Many financial service providers struggle with high levels of account dormancy and customer dropouts, limited service usage, and loss of their best clients to other providers.
... See More + Negative customer experiences that erode customer trust are at the root of many of these challenges. Many of these negative experiences are the result of poorly designed products that do not respond to clients’ needs, are difficult for customers to activate and use, do not deliver on promised features, or are costly relative to their benefits.
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Policy makers worldwide are increasingly appreciating the expanding role that digital financial services play in reaching financially excluded and underserved customers.
... See More + Though models vary widely, all have at their heart a low-cost digital financial product such as e-money issued by a mobile network operator (MNO) or financial institution that permits customers to make payments, to transfer money, and to store value in small amounts. This value-storage functionality enables the offering of additional services such as digital credit and off-grid electricity on a pay as one go basis - services better tailored to the unpredictable cash flow of poor households and microenterprises.
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This brief provides an introduction to the fast-evolving landscape of digital credit and illustrates common features of this new digital finance offering.
... See More + The focus is on digital credit services that leverage customers’ existing access to a mobile phone, though there are also digital credit models building on a person’s connection to the internet. This brief uses 10 case examples to describe the digital credit trend, recognizing that there are many more pilots and products under design than are covered. Many of the case examples are new and have not reached scale yet, while a few already have portfolios reaching 800,000 to 1.8 million active borrowers.
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This brief provides an introduction to the fast-evolving landscape of digital credit and illustrates common features of this new digital finance offering.
... See More + The focus is on digital credit services that leverage customers’ existing access to a mobile phone, though there are also digital credit models building on a person’s connection to the internet. This brief uses 10 case examples to describe the digital credit trend, recognizing that there are many more pilots and products under design than are covered. Many of the case examples are new and have not reached scale yet, while a few already have portfolios reaching 800,000 to 1.8 million active borrowers.
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The evidence on demand for sharia-compliant financial services is mixed. On the one hand, IFC-funded studies showed relatively high demand, while results from Findex showed that financial exclusion due to religious reasons was minimal (Demirguc-Kunt, Klapper, and Randall 2013).
... See More + One of the reasons behind these contradictory messages could be the survey instruments themselves: perhaps the issue is not so much what people want but how they were asked. For example, if you ask participants why they do not use borrowing or savings products, their responses may include ‘they are too expensive’ or ‘they are too far away’ even if the real reason is something more nuanced, such as intra-household bargaining issues. Similarly, if you ask Muslims if they prefer an interest-bearing loan or a noninterest-bearing loan, it might not be surprising that they would choose the noninterest-bearing loan, perhaps because they want to demonstrate piety, or maybe because they assume it means a no-cost loan.
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Digital Social Payments (DSPs) offer a variety of potential benefits over traditional cash, voucher, or in-kind methods. Proponents most often cite increased efficiency, reduced leakage, and faster, more convenient and more secure payments to recipients.
... See More + When linked to bank accounts or mobile wallets that offer store-of-value opportunities or access to additional financial services, DSPs to the bottom of the pyramid could pave a way to fuller financial inclusion. However, evidence shows that the financial inclusion benefits of DSPs have thus far been limited: most recipients withdraw 100 percent of their payment at once and by and large do not use the account again until the next transfer takes place, let alone take advantage of additional financial services that may be available to them. This lackluster use has led some to question the promise of DSPs as a financial inclusion gateway.
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The expansion of digital finance systems in the developing world has altered this financial context and enabled new business models that rely on small, regular payments.
... See More + In the off-grid energy sector a group of solar companies, primarily in East Africa and South Asia, are leveraging digital finance to offer pay-as-you-go (PAYG) energy. This brief explains how digital finance is enabling PAYG energy expansion, which in turn provides a gateway to a range of financial products for the financially excluded.
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Brief 106034 MAR 01, 2016
Waldron,Daniel Peter; Faz De Los Santos,Pedro XavierDisclosed
This brief provides an introduction to the fast-evolving landscape of digital credit and illustrates common features of this new digital finance offering.
... See More + The focus is on digital credit services that leverage customers’ existing access to a mobile phone, though there are also digital credit models building on a person’s connection to the internet. This brief uses 10 case examples to describe the digital credit trend, recognizing that there are many more pilots and products under design than are covered. Many of the case examples are new and have not reached scale yet, while a few already have portfolios reaching 800,000 to 1.8 million active borrowers.
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The 2015 cross-border funder survey reports commitments from the largest international funders of financial inclusion, as of 31 December 2014. Consultative group to assist the poor (CGAP) has conducted the survey annually since 2008 and in partnership with MIX since 2012.
... See More + Funding for financial inclusion was stable in 2014, although the weaker euro caused a slight decrease in dollar terms. To a greater degree than in previous surveys, funders this year emphasized that due to other global priorities it was difficult to promote financial inclusion internally. Nevertheless, their commitments generally followed the same patterns as in years past, with the majority of funding directed at retail-level financial service providers (FSPs) through debt, which accounts for half of all commitments. There was an increasing interest in digital financial services and a rapid and sustained growth in funding to the Middle East and North Africa (MENA). Going forward, funders report that they will increase their funding to sub-Saharan Africa (SSA) and continue to focus on supporting FSPs, as well as payment systems and consumer protection programs.
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Brief 103209 DEC 01, 2015
Soursourian,Matthew Jacob Klein; Dashi, Edlira; Dokle, EdaDisclosed
This actual case highlights the importance of an efficient customer recourse system. Recourse systems can help consumers overcome the challenges related to product adoption and continued use by helping resolve initial problems or challenges quickly, which can build trust in providers and their products, and increase uptake and customer retention.
... See More + Effective recourse, and the key principles of awareness, access, timeliness, and fairness associated with effective recourse systems, becomes all the more relevant in the case of digital financial services (DFS), which still face trust deficits among some consumers.
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The term shadow banking came into widespread usage with the onset of the global financial crisis to refer to a broad array of entities and activities operating outside the regular banking system that were being used to perform bank-like functions.
... See More + With progress on financial inclusion - and ongoing innovation, sometimes reaching vast scale quickly - it is worth remembering that the very concept of shadow banking emanated from fast-changing market practices and a corresponding failure of financial regulation and supervision to keep pace. This brief explains why approaches to inclusive finance that are currently widespread do not share the potentially destabilizing attributes of other types of shadow banking, concluding by identifying some risks worth monitoring as the picture continues to evolve.
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The term shadow banking came into widespread usage with the onset of the global financial crisis to refer to a broad array of entities and activities operating outside the regular banking system that were being used to perform bank-like functions.
... See More + With progress on financial inclusion - and ongoing innovation, sometimes reaching vast scale quickly - it is worth remembering that the very concept of shadow banking emanated from fast-changing market practices and a corresponding failure of financial regulation and supervision to keep pace. This brief explains why approaches to inclusive finance that are currently widespread do not share the potentially destabilizing attributes of other types of shadow banking, concluding by identifying some risks worth monitoring as the picture continues to evolve.
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The use of digital channels is changing the way financial services can be delivered to poor people. Growing mobile phone usage and the development of agent networks enable customer access too timely, low-cost digital financial services (DFS) (World Bank 2014).
... See More + Despite this, active use of DFS is relatively low. In this brief, the author address the inactivity problem faced by many financial service providers (FSPs) and some of the underlying causes related to customers’ experiences. The author explores how empowering customers can help address this issue and the role FSPs can play. This exploratory Brief reflects our hypothesis that customer empowerment, here defined as a process that builds customer trust and confidence through an interactive relationship between providers and their customers, can lead to a win-win for both providers and customers.
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Although international funders have been longstanding supporters of financial inclusion, their commitments have been put to the test in the past five years.
... See More + The financial crisis led to a more challenging economic environment and budget cuts at public donor agencies. Results of impact studies made the expectations of microfinance more realistic. Yet, international funding continues to grow. In 2013, international funders committed at least 31 billion dollars to support financial inclusion - an estimated increase of 7 percent on average per year between 2011 and 2013. This brief analyzes trends in the international funding landscape based on consultative group to assist the poor (CGAP) research.
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Brief 96286 MAR 01, 2015
Lahaye,Estelle Marie; Dashi, Edlira; Dolke, Eda; Soursourian,Matthew Jacob KleinDisclosed
Mobile network operators (MNOs) such as Safaricom in Kenya; Vodacom, Tigo, and Airtel in Tanzania; and Econet in Zimbabwe are collectively underscoring the importance and potential of MNO-led business models to advance financial inclusion.
... See More + In each of these markets, and in a number of others, where MNOs are able to effectively compete in the provision of mobile financial services (MFS), there are more registered mobile wallets than bank accounts. And in each of these markets mobile payment platforms are being leveraged to offer other financial services such as savings and credit at scale.
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India has ambitious goals to deliver electronic welfare payments, banking services, and digital local government services to each of its 638,000 villages.
... See More + The road is fraught with challenges as about 60 percent of the country's 1.2 billion live in rural areas and many lack connectivity and infrastructure. Moreover, at the policy level, digitizing India's annual 72 billion dollars subsidy machine is a massive task organized across ministries, departments, and 29 state governments. Since 2006, a few state governments have been experimenting with electronic cash transfers via bank accounts, delivered through bank agents. By 2013, the federal government had selected some of the largest cash transfers to shift to an electronic system, and the process is gaining momentum this year with a renewed effort by the newly elected national government.
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Digital financial inclusion can be a game changer for unserved and under-served low-income households as well as micro- and small enterprises. The regulatory, supervisory, and standard setting challenges - and likewise the solutions include those one currently face, and others one can only imagine as billions of new digital finance users go online.
... See More + One has the opportunity and indeed the responsibility to prepare for both the risks and the rewards of the digitization of financial services.
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Mobile network operators (MNOs) such as Safaricom in Kenya; Vodacom, Tigo, and Airtel in Tanzania; and Econet in Zimbabwe are collectively underscoring the importance and potential of MNO-led business models to advance financial inclusion.
... See More + In each of these markets, and in a number of others, where MNOs are able to effectively compete in the provision of mobile financial services (MFS), there are more registered mobile wallets than bank accounts. And in each of these markets mobile payment platforms are being leveraged to offer other financial services such as savings and credit at scale.
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Mobile network operators (MNOs) such as Safaricom in Kenya; Vodacom, Tigo, and Airtel in Tanzania; and Econet in Zimbabwe are collectively underscoring the importance and potential of MNO-led business models to advance financial inclusion.
... See More + In each of these markets, and in a number of others, where MNOs are able to effectively compete in the provision of mobile financial services (MFS), there are more registered mobile wallets than bank accounts. And in each of these markets mobile payment platforms are being leveraged to offer other financial services such as savings and credit at scale.
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Different agent networks offer payments and banking services in Peru. Their size and coverage varies, but different design choices have influenced their ability to operate viably in more remote areas of the country.
... See More + These choices involve the range of services offered, the complexity of agent operations, and the overall network operating model. This brief describes the relationship among these factors and their impact on the potential for rural outreach. It also extracts high-level insights for providers and regulators in markets beyond Peru.
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Brief 95200 JAN 01, 2015
Garcia Arabehety,Pablo; Faz De Los Santos,Pedro XavierFrenchDisclosed
