Global consulting firm Bankable Frontier Associates (BFA) is partnering with The MasterCard Foundation to launch Financial Inclusion on Business Runways (FIBR), a multi-million dollar project to extend financial inclusion in Africa
The four-year FIBR project will focus on Ghana and Tanzania and demonstrate how to better connect poor people to financial services by capturing and digitising the data of business transactions in the informal economy.
By 2020, smartphone ownership is projected to rise from about 18% to over 50% in Africa, generating large amounts of new customer data. FIBR will aim to support technology, business and financial partners that can use this data to design and develop new ways to make savings, credit and insurance products available to under-served customers.
“FIBR is exploring different types of relationships, or links, between financial service providers and poor customers,” said David Porteous, chief executive officer (CEO) of BFA, which has made its specialism the development of financial services for low-income people around the world.
“The smartphone now makes it possible to propose new and more targeted solutions by a new range of players. How this happens and what will succeed is largely untested but it will be a transformative contribution to the financial services sector and how the poor better manage their money.”
The under-served two billion
As part of the project, FIBR says that it will be:
• Experimenting with predictive algorithms on this data so financial service providers can make better decisions about potential customers in underserved markets, and
• Cultivating an active learning agenda that is supported with practical examples, and sharing insights with the broader financial inclusion field.
BFA notes that two billion people worldwide lack access to regulated financial services yet the traditional way financial institutions cater to underserved customers is limited, resulting in low adoption and usage of services.
Experimenting with the data from a poor person’s interactions with businesses as an employee, customer or supplier, and using it as a financial track record, opens up new possibilities in what a bank can offer, fund or underwrite.
“These business-based relationships, such as a shopkeeper extending customer credit, an employer setting aside savings for employees or a club providing micro-insurance to its members represent an untapped, indirect source of financial data about a person,” says Mark Wensley, senior program manager, financial inclusion at The MasterCard Foundation.
“With this data, banks and microfinance institutions, even mobile network operators, can offer a wide range of new financial services to poor customers whom they currently cannot serve directly.”
The MasterCard Foundation, based in Toronto, Canada, was created by Mastercard as an independent entity in 2006 and works with visionary organisations to provide greater access to education, skills training and financial services for people living in poverty, primarily in Africa.
At the official project launch in Accra, Ghana, on February 25, BFA announced that several local organisations were already engaged in pre-qualifying projects for FIBR. By June this year, the first selection of partners is scheduled to go through the programme.
The cause of financial inclusion for the world’s poorest has been taken up by a number of high-profile business figures, including Bill Gates.
Tim de Knegt, treasurer for the Port of Rotterdam, discusses how he is looking to bring more value to the Port's clients using blockchain.
Regulation technology is fast gaining currency by transforming how financial institutions can tackle compliance in a swift, comprehensive and less expensive manner.
Many banks around the world, large and small, continue to experience major security failures. Biometric systems such as pay-by-selfie, iris scanners and vein pattern authentication can help.
The implementation date of Europe's revised Markets in Financial Instruments Directive, aka MiFID II, is fast approaching. Yet evidence suggests that awareness about the impact of Brexit on MiFID II is, at best, only patchy and there are some alarming misconceptions.