Accelerating financial inclusion: The role of payment systems
ACCELERATING FINANCIAL INCLUSION Navigating Opportunities...
Transcript of ACCELERATING FINANCIAL INCLUSION Navigating Opportunities...
ACCELERATING FINANCIAL INCLUSION
M A Y 2 0 1 9
R AL I AT S U N M O N U
Navigating Opportunities & Risks of Technology Innovations
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• What is driving Technology Innovations?• Where are the Opportunities?• What Risks are being introduced?• How do we mitigate them?• Questions
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Changes in technology infrastructure, market landscapes and regulatory policies are creating new opportunities in the FI ecosystem - #1
FSPs can leverage new &
alternative sources of data
such as bill payments, social
media and psychometric
tests – to provide new
products and/or gain new
customers
Whether top-down (e.g.
Aadhaar in India) or
bottom-up (e.g. BVN in
Nigeria), digital identities
can simplify KYC
requirements and enable
new digital financial services
Digital Disruptors are taking
advantage of previous tech
such as mobile money and
adopting innovative
approaches to Risk
assessment, product design,
distribution, etc
Alternative Data
Digital Identity
New Players
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Changes in technology infrastructure, market landscapes and regulatory policies are creating new opportunities in the FI ecosystem - #2
Artificial intelligence
innovations such as chatbots
and big data analytics are
being used to drive new
products (lending tools) and
services (e.g. financial
literacy programs)
Blockchain is enabling
companies tackle real issues
for financially-excluded
people; from Remittances
and Asset transfer (e.g.
BitPesa, Leaf) to Property
Rights (e.g. Meridia)
Open APIs enable faster,
more seamless
collaborations between
service providers and
financial institutions for the
provision of new services
and products
Artificial Intelligence
Blockchain and DLT
Open APIs
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These have led to dramatic shifts: which customers are served and how; what financial services are provided and who provides them
Customer interaction – digital and touch-led channels
Delivery of Government Services – e-Payments, Digital ID
Credit – PAYG, P2P, analytics-based lending
Business Models – Supply Chain Financing; online lenders
Alliances – increase in partnerships between FSPs and non-traditional FSPs
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N E W B U S I N E S S M O D E L S / P R O D U C T S
Service Providers have been leveraging these innovations to transform their organizations and services
S T R A T E G I C P A R T N E R S H I P S
C R E D I T P R O V I D E R S
Tech-enabled smallholder agriculture financing
Mobile POS and payment solutions for SMEs SME E-invoicing
and invoice solution
Digital crowdsourcing platform that enables access to information and services
MFI re-imagining its products and operations to be digital-led
offers affordable and accessible digital finance solutions (e.g., credit, savings, and payments) by partnering with 12 banks, nationwide, through an agent-assisted model.
Provide technology infrastructure that enables connectivity between Finance
Institutions and FinTech providers
Alternative credit scoring based on mobile phone data
D E L I V E R Y O F G 2 C S E R V I C E S
Dopay provides a cloud-based payroll service that allows employers (including government entities) to calculate salaries and make payments electronically.
India’s biometric ID system
PAYG provider of solar products and financial services
Whilst the effect of many of these innovations and new technologies has been positive, new risks are also emerging
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Excluding financially illiterate and/or less technically savvy customers
Focus on digitizing services often
has the unintended consequences
of excluding lower -income
and/or rural people – who tend
to have lower technological
literacy and generally live in
locations with limited technology
infrastructure
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Data Privacy & Customer Protection
Digital technologies are especially
susceptible to hacking and fraud
– especially in the absence of
strong security tools and policies.
Protection and privacy of
sensitive customer data are key
risks
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High Default Rates and Over-indebtedness
Credit algorithms generally focus
on predicting repayment but still
inadequate in addressing
“motivation” factor.
Easier access to credit coupled
with lack of consumer protections
and financial illiteracy is creating
over-indebtedness.
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Regulatory CapacityUnder-regulation: pace of change so rapid
means the regulator may be playing catch-up;
may create barriers to entry or unduly favor
incumbents
Over-regulation: regulatory controls that
limit operators’ ability to innovate and change
rapidly
Test-and-learn approaches can help in
supporting innovation whist mitigating risks.
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Talent & Governance
Fierce competition for talent so
smaller players may find themselves at a
disadvantage in their ability to attract and
retain top talent.
Lack of management capacity to
handle fast pace of change; insufficient
corporate governance practices and
oversight.
How do we mitigate these risks to take full advantage of digital technology innovations?
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Understand that Digital transformation is complex and multi-faceted
Customer Centric Channel Design
Customer Engagement
Channel Strategy
Data Privacy and Protection
Customer Education and Support
Responsible Product Design
Product
Product Strategy
Processes Technology
Core Infrastructure
Technology Integrations
Business Continuity and Disaster Recovery
Technology SLAs
Governance
People
Org Structure and Team Composition
Internal Interaction Design
Organizational Goals and KPIs
Partnerships
Data platforms
Research & Development
Responsible Process Design
Department SLAs
Algorithmic Scorecards
Self-Sustaining Business Case
Commodity Service vendor strategy
Business Case
Process Integration
Strategic Partnerships Strategy
FSPs need to transform every core business area, including corporate culture, to move from the status quo to a digitally-enabled business model
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But it has to be done right:
Planning for Digital Transformation
Sample Resources
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The value to the customer must be clearCustomer-centricity and appropriate product design
Know Your Customers -
Segmentation
Identify customer-centric products and
Value Proposition
Pilot & Monitor
Refine & Repeat
Sample Resources
Responsible Digital Credit
http://www.smartcampaign.org/about/fintech-protects-community-of-practice
https://www.accion.org/demystifying-digital-lending/
Customer Acquisition Toolkits
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In Summary…
Digital Technology Innovations are creating
tremendous opportunity to accelerate financial inclusion
Identify opportunities for your organization and chart a
path that is relevant & appropriate
Digital transformation is about the entire organization
changing – mindsets, workforce, business model –in addition to technology and
products
Understand the risks and identify mitigation
opportunities
You don’t have to go it alone!
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Obrigada!
Raliat Sunmonu
Senior Director, Africa Program Management
Global Advisory Solutions
Questions?