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Can 'fintech' innovations impact financial inclusion in developing countries?

Margaret Miller's picture
A digital transaction in the Democratic Republic of Congo. Such transactions are made possible in part by FINCA. FINCA's strategy in Africa is to focus operations on underserved markets and groups, namely rural areas and women. Photo: Anna Koblanck/IFC


Financial technology, “fintech,” has been reshaping the financial services industry with the level and speed of innovation that’s simply fascinating.

A month ago, my colleagues and I attended the 5th Annual Lendit USA conference to check out about the latest innovations and thinking in this field and see how we can apply it to our work.

There is growing interest in trying to figure out this new industry and take advantage of the opportunity. Now billed as the largest Fintech industry meeting in the world, Lendit organizers started this event four years ago with about 200 participants. This year’s event attracted more than 5,000 people.

We work on various areas of financial inclusion and are interested in new ways that can help expand access to financial services to hard-to-reach populations and small businesses in developing countries.

We returned with a new appreciation for the magnitude of change that is coming, and how quickly it could occur – and already is in some instances.  Some innovations will help developing countries leapfrog into this new tech era. This could have a significant – and potentially highly positive - impact on financial inclusion, and fundamentally change the nature of financial infrastructure. 

However, these opportunities come with potential risks, such as those related to (un)fair lending practices related to unmonitored use and analysis of big data or increased systemic vulnerabilities due to threats to cybersecurity. 
 

Resource-Backed Investment Finance in Least Developed Countries

Otaviano Canuto's picture
In recent decades, Least Developed Countries (LDCs) have been using their natural-resources as collateral to access sources of finance for investment, countervailing the barriers they face when accessing conventional bank lending and capital markets.  Depending on whom you ask, such financing models have been alternately vilified and sanctified in the global development debate.

Development Banks and Post-Crisis Blues in Investment Finance

Otaviano Canuto's picture

International long-term private finance to developing countries has changed dramatically in the wake of the global financial crisis. Caught in “post-crisis blues”, as my World Bank colleagues Jeff Chelsky, Claire Morel and Mabruk Kabir called it in a recent Economic Premise, some traditional sources of long-term finance are strained, and alternatives have not been able to adequately compensate. Private financing of infrastructure has been particularly hurt.