the use of the Decision Framework for Small Balance Deposit Mobilization (SBDM), including case studies from Fidelity Bank and Sinapi Aba in Ghana, UGAFODE in Uganda, and NBS Bank…

Money, Decisions, and Control. Building Digital Financial Services That Help Poor Customers Cope and Strategize

Beyond payments, finance is also about day-to-day money management, decision-making, and coping strategies that end in individual payments and transactions. We are beginning to see new digital tools, such as Flexipay and MChanga, that help low-income customers leverage social networks to bridge temporary gaps in cash flows. Other services, such as Paygo Solar, leverage digital…

What are savings groups?

Many savings groups’ initiatives are born locally, in a decentralized manner, and stem from long-standing cultural practices. Savings clubs, mutual aid groups, rotating savings and credit associations, and cumulative savings and credit associations are examples of methodologies and practices commonly found in various Latin American and Caribbean countries. This note outlines the characteristics of savings…

The March Towards Digital Money:Bringing The Underbanked In FromThe Cold

The 2017 Index represents more of a shuffling than shifting of countries in their comparative readiness to embrace digital money. Overall,there has not been significant movement across categories. Rather, it’s been a story of small movement within the higher clusters and significant fluctuation within the lower ones. Consistent with last year’s findings, the research suggests…

The State of Linkage Report: The first global mapping of savings group linkage

The State of Linkage Report provides, for the first time, a global mapping of linkage activity – the process through which informal savings groups are able to access products and services from formal financial service providers (FSPs). The report identifies where linkage is taking place, the organisations that are currently offering group savings and credit…

Is There a Business Case for Small Savers?

This study by CGAP examines quantitatively whether or not small savers—defined here as the half of all savings clients of a microfinance institution (MFI) with the smallest deposit account balances—contribute to or undermine the sustainability of the MFI. MFI sustainability has long been accorded a place of central importance in microfinance for reasons that are…

Seven Keys to Success for Mobile Microinsurance

This GSMA blog post summarises the key lessons from digital insurance around the world. While mobile insurance products hold the promise of scale, lower distribution costs, adjacent benefits for insurers and mobile operators, and act as first-level enablers of financial inclusion, thus far many initiatives have struggled to realise their full potential. They face challenges such…

Can the digitalisation of microinsurance make all the difference? Assessing the growth potential of digital microinsurance

BFA co-authored this paper which examines the use of technology in microinsurance and insurance sold through and with mobile operators. The study, commissioned by the Bill & Melinda Gates Foundation, provides an overview of recent developments in the sector and assesses whether digital microinsurance can provide the growth injection the microinsurance market needs to manage…

Enhancing Customer Engagement and Experience of Microinsurance in Africa

This presentation from CGAP explores using human centered design techniques to figure out how to deliver relevant insurance products to the mass market, leveraging mobile phones.    

Marketing Channel Strategy in Rural Emerging Markets

In his landmark book “The Fortune at the Bottom of the Pyramid,” C.K. Prahalad describes the profits that can be earned by selling products to “Bottom of the Pyramid” customers. While there is truth to this, companies face unique challenges when operating in the rural regions of emerging markets where many of these customers live.…

Informed Consent: How Do We Make It Work for Mobile Credit Scoring

First Access is a data analytics company that works with lenders to use mobile data to predict credit risk for base-of-the pyramid (BoP) financial consumers. The mission of First Access is to help these lending institutions reduce their lending costs by predicting credit risk for clients in the informal sector, billions of whom are still shut…

Saving for Change: Financial inclusion and resilience for the world’s poorest people

Three-quarters of the world’s poorest people do not have a formal bank account. With few viable means to save, these individuals and their families are vulnerable to life-threatening hardships. Community-based savings groups are designed to provide a mechanism for resilience. Jointly, Oxfam America and Freedom from Hunger commissioned the largest study to date to evaluate…

Health and Microfinance: Leveraging the Strengths of Two Sectors to Alleviate Poverty

Freedom from Hunger and five microfinance institutions (MFIs) from Benin, Bolivia, Burkina Faso, India, and the Philippines tested whether MFIs could sustainably offer health-related services with positive health and social impacts for client. The health services ranged from education, health-financing (loans, savings and microinsurance), to linkages to health providers and health products. Impact research included…

Two steps back: How low income Kenyans think about and experience risk in their pursuit of prosperity

The climb out of poverty is seldom a smooth one. Life rarely bestows good fortune evenly and persistently over a lifetime. Given their limited capacities to cope, low income people can experience major setbacks when hit by what are seemingly even small shocks and can experience serious losses of wealth and welfare when the big…

Savings for the Poor: Banking on Mobile Phones

The paper by Ignacio Mas reviews the relevance of formal financial services – and in particular savings – to poor people, the economic factors that have hindered the mass-scale delivery of such services in developing countries, and the technology-based opportunities that exist today to make massive gains in financial inclusion. It also highlights the benefits…

The Early Experience with Branchless Banking

Branchless banking has great potential to extend the distribution of financial services to poor people who are not reached by traditional bank branch networks; it lowers the cost of delivery, including costs both to banks of building and maintaining a delivery channel and to customers of accessing services (e.g., travel or queuing times). Ignacio Mas…

Evidence on Child and Youth Savings

In three recent studies by IPA, researchers measured the impacts of offering savings accounts and delivering financial education to children and youth in Ghana and Uganda. These studies tested the effectiveness of different combinations of savings account designs and financial education or information campaigns. This note describes the design of the three programs that were…

Effect of Income Timing and Structure on Consumption and Savings Behavior in Malawi

The researchers evaluated whether paying workers on a weekly basis or in one lump sum affected their spending on temptation goods, and how the timing of wage payments changed the impact of both payment structures. This paper from IPA summaries the findings. Monthly vs. weekly payment: Those in the monthly group spent on average MK…

Scaling Digital Financial Services: Go-To-Market Lessons from Two Microfinance Institutions in Uganda

Mobile financial services have been widely recognized as a driver of financial inclusion for the rural poor. However, despite large sums of money being poured into mobile money, branchless banking, and mobile banking offerings around the world, enrollment numbers and usage rates remain low. Few services end up actually reaching those who need them the…

The Emerging Global Landscape of Mobile Microinsurance

Since 2012, there has been a rapid increase in the number of mobile microinsurance (MMI) products. The use of relatively low-cost mobile channels in microinsurance offers the potential to reach poorer and more remote clients, which in turn could reshape the microinsurance footprint and contribute to financial inclusion. In addition, many mobile network operators (MNOs)…

Market Research for MicroFinance Participant’s Manual

A participant’s manual to product development and market research. Manual includes detailed sessions, handouts, and activities.

The Evolution of Real-Time Gross Settlement: Access, Liquidity and Credit, and Pricing

This paper identifies and analyzes some policy issues arising from central bank experience and practice in supporting RTGS systems, both as settlement authorities and as service-providing RTGS system operators. By identifying practical policy issues, we hope to motivate operationally concrete responses by individual central banks to system-specific problems, and by consortia of central banks to…

Microfinance: Access Africa – Closing the Gap

This review focuses on the potential for the savings-led microfinance (MF) movement in sub-Saharan Africa to close an important gap in MF so that all poor people can access the financial products and services (including most fundamentally savings, credit, insurance, and remittances) that they need to improve their lives and livelihoods. The three sections of…