NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

I just bought a cup of coffee with my debit card, checked my bank balance on my phone, and paid my monthly home insurance bill – or at least my bank did – automatically.

These services only feel ubiquitous. For 59 percent of adults in developing economies and 77 percent of adults earning less than $2 a day, they are nonexistent. Half of the world’s working-age population has no access to basic financial services. The numbers and the scope are daunting to say the least. Of course, poverty is the key barrier to participation. But so too are the associative barriers of cost, travel and paperwork – at least historically.

But here’s some good news – and for most of you reading this, it won’t come as news at all: Our physical world no longer dictates the progress of the fiscal world. And many of those barriers are starting to fall in the wake of expanding global Internet access. That’s long been the case for developed economies, but now the same paradigm shift is creating a new reality for millions of people in developing countries.

It seems that nearly every day a financial provider, a technology designer or an entrepreneur (or other innovator) is unveiling a new wedge to crack open the door for people traditionally shut out of the financial system. Telling their stories, sharing their insights, debating the consequences of their advancements (or setbacks, as the case may be), this is the guiding principle of NextBillion Financial Innovation (www.nextbillion.net/fi) the new blog we’re proudly launching today. We’ve never lived in a time when more financial tools, educational capability and products – once purely the domain of the developed world – were more available and transferable to base of the pyramid customers.

Whether charting micro-credit and insurance or following major impact investment funds, NextBillion has been a platform to share and debate these issues and breakthroughs since the site was first launched some eight years ago. But we’ve never done so in one forum, with as highly concentrated an effort as we’re bringing forward with this launch. NextBillion Financial Innovation (NBFI) will be very much its own entity, complete with its own Newsfeed, Events listings, Twitterfeed (@NextBillionFI) and Content Partners.

While NBFI will primarily focus on efforts to improve access in emerging markets and the base of the pyramid, new tools and methods being deployed by financial institutions and entrepreneurs in developed markets have literally found currency in the developing world. We hope to shine a light on those developments as well. (After all, 11 percent of people in high-income countries also have no formal connections to banks, according to the World Bank).

In a global financial community, we can’t simply celebrate the good, we must explore both successes and failures candidly.

So how will we actually organize that dialogue? We recognize that Financial Innovation cuts across many sectors and business frameworks. And although you will be able to find articles by searching by article tags, we’ve done our best to structure our content into five key Focus Areas:

• Microfinance: Of course we’re talking about innovations in microcredit, but also insurance, home lending and other retail-level advancements that help low-income people
• Financial Capability: We can’t move forward without robust financial education for students, consumers, entrepreneurs and other stakeholders, which is covered here
• Mobile Services: It’s about more than just mobile money networks, but how to use them effectively and how they’re being creatively deployed
• Innovations in Investing: Impact investing, crowdsourcing, and other new techniques that deserve explanation and exploration
• Alternative Finance: This is a category without sharp edges, but this space will explore new thinking – including unconventional approaches like social network-based credit scoring and peer-to-peer lending – in financial access

I’m also glad to formally announce that James Militzer, previously NB’s Health Care Editor, today takes the helm as the editor of NBFI. If you have news, blog or event suggestions, please get in touch with him at jamesmil@umich.edu here at William Davidson Institute at the University of Michigan.

This blog is made possible with support from the Citi Foundation. We thank them for helping us to launch this new site, and for promoting what we hope will be an important new forum for understanding as well as action. I also want to thank and welcome a new lineup of Content Partners who are joining NextBillion: Accion, the Center for Financial Services Innovation, Grameen Foundation, ideas42, and Innovations for Poverty Action. Please learn more about them by clicking on their partner blogs.

As I noted at the start of this post, the 2.5 billion people who are unbanked or otherwise without financial services represent a very daunting challenge. Our goal is to highlight the ways in which people, institutions and innovators of all kinds are working to steadily reduce that number and increase incomes in the meantime.