Center for Financial Inclusion at Accion
10th Anniversary Symposium
World Cafe Summary
As promised, we have collated all the ideas generated during the interactive sessions of the Symposium. There were varied conversations, with each table talking about a different topic, and they shed light on where you collectively have concerns and how you see the future of financial inclusion.
Here is a summary of the highlights, by topic:
Measuring Progress
Opinions on how to measure whether we are getting inclusion right are perhaps best summarized as, “Usage is important but insufficient. We need to understand outcomes.” ◊ One approach involves business indicators. A fintech executive said that we’ll know it’s right when people use a product, recommend it to others and the product is profitable. High and stable client retention rates are another such indicator. ◊ Decreases in interest rates is also a sign that we are getting it right. ◊ On the client outcomes side, one person advocated more randomized control trials to figure out what increases well-being. Another said that we need to measure how clients accumulate assets over time and move out of poverty. ◊ In measuring whether products are working for consumers, consumer protection indicators surfaced, such as low overindebtedness and low write-off rates. ◊ Customer complaints data is seen as a rich source of insights for policy and product development. At this policy level, this can be supported by standardization of complaints data and regtech solutions to compile it. As was discussed by the following group:
Consumer Protection
The discussions on emerging consumer protection issues included optimism about chatbots that use technology to facilitate customer recourse as a “convenient channel for customers to voice complaints, reducing manual processing for the government and the opportunity to analyze data and identify trends.� Data is probably the biggest emerging consumer protection issue, with concerns about data ownership, how to carry out informed consent, and data portability. At the regulatory level there are efforts to maintain data sovereignty (i.e. keep data in-country), which pose problems for providers (relevant for discussion on super-platforms).
Super-platforms and financial inclusion
This discussion was especially rich. ◊ One observer summarized the potential up-side: “The super platforms have the best chance to close the usage gap and fulfill the promise of customer centricity by innovating the user experience and blending financial services into other online behavior.” Another added, “Super platforms play a crucial role because they have the last mile connectivity.” And another added that they can help people without a previous credit history to establish a digital footprint to access credit. ◊ The table concluded, “Impact will be huge – in the mid-term for U.S. tech giants, and right now for the Chinese. We can’t ignore the wave.” This opened the door to conversations about how to respond to the potential represented by the super-platforms. Some responses noted grave concerns: “There may be a race to the bottom…and the ability to arbitrarily exclude people – think A Handmaid’s Tale,” and “Super-platforms lead to concentration of wealth and data and to destruction of local jobs.” Concerns were raised at both the customer and provider levels. For customers, the concerns include exclusion (from being in a disadvantaged group, algorithmic biases, or from making early mistakes that can’t be expunged), job loss “What’s the point of access to finance when you lose your source of income?” and vulnerability to data breaches. At the provider level, concerns were about competition – “There is a risk that competition will be purchased and dismantled.” There were calls for providers to partner with the super platforms. In response, suggestions included, “Putting guard rails on super platforms’ role in finance, particularly around data privacy,” and ensuring that super platforms create interoperability with other systems. Speaking from a super-platform perspective, one person commented, “Google can’t just replace banks…And it’s not one size fits all. Countries have different regulatory structures.” He noted that Google’s strategy includes developing products specifically from a local market perspective and in concert with regulators, governments and existing providers.
Financing of financial inclusion
This conversation indicated that financing is not the most pressing challenge. One participant wrote, “Funding may be the least of the issues, except that funding for capacity building has dried up.� Another at the same table confirmed the need for capacity building funding. There was, however, affirmation of the need to develop local capital markets where most of the funds will originate, and a call for very early stage funding seeded by the public sector and philanthropy. A researcher gave the example of a program that is funding 1000 African start-ups (across 10 years). And further comment that debt financing for fintechs is very hard to come by.
Aligning interests of providers and consumers
This conversation focused mainly on how to get providers to be more customer-centric, and there were many suggestions. ◊ Create a business case for customer-centricity. “Management needs to be aware that being a customer-centric institution pays off.” ◊ And help providers learn how to be more customer-centric. One suggestion in that direction was to bring in staff from other industries who may have fresh customer insights. ◊ Talk to customers; listen to customers; spend time with customers. ◊ Systematize customer voice into the processes of management. ◊ Make meeting customers a KPI ◊ Extend customer-centricity throughout the organization – every staff member to meet customers ◊ Design products with direct customer input ◊ Talk to clients who leave and those who stay – find out why ◊ A number of suggestions involved creating incentives for customer alignment: ◊ Removal of regulatory barriers, such as simplifying KYC ◊ Regulatory requirements or tax incentives for banks to develop products for lower end market ◊ Guarantee funds to reduce the risk of credit products ◊ Regulate based on customer outcomes ◊ Work with socially responsible impact investors
Balancing opportunities to use data with the need to ensure data privacy and security
We may not have picked up all the conversation on this, but a few highlights include the soundbite: “Collaboration is the new innovation.�(I’m not sure what it means, but I like it.) The main messages that were noted in writing involved the need for a deeper dialogue between regulators and providers to find the right balance.
Products for major life goals
This conversation did not focus on tailored products, but asserted that people will use high quality basic financial services to pursue their goals. “All these life goals need to be supported by financial products. There may be a combination of products such as loan plus savings…As long as there are financial services available in the communities and the customer is savvy about options…” And one comment brought in a wider perspective: “Financial products are not enough. It depends on the ecosystem. Education investment doesn’t matter if the quality of education is poor. Same for business environment, etc.” With that as a basis, the conversation also focused on the need for financial education so that people know how to use financial services well to pursue their biggest goals.