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

Wednesday, August 1, 2018

IFC, a member of the World Bank Group, together with the Mastercard Foundation, today released a digital study that presents a set of best practice financial modeling benchmarks for agent banking and mobile money solutions. These benchmarks will aid financial institutions as they launch or expand digital financial services for greater financial inclusion in emerging markets, a critical step in achieving inclusive economic growth.

The benchmarks are gathered together in a digital study that is available online: Aligning Expectations: The Business Case for Financial Inclusion. It will help financial institutions design sustainable business models for affordable and accessible financial services, targeting previously unbanked populations such as small-scale entrepreneurs, low-income individuals, and rural communities. The benchmarks are based on a four-year study of nine financial institutions pioneering agent banking and mobile money solutions in Sub-Saharan Africa.

Riadh Naouar, Manager of IFC’s Financial Institutions Group Advisory in Sub-Saharan Africa, said, “The benchmarks show that there is a viable business case for digital financial services to expand financial inclusion. The pioneers of mobile and agent banking had to guess their way forward, but now these benchmarks make it less costly and risky for new entrants to the market.”

The development of digital financial services has led to an unprecedented increase in financial inclusion in Sub-Saharan Africa over the past decade, from 24 percent in 2011 to 43 percent in 2017 (Findex 2018, World Bank). Sub-Saharan Africa, the only region where the share of adults with a mobile money account exceeds 20 percent, is fast moving towards the goal of universal financial access by 2020.

“Agent banking and mobile money have begun to transform the financial landscape in many African markets, and there is an increasing body of evidence to show that this has real, positive impact on people’s lives and livelihoods,” said Riadh Naouar.

The benchmarks study is a knowledge product of the Partnership for Financial Inclusion, a $37.4 million joint initiative of IFC and the Mastercard Foundation to expand microfinance and advance digital financial services in Sub-Saharan Africa.

Photo courtesy of Mastercard Foundation.