AFI Financial Inclusion Data working group
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AFI Financial Inclusion Data working group San Salvador, April 2016
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AFI Financial Inclusion Data working group
- 1. AFI Financial Inclusion Data working group San Salvador, April 2016 Shaping our tools: Measuring financial inclusion for development
- 2. “We shape our tools and thereafter our tools shape us” - Marshall McLuhan
- 3. i2i Measurement mandate • The i2i facility is an open collaboration funded by the Bill & Melinda Gates Foundation in partnership with The MasterCard Foundation. • Facility objective: The i2i facility seeks to drive collaboration to improve the relevance, reliability and use of data to design of effective programmes, policies and products. • Measurement objective: To develop measurement frameworks that answer key financial inclusion questions, in collaboration with decision makers. • Measurement audience: Governments and development agencies
- 4. • Measurement and goals • What to measure? • Next steps Overview
- 5. Measurement and goals: What concerns stakeholders? Three common measurement needs • Driving usage • FI impact or outcomes including consumer protection • Financial literacy/ capability Across measurement objectives • Disaggregated data – gender, location, youth, small business
- 6. Measurement and goals: Are we setting off the right races? AFI members that adopted Maya Declaration increased % of adults with accounts by 9.5% from 2011 – 2014 (Findex) The number of people worldwide having an account grew by 700 million between 2011 and 2014 (Findex)
- 7. Measurement and goals: The big compromise Goal: Inclusive financial systems provide individuals and firms with greater access to resources to meet their financial needs, such as saving for retirement, investing in education, capitalizing on business opportunities, and confronting shocks (WB, 2014) Financial inclusion: proportion of individuals & firms that use financial services (WB, 2014) Why measure ownership to target financial inclusion? • Alternatives not defined • Data constrained
- 8. Measurement and goals: Account ownership not resulting in usage 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% %ofadultswithanaccountata formalfinancialinstitution Dormant account at FI (0 transactions) Mailbox account at FI (1 - 2 transactions) Used account at FI (> 3 transactions) Source: Findex 2015 “[Bankerisation*] It is not so good, it obliges us to not go to work, because we need so much time. And not only for ourselves, I also know friends in the province that require us to collect for them here. I am practically the second signatory for two or three people who live in the province” DRC, male, government employee in Kinshasa, 2015 *Paying civil servant salaries into bank accounts
- 9. “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” - James Harrington
- 10. • Measurement and goals • What to measure? • Next steps Overview
- 11. What to measure? Our focus The challenge: To measure financial inclusion for development i2i goal = improve data available and use of data to drive appropriate decisions – in collaboration with data collectors and users i2i measurement focus: • Going beyond ownership to usage • Exploring outcomes
- 12. What to measure? Unpack AFI framework into an FI theory of change – focus on usage and outcomes * An existing relationship with a financial service provider that confers the right to use a financial service without any further requirements having to be met Enabling environment Environment allows appropriate products to be provided Availability Appropriate products are available to consumers Ownership* Adults take- up products Usage Adults use products effectively HH and gov’t objectives for which the use of financial services is a necessary but not sufficient condition. FI Outcome Outcomes directly attributable to usage of financial services Impact Quality Access Usage Impact (Outside FS control)
- 13. What to measure? Drivers of usage and outcomes? Enabling environment Availability/ Access Ownership Consumer value not increased Usage FI Outcome Impact Quality Access Usage Impact
- 14. What to measure? Understanding the linkages: Consumer value Enabling environment Availability/ Access Ownership Usage ImpactFI Outcome Net value Value Cost Increase in welfare of consumer Utility derived from using financial services Direct and indirect cost to use financial services Portfolio of needs met Functional needs Experiential needs Capability cost Access cost Indicators Sustainable usage Consumer value increased Quality Access Usage Impact
- 15. What to measure? Unpacking consumer value • Transfer of value • Liquidity • Resilience • Meeting goals (education, housing, business, old age) • Productive risk taking • Awareness • Knowledge • Skills • Attitudes incl. Trust • Decision constraints Net value CostValue Sustainable usage Functional needs Experiential needs Capability cost Access cost • Usage (digital, informal, cash) • Fit for purpose interactions (save, spend, risk, grow) • Number/ value/ proportion of interactions • Breadth of use (portfolio of services) • Negative value (Indebtedness, Abuse) • Consumer satisfaction • Control/ Self-discipline • Choice • Social identity/ Status • Peace of mind • Proximity • Affordability • Reliability • Convenience • Connectivity (digital, physical) • Eligibility incl. Identity Portfolio of needs met • Financial health/ wellness • Financial stress
- 16. What to measure? Measuring value – improving FI outcomes by meeting needs RCTV – Remote cross-border transfer of value RDTV – Remote domestic transfer of value Source: FinScope Consumer Survey Zimbabwe , 2014 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% %ofadultpopulation Use savings Borrow Use payment instruments Use insurance Use multiple financial services
- 17. What to measure? Financial stress: Assessing the link between inclusion and well-being 60% 48% 0% 10% 20% 30% 40% 50% 60% 70% $0 - $30 %ofadults Income category % of adults, earning less than a dollar a day, that reported they had to skip a meal, were not able to send their children to school or had to go without medical treatment or medicine Financially excluded adults (informal or formal) Financially included adults (formal or informal) Source: FinScope Consumer Survey DRC, 2015
- 18. What to measure? Potential game-changers 1. Usage: Move away from ownership-based indicators of usage, to interaction-based indicators of usage 2. Defining markets for financial services: Moving from product- based measures of market size to needs-based measures of market size 3. Proximate outcomes: Measure proximate outcomes that contributes to impact
- 19. “One accurate measurement is worth a thousand expert opinions” – Grace Hopper
- 20. • Measurement and goals • What to measure? • Next steps Overview
- 21. Next Steps 1. Survey to better understand AFI members’ measurement needs 2. Select priority measurement frameworks 3. Build key frameworks in collaboration with AFI 4. Pilot frameworks with interested partners
- 22. Thank you! Mia Thom E-mail: miathom@cenfri.org Celina Lee E-mail: celina@cenfri.org Please contact us at… insight2impact | i2i is a facility established by FinMark Trust and Cenfri to advance the use of data for financial inclusion. i2i aims to demonstrate how policymakers and providers can draw insights from data to inform the design of financial inclusion programmes, policies and products. i2i is funded by the Bill & Melinda Gates Foundation in partnership with The MasterCard Foundation. For more about i2i, see attached brochure or our website at www.i2ifacility.org
Editor's Notes
- Herbert Marshall McLuhan, CC (July 21, 1911 – December 31, 1980) was a Canadian professor of English, philosopherof communication theory and a public intellectual. McLuhan is known for coining the expressions the medium is the message and the global village, and for predicting theWorld Wide Web almost thirty years before it was invented.[
- World Bank UFA 2020: Initiative: The UFA2020 envisions that adults worldwide will be able to have access to a transaction account or an electronic instrument Commitments: 14 partners have pledged commitments towards achieving universal financial access. Measurement indicators: % of adults with an account at a financial institution or an electronic instrument The Maya Declaration: Initiative: The Maya Declaration is a commitment to unlock the economic and social potential of 2 billion unbanked through financial inclusion Commitments: 54 countries have made 85 quantifiable targets for financial inclusion under the Maya Declaration Measurement indicators: % of adults with regulated deposit or credit account
- Countries are the 25 World Bank UFA 2020 priority countries FI = Financial Institution Interaction: FI Account: Either a withdrawal or a deposit. Therefore, an account is classified as dormant if the account holder does not make either a withdrawal or a deposit in a typical month. Mobile money: Either a payment received or made, or a bill payment made in the last year. Statistical universe: FI Account: The bars represent the % of adults with an account at a formal financial institution. The percentages within the bars, indicate the usage of accounts of those formally served. I.e. the percentage of formally included adults that have a dormant account, mailbox account or use their account. Mobile money: % of adults with a mobile money account Additional speaker notes: While mobile money seems to be used in Uganda, Kenya and Tanzania this seems to be the exception that proves the rule. The Findex Global Survey found that just two percent of adults globally own a mobile money account. However, in Sub-Saharan Africa, the average was much higher at 12%. This represents more than 64 million adults. While this highlights significant penetration of mobile money, the MAP evidence from the MAP countries where mobile money was present showed shows a similar trend to bank accounts: despite high initial up-take in mobile money subscribers, only between a quarter and a third of accounts are active. Active accounts are usually can be defined as those accounts that have been used at least once in the last 90 days. In Mozambique, mobile money subscribers increased from 485,000 in 2013 to 887, 000 in 2014. However, usage levels have remained low with the proportion of active users estimated to be between 20 – 25%. In both Swaziland and Malawi, despite rapid initial uptake, the proportion of active users has remained below 30% and the rate of growth of subscribers has slowed substantially. In Malawi from 2013 to 2014 mobile money subscribers grew from about 230,000 subscribers in 2013 to more than one million in 2014. However, less than a third of these adults are active customers. Similarly, in Lesotho, rapid initial uptake was partially driven by the fact that the providers offered generous incentives - in the form of an airtime bonus - for signing up. Based on in-country consultations, it is estimated that only between one-third and one-quarter of mobile money subscribers in Lesotho are active.
- James Harrington was an English 1700s political theorist of classical republicanism, best known for his controversial work, The Commonwealth of Oceana. How to develop an utopian government Message: Appropriate measurement is a precondition for improvement
- 3 reasons links break down: 1- Firm value not apparent 2-Consumer value not increased 3-Non-FS factors 4-Mandated provision
- Why use need cases? Quantifies the demand for financial services indicating potential market size; Reveals underlying incentives for using financial products; Shows which providers are really competing; Shows that clients do not think i.t.o. product silos, i.e. credit, savings, insurance and payments,; Suggests which business models are required. Use cases definitions: Local payments: Requited payments where the physical presence of the payer and payee is required for a legally valid transaction. Bill payments: Requited payments where t he physical presence of the payer and payee are not required for a legally valid transaction. Risk mitigation: Risk mitigation is the use of financial services to offset the costs of uncertain events, regardless of when they occur. Consumption smoothing: The need to meet regular and foreseeable expenses, other than from regular income. Encashment: The need to convert digital value into physical cash. Farming inputs: The need to accumulate assets to be used directly or indirectly as inputs into agricultural activities. This is a subset of the asset accumulation need. RDTV (Remote Domestic Transfer of Value): The need to make unrequited payments where individuals physical location is not required for a legally valid transaction. This transaction takes place entirely within one jurisdiction. Asset accumulation: The need to accumulate assets, whether productive or not. Education: This is a specific subset of the need for consumption smoothing. It merits its own discussion due to its prominence in the Zimbabwean context. Investment in Business: The need accumulate assets to be used directly or indirectly as inputs into business activities. This is a subset of the asset accumulation need. RCTV (Remote Cross-Border Transfer of Value): The need to make unrequited payments where individuals physical location is not required for a legally valid transaction. This transaction takes place in two or more jurisdictions.
- Grace Brewster Murray, was an American computer scientist and United States Navy Rear Admiral.[1] She was one of the first programmers of the Harvard Mark I computer in 1944,[2] invented the first compiler for a computer programming language,[3][4][5][6][7] and was one of those who popularized the idea of machine-independent programming languages which led to the development of COBOL, one of the first high-level programming languages.