ACCELERATING FINANCIAL INCLUSION Navigating Opportunities...

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ACCELERATING FINANCIAL INCLUSION MAY 2019 RALIAT SUNMONU Navigating Opportunities & Risks of Technology Innovations

Transcript of ACCELERATING FINANCIAL INCLUSION Navigating Opportunities...

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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

Presenter
Presentation Notes
Digitization is creating new and alternative sources of data. Blockchain and AI will enhance FSPs’ abilities to collect, analyze and utilize the data
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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

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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.

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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?