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.
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
On a fine Tuesday morning Roghan Devi, a routine road maintenance worker from Dhanusha district visits the local branch of Mega Bank - a commercial bank in Nepal, to receive her monthly salary. She was notified about this through a text message in her mobile phone. Just a few years back, it was unimaginable for her, and for most of the women from her community, to have a personal bank account.
This initiative is part of a World Bank-supported Strengthening National Rural Transport Program (SNRTP) project that works in 33 districts employing over 1,800 routine maintenance workers- over 70% of them are women - to enhance the availability and reliability of transport connectivity for rural communities. To support this initiative, SNRTP forged a joint collaboration with the private sector.
a longer version of this blog post is available on the MIT Media Lab’s Digital Currency Initiative platform
With Google Trends data showing that searches for the word “blockchain” have exponentially increased, we may be entering the peak of the hype cycle for blockchain and distributed ledger technology.
But here’s the thing: the blockchain is a major breakthrough. That’s because its decentralized approach to verifying changes in important information addresses the centuries-old problem of trust, a social resource that is all too often in short supply, especially amid the current era’s rampant concerns over the security of valuable data. It turns out that fixing that can be a boon for financial inclusion and other basic services delivery, helping to achieve the global objectives laid out in the Sustainable Development Goals (SDGs).
Sorting out hype from reality may depend on how well we identify where institutions that have until now played a role in mediating trust between people are falling short, especially in the key area of money. Deploying the blockchain in those settings to generate secure, decentralized trust could achieve great strides in inclusion and innovation.
What do we mean by decentralized trust? The concept is unfamiliar in part because its converse -- centralized trust – is something that we often take for granted, at least while it’s working. But if we look at the history of transactions since the early barter systems to modern-day digital money exchanges, we can see how different trust protocols for keeping track of our exchanges of value have evolved and how, in each case, centralizing trust within particular institutions has periodically caused problems.
As strategies for dealing with this challenge evolved and as the complexity and frequency of transactions grew, different trust bearers emerged. We went from relying on the memory and discretion of tribal leaders, to central governments issuing currencies in the form of precious metals, to commercial banks acting as trusted intermediaries and issuing their own bank notes, to central banks managing a hybrid system in which sovereign fiat banknotes circulate alongside a debt/credit form of money managed by regulated banks and internal ledgers.
For the first time in history, the proportion of people living in extreme poverty has fallen below 10%. The world has never been as ambitious about development as it is today. After adopting the Sustainable Development Goals and signing the Paris climate deal at the end of 2015, the global community is now looking into the best and most effective ways of reaching these milestones. In this five-part series, I will discuss what the World Bank Group is doing and what we are planning to do in key areas that are critical for ending poverty by 2030: good governance, gender equality, conflict and fragility, preventing and adapting to climate change, and, finally, creating jobs.
Good jobs are the surest pathway out of poverty. Research shows that rising wages account for 30 to 50% of the drop in poverty over the last decade. But today, more than 200 million people worldwide are unemployed and looking for work — and many of them are young and/or female. A staggering 2 billion adults, mostly women, remain outside the workforce altogether. In addition, too many people are working in low-paying, low-skilled jobs that contribute little to economic growth. Therefore, to end poverty and promote shared prosperity, we will need not just more jobs, but better jobs that employ workers from all walks of society.
- end poverty
- International Development Association (IDA)
- fragile countries
- Fragile and Conflict Afflicted States
- private sector
- financial inclusion
- Information and Communication Technologies
- The World Region
The recent global financial crisis has highlighted the impact of credit markets on the real economy, in particular on employment. While an extensive literature exists on how finance can affect corporate investment and overall economic growth, comparatively little is known about the effect of finance on labor market outcomes.
In a recent paper, entitled “Access to Finance and Job Growth: Firm-Level Evidence across Developing Countries” Meghana Ayyagari, Pedro Juarros, Sandeep Singh and I use comprehensive firm-level data across a large set of developing countries to analyze the impact of access to finance on job growth and the heterogeneity in this relationship across firm size. In particular, we study the differential impact of access to finance on MSMEs’ ability to create jobs relative to that of larger firms.
For the first time in history, the number of people living in extreme poverty has fallen below 10%. The world has never been as ambitious about development as it is today. After adopting the Sustainable Development Goals and signing the Paris climate deal at the end of 2015, the global community is now looking into the best and most effective ways of reaching these milestones. In this five-part series I will discuss what the World Bank Group is doing and what we are planning to do in key areas that are critical for ending poverty by 2030: good governance, gender equality, conflict and fragility, creating jobs, and, finally, preventing and adapting to climate change.
The world is a better place for women and girls in 2016 than even a decade ago. But not for everyone, and definitely not everywhere: This is especially true in the world’s poorest, most fragile countries.
It’s also particularly true regarding women’s economic opportunities. Gender gaps in employment, business, and access to finance hold back not just individuals but whole economies—at a time when we sorely need to boost growth and create new jobs globally.
- Gender-Based Violence
- Adolescent Girls Initiative
- Gender Data
- financial inclusion
- maternal and child health
- inequality and shared prosperity
- girls education
- Social Development
- Labor and Social Protection
- Information and Communication Technologies
- The World Region
- international development association
Telenor believes in empowering societies. Motivated by the prospect of building something that can make a difference for customers with very limited access to traditional financial services, we ventured to leverage our mobile tele-density strength in developing countries to bring about financial inclusion. Telenor has committed to enabling 50% of its customers to use their mobile phones for financial services by 2020, which means 100 million customers will have access to mobile financial services. We joined the UFA2020 initiative eager to learn from other players on shared challenges, drive strength from a common goal, and scale solutions that have demonstrated success in other markets.
We are about to launch in Myanmar and have obtained a banking license in India. We are already working in Bangladesh, Bulgaria, Hungary, Malaysia, Pakistan, Serbia and Thailand. In each country we have adopted different models of financial services catering to the needs of that market. For example, in Serbia fully owned Telenor Banka is the first fully mobile and online bank, consolidating banking needs in a unified digital interface, making it the fastest growing bank and the highest rated banking app in the region. In Pakistan, Telenor’s subsidiary Tameer Micro Finance Bank offers mobile financial services under the globally recognized brand of Easypaisa, serving over 20 million customers for domestic and international remittances, purchase airtime, pay utility bills, receive government social cash transfers, pay taxes, save and borrow money, buy insurance or make online retail purchases. We are picking up speed in delivering straightforward digital banking services in most of our Asian markets. Last year we established the groundwork for business in five out of six Asian countries, and this year we are focusing on expanding our footprint in these markets. When all businesses are up and running, we will be ready to build scale and to reach our 100 million customers target.
The World Bank (WB) has set an ambitious goal of securing universal access to formal financial services by 2020. Although 700 million people have signed up for a bank account since 2011, about two billion worldwide remain unbanked. As the WB seeks to expand worldwide financial inclusion, it should look to Sub-Saharan Africa (SSA) for inspiration.
In just a few years since the G20’s Global Partnership for Financial Inclusion (GPFI) published its initial White Paper, the role that global financial standard-setting bodies (SSBs) have on “who gets access to what formal financial services at what cost” has been increasingly recognized.
Appreciation has also grown for the important role that digitization of financial services plays in reaching financially excluded and underserved customers, and the implications this development has had on the SSBs.
There is still far to go, but the advances are noteworthy.
The GPFI’s new White Paper, Global Standard-Setting Bodies and Financial Inclusion: The Evolving Landscape documents this progress while flagging the disruptive forces that digital financial services represent for the formal financial system, as well as the opportunities and challenges they carry for the SSBs to develop standards that countries can apply.