NB Financial Health

Thursday
April 17
2014

Scott Anderson

March’s Most-Popular Posts on NextBillion

Three posts, each advocating constructive and concrete steps for expanding the umbrella of financial inclusion to even more people, were the most-read articles on NextBillion in March.

Most Viewed for March

A Visionary Approach to Financial Inclusion: Nachiket Mor discusses his groundbreaking plan for universal financial access in India – Part 1

Nachiket Mor and his committee report on financial inclusion has captured the attention of Indian and worldwide players in financial access, particularly with the audacious target of securing bank accounts for every Indian adult by 2016. The report, which was commissioned by the Reserve Bank of India, prescribes a variety of tactics for achieving that strategic goal – from leveraging the national ID card system to finding prospective unbanked account holders to expanding what constitutes a “bank” by allowing current non-banking enterprises to offer new, bank-like services. In two parts (you can read part two here), NextBillion Financial Innovation Editor James Militzer interviewed Mor about his report and its potential pitfalls. Here’s a key exchange:

“James MIlitzer: Some have pointed out that the report seeks to achieve in the next two years something that India (and the RBI) have been working toward for decades. What is radically different about your plan (or about the current state of India’s economy, government or new technologies) that will make these goals attainable so quickly, where prior efforts have failed?

Nachiket Mor: The recommendations of the report are anchored to the underlying momentum generated by several dramatic developments in India, especially the ones in supply side infrastructure seen in recent years. For instance, the Unique Identification (UID) project has already covered 500 million Indians and expects to complete the task of issuing a UID to the rest of the country by 2016. By linking UID numbers to Know Your Customer (KYC) norms, RBI has already paved the way for universalising bank accounts, thus removing one of the most important barriers to financial access.

Telecommunications companies now have over 870 million mobile phone subscribers of whom over 350 million are based in rural areas, and the rural number continues to grow at an annualised rate of 10 percent. Therefore, India already has all the elements for success in place – a wide range of institutional types, well-developed financial markets, a good regulatory framework, and large scale and high quality authentication and transaction platforms. If these elements are used well, paradoxically, it is even possible that poor historic progress on financial inclusion may actually present India with an opportunity to leap-frog over the rest of the world and may prove to be an advantage.”

Second Most-Viewed Post for March

New White Paper: The Case for Using Behavioral Economics in the Financial Inclusion Space

In the Philippines, only 26 percent of adults use formal financial services and almost 80 percent do not have a deposit savings account, writes Josh Wright of Ideas42 (a NextBillion Content Partner). Wright details a recent report he co-authored with Alexandra Fiorillo and Louis Potok which shows how to harness the power of behavioral economics to increase savings rates at the Filipino CARD Bank. Key quote:

“A randomized control trial showed that clients who were exposed to the new design when opening a savings account made initial deposits that were 15 percent higher than the ones made by clients who opened accounts using the standard process. They were also 73 percent more likely to initiate a transaction in the new account, and made smaller and more frequent ongoing deposits as well as smaller withdrawals. Most importantly, the intervention appears to have had the effect of increasing balances by 37 percent compared to the control group over the course of the eight-week pilot.”

Third Most-Viewed Post for March

No Silver Bullet: While microfinance alone won’t end poverty, it is making an impact – so let’s re-focus it to serve the poor

Steve Hollingworth of Freedom From Hunger had a clear-eyed, but hopeful take on microfinance’s gains and backslides over its 25-plus year history. He makes a compelling case for the broader microfinance industry to link up with other sectors, such as health care, to better learn and better act the mission of serving the poor. Key quote:

“With more than 200 million clients worldwide, microfinance providers have proven to be a durable and sustainable channel for reaching poor families. The innovations that we are seeing from many of our sister organizations in the sector are very inspiring, impacting everything from agriculture, savings and housing to education and mobile technologies. Imagine how the debate would change if the microfinance sector was contributing in a significant way to national and global health-improvement targets, especially in the areas of maternal/child health and nutrition. Now THAT would be impact!”

Congratulations to these contributors and to everyone who contributed articles on NB in March.

Scott Anderson is the managing editor of NextBillion.

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financial inclusion, ideas42, lending, savings