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Digital Finance

Rethinking saving practices in the digital era

Margaret Miller's picture



3-1-0 Three minutes to complete the online loan application, one second for approval and with zero human touch for SME loans. This is the marketing slogan used by Ant Financial, one of China’s largest online lenders with more than 400 million active users.

Digital finance is a cost-effective route to financial inclusion for many unbanked and underserved consumers in emerging markets. But digital finance is also still developing and maturing, with many open questions on the impact it will have. One of the most important of these is whether digital finance will ultimately help consumers to make better financial decisions over time.

October 31 is World Savings Day, a day which emphasizes the importance of savings to economic development, and provides a good occasion to look at how fintech may help solve the challenge of savings.

Weekly wire: The global forum

Darejani Markozashvili's picture
These are some of the views and reports relevant to our readers that caught our attention this week.


Mary Meeker’s 2017 internet trends report: All the slides, plus analysis
Recode
Kleiner Perkins Caufield & Byers partner Mary Meeker is delivering her annual rapid-fire internet trends report right now at Code Conference at the Terranea Resort in California.  Here’s a first look at the most highly anticipated slide deck in Silicon Valley. This year’s report includes 355 slides and tons of information, including a new section on healthcare that Meeker didn’t present live.

Evaluating Progress Towards the Sustainable Development Goals
GlobeScan
For this iteration of The GlobeScan/SustainAbility Survey (GSS), we chose to focus on the progress made on the Sustainable Development Goals (SDGs or the Global Goals). These goals were agreed by the United Nations member states together with civil society and business in 2015, and set forth the agenda until 2030. These goals are new, and progress was expected to be limited. We asked more than 500 experienced sustainability professionals to evaluate the progress that has been made on each Global Goal, rank their relative urgency and also share insights into the priorities within their own organizations. We also wanted to know how companies specifically are responding to the SDGs and where they see opportunities for the greatest impact. Polled experts unanimously agree that, so far, society’s progress on sustainable development more broadly and the SDGs specifically has been poor.

Well-regulated financial technology boosts inclusion, fights cyber crime

Joaquim Levy's picture

Luceildes Fernandes Maciel is a beneficiary of the Bolsa Família program in Brazil. © Sergio Amaral/Ministério do Desenvolvimento Social e Agrário

Financial technology — or FinTech — is changing the financial sector on a global scale. It is also enabling the expansion of financial services to low-income families who have been unable to afford or access them. The possibilities and impact are vast, as is the potential to improve lives in developing countries.

The financial sector is beginning to operate differently; there are new ways to collect, process, and use information, which is the main currency in this sector. A completely new set of players is entering the business. All areas of finance — including payments and infrastructure, consumer and SME credit, and insurance — are thus changing.

Want to empower women? Digital Financial Services are the way to go!

Duncan Green's picture

Sophie Romana (left) and Shelley Spencer (right) report back from the June 8 high level roundtable organized by NetHope and USAID, which brought together mobile banking and gender champions to reflect on how Digital Financial Services (DFS) can galvanize women’s empowerment.

Women’s empowerment is often measured by their access to resources and ability to make decisions over how they are used.  Recent evidence shows that DFS delivered through mobile phones deserves solid A's against each metric. This is not just hopeful musing by us as two empowered women with banking apps on our mobile phones, it is the consensus of a cross section of thought leaders with a seat at the table in Washington including USAID, the Bill & Melinda Gates Foundation, the Better than Cash Alliance and UNCDF, CGAP, and Women for Women International, as well as our own organizations, Oxfam and NetHope.  We recently spent a morning reflecting on rigorous academic and implementation research on DFS use by women — all to be published soon — and pathways to close the gender gap in DFS product use.

Oxfam has long known that women play a central role in financing family and community needs. What we are now finding is that DFS tools can enhance their role.  To study the impact of DFS on Saving for Change (SfC) savings groups in Senegal, Oxfam divided up 210 SfC groups (over 5,000 women) into 2 cohorts: one who participated in the project and the other as a comparison set.  Women who participated in the pilot saved and borrowed more than the comparison groups. The differences are not marginal.  There is a significant difference in savings.

 
Graphs: Saving for Change Mobile Banking, First Assessment & Learning Review, March 2016, Oxfam America

Shifting regulation of digital financial services: from enabling to fostering competition

Ignacio Mas's picture

Branchless banking and mobile solutions in developing countries tend to be dominated by very few large (mostly telco) players, focus narrowly on the payment function of money that calls for a national footprint, elicit relatively infrequent usage from the majority of customers, and exhibit low levels of service innovation. There are few examples globally of what I call an intensive model: smaller players making the business economics work by driving much greater usage from a much smaller customer base.

Tackling financial inclusion — that is, making financial services truly a mass-market offering — will require more, and more diverse, players contributing variously their resources, inventiveness and goodwill. We need more players jumping in: to create more competitive tensions and force more service and business model differentiation, but also because in most markets the usual path to scale is through specialization.

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.
 

The Transformative Impact of Data and Communication on Governance: Part 3
Brookings Institution
How do digital technologies affect governance in areas of limited statehood – places and circumstances characterized by the absence of state provisioning of public goods and the enforcement of binding rules with a monopoly of legitimate force?  In the first post in this series I introduced the limited statehood concept and then described the tremendous growth in mobile telephony, GIS, and other technologies in the developing world.  In the second post I offered examples of the use of ICT in initiatives intended to fill at least some of the governance vacuum created by limited statehood.  With mobile phones, for example, farmers are informed of market conditions, have access to liquidity through M-Pesa and similar mobile money platforms.

Cashing in: why mobile banking is good for people and profit
The Guardian
Using digital finance to tackle development problems can improves lives, and offer innovative companies handsome rewards. Whether it is lack of access to water, energy or education, development professionals are well versed in the plethora of challenges facing billions of people. The traditional approach to solving these problems has been to think big – in terms of the millennium development goals, government aid programmes, or huge fundraising campaigns. But there are dozens of startups and larger companies with innovative ideas who are approaching these challenges in new ways using digital finance.