Collaboration, Business Models and Managing Change

Changing business and market requirements were already pushing financial service providers to pursue digital transformation or digitization, the process of using digital technologies to create or modify products, business processes, and customer experiences. The COVID-19 pandemic has accelerated this process. Interventions to contain the virus’s spread have focused on restricting mobility and non-essential employment, and…

Kenya’s first official case of COVID-19 was diagnosed in early March 2020. Government authorities immediately put in place a number of measures aimed to “flatten the curve,” including closing schools, restricting passenger numbers in vehicles, instituting a 7pm curfew, restricting travel in and out of Mombasa and Nairobi, and encouraging the public to frequently wash…

More than a year into the pandemic, much is still unknown concerning its impact on global poverty. Though high-frequency phone surveys have helped gain a broad understanding of the economic consequences of the pandemic, the collection of detailed, household surveys needed to understand its impact on poverty has largely been put on hold. In this blog published…

The COVID-19 pandemic has brought home the extent to which technology is reshaping our economies and industries. One such industry is the gig economy, a labour economy of sorts where speed and convenience are the norm, characterized by temporary or short-term work opportunities that are sometimes completed within minutes. This report by the UNCDF offers…

There has been tremendous progress when it comes to improving access to financial services, with 515 million more adults globally reporting account ownership at a financial institution or a mobile money provider in 2017 than in 2014, for a total of 69% of the world population. However, to improve the overall financial well-being of customers,…

In July 2020, nearly 300 participants from 30 countries joined CGAP workshops to discuss how the COVID-19 crisis is affecting MFPs and their funders, microfinance investment vehicles (MIVs), in terms of renegotiating and restructuring debt claims on distressed MFPs. This Briefing touches on the key insights and recommendations that emerged from the workshops. The views…

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…

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.…

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,…

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…

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…

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…

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…

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…

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…

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…

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.

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…

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.…

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…

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 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…

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.

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…

This article discusses joint ventures and how they can fail without cross-process discipline in planning and implementation.

“Balancing Cooperation and Competition in Retail Payment Systems: Lessons from Latin America Case Studies” presents the findings of four case studies in Latin America (Argentina, Brazil, Colombia and Mexico) that have explored the issue of cooperation and competition in different retail payments markets, such as the automated clearinghouse (ACH) and cards markets. The study includes…