NB Financial Health
The Evolution of Inclusive Finance Data: What’s Next for MIX
Earlier this month, our team at MIX announced two important shifts we are making to increase our value to the inclusive financial services sector. As CEO of MIX, I am grateful for this opportunity to share with you how we arrived at these decisions. And as someone who used MIX’s data services earlier in my career as an investor, I am excited to share details about MIX’s next chapter in the frontier areas of inclusive financial services.
A track record of building transparency in inclusive finance
Since 2002, MIX has been the global data resource for inclusive finance. In the beginning, MIX partnered closely with industry actors to build transparency in microfinance through the development of shared data standards and common metrics. This transparency would help enable capital to flow to financial service providers reaching under-served populations; it would also help identify concentrations of capital and the associated risks. Over the years, MIX built its credibility as a neutral third-party data provider through its core microfinance dataset, MIX Market. The dataset grew to cover thousands of financial service providers from over 100 countries, and helped unlock billions of dollars in investment capital for these institutions. Thanks to the commitment of our staff, the financial service providers that contributed data, and countless advocates, partners and users, the MIX Market dataset became a critical source of information for the microfinance industry.
In the intervening years, much has changed. New areas in inclusive finance emerged, including agricultural, energy and digital finance, which present a promising opportunity for technology and innovation to bridge the remaining gaps between formal financial services and the 3 billion financially underserved people globally. Investors and funders, recognizing this significant opportunity, are refocusing their investment strategies. Yet a familiar problem has emerged: There is little visibility into the capital flowing to these new areas. Similar to microfinance in the early 2000s, the new frontier of inclusive financial services requires greater transparency in order to ensure healthy market growth that benefits the poor.
Applying our expertise where it’s needed most
We know the impact that data can make. Through our new initiatives, we are creating visibility in areas like fintech, and in perpetually underserved areas like agricultural finance. For example, in agriculture, we are working with the Council on Smallholder Agricultural Finance (CSAF) to aggregate and analyze the agricultural lending data for its 12 member organizations. This analysis ensures that each organization can compare their own individual data against the group’s aggregate lending data, which allows them to allocate capital optimally, managing risk and generating greater impact. As the official data partner, MIX also helped launch the CSAF Open Data Portal, which includes analysis of the largest publicly available dataset on agricultural finance funding flows.
Similarly, though fintech is expanding at a record pace, it is unclear if this growth is translating into real impact for the financially underserved. In response to demand from investors and funders, MIX is working closely with industry actors to develop the Data Standards for Inclusive Fintech, and we are in the process of creating an initial set of benchmarks built on those standards. (You can learn more about our fintech data initiative, RELAY, here). Additionally, we implemented the Inclusive Fintech 50 competition on behalf of four organizations driving investment and influence in technology and innovation for financial inclusion. This global effort to recognize the most promising early-stage inclusive fintechs has generated insights into how investment in inclusive fintech is concentrated, and a deeper understanding of how investors can help these companies scale.
Creating greater impact with the MIX Market dataset
The growing demand for services in these and other new areas, paired with the significant costs of collecting hundreds of thousands of private data points, has made it prohibitively difficult to sustain the MIX Market microfinance data service and ongoing data collection. Therefore MIX will stop offering its microfinance subscription data products, and will no longer update the MIX Market dataset. At the same time, enormous value can be unlocked by combining the existing MIX Market microfinance dataset with other global finance and development data. As a result, we are transitioning the data into the World Bank’s Data Catalog, which consolidates access to the World Bank’s flagship datasets, including the Global Findex. In this new home the data will be accessible and open to the public, and this effort can serve as an example for other mission-driven data consolidation. I look forward to seeing what rich insights emerge from this transition.
Together, these strategic shifts will allow MIX to play a leading role in frontier areas where our experience, expertise and skillsets can be transformational. Just as we have done in microfinance, we are committed to addressing information asymmetries to ensure equitable capital flows, encourage the growth of inclusive markets, and support informed thinking on the future of financial services.
Camilla Nestor is the CEO of MIX.
Photo courtesy of Campaign Creators.