Financial Inclusion Newsflash – April

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A roundup of some of the notable news in the financial inclusion, fin-tech, mobile money, and open source circles:

Making Progress Towards 3 Billion Maries

World Bank has released the results of the latest Global Findex data and progress is being made. The Center for Financial Inclusion has nicely recapped the report on their blog: The number of unbanked individuals has dropped from 2.5 billion to 2 billion as account penetration increased by about 20 percent or 700 million adults, bringing the world’s banked rate from 51 to 62 percent. India and China account for most of this jump in financial inclusion but 43% of “banked” Indians hadn’t made a deposit or withdrawal in the past twelve months.

The data also confirms the growth and penetration of mobile money in sub-Saharan Africa where 12% of adults (versus 2 percent globally) have a mobile money account. 45% of these mobile money account holders rely on it alone for formal banking which is promising for the potential of digital financial inclusion in other regions. We are delighted to see the overall growth in universal access and optimistic that adoption and true inclusion will be brought about through the transition to digital financial inclusion. We are eager for the Mifos X platform to be a part of that shift by serving as a common technology foundation for others to innovate from.

You can read the full report at The Global Findex Database 2014: Measuring Financial Inclusion Around the World and also download the data itself to analyze and visualize it.

MUDRA Bank Launched in IndiaMUDRA Bank

India continues to lead the charge in global financial inclusion by ushering in regulatory frameworks to accelerate universal financial access. A new wave of digital financial inclusion is already set to flow in as with the upcoming issuance of licenses to the first small finance and payment banks.
In early April, Prime Minister Modi formally launched MUDRA (Micro Unity Development and Refinance Agency) to fund and promote MFIs lending to the Micro, Small, and Medium Enterprise (MSME) sector. This sector is and will be a large economic engine and driver of growth with nearly 120 million people employed by 57.5M SMSEs.
We are in active conversations with our Indian partners and customers and are closely watching and ready to help the new and existing players who will be helping to bring financial inclusion to MSMEs.

A Playbook to Universal Financial Inclusion

Building off of this trend of growth in financial inclusion and favorable regulatory policy as an enabler of that, the World Economic Forum’s steering committee on Promoting Global Financial Inclusion has published eight principles for achieving full financial inclusion. Governments, investors, practitioners, and fin-tech startups should all take these to heart:
  1. Sign a Hippocratic Oath for financial inclusion that puts customer needs first, and live by it. 
  2. Take an “ecosystems” approach to reach scale. 
  3. Treat full financial inclusion as a journey and develop multi-product approaches.
  4. Create fully electronic payment systems.
  5. Ensure that customers benefit from the information they create.
  6. Engage in dialogues with regulators and policy-makers. 
  7. Embrace financial inclusion as integral to the business. 
  8. Eliminate group biases, particularly gender, age-based, literacy and rural biases.

Winning the Great Remittances Disruption

Over the several months, we’ve begun to explore how the Mifos X platform along with some of the emergent payment technologies can play a role in creating a more efficient remittances ecosystem that fully integrates with other financial services.

The Center for Financial Inclusion and the Accion Venture Lab have provided an insightful write-up, Winners in the Great Remittances Disruption, on the challenges and keys to succeeding the remittance space which is crowded with both incumbent players and new global disruptors. While technology will be a fundamental part of the solution, ultimate success will come down to trust and ability to acquire customers, a user experience that captivates them, and the ability to scale and offer them a full suite of services that goes beyond merely a lower price than the alternatives.

How to Build a Viable Open Source Ecosystem

Achieving our Mission of 3 Billion Maries requires a flourishing ecosystem with value being created and flowing throughout. We are continuing to explore how the Mifos Initiative can be more self-sustaining by helping directly create value within the ecosystem by working more closely with our partners, taking the lead on large opportunities, and architecting the platform to offer greater modularity.

TechCrunch recently published an article which had some nice takeaways from successful open source ecosystems that is good validation for platform approach we’re taking to our community. We especially liked the focus on service engagements around the ecosystem and building value-added components above and around the technology – both of which partners in our community are doing successfully.