5 Themes in Financial Inclusion Innovation from European Microfinance Week 2016
European Microfinance Platform is celebrating 10 years of supporting inclusive finance innovation, and hosted European Microfinance Week 2016 (EMW) in Luxembourg last week. At the conference, I joined discussions about key organizations and challenges in the industry. Here are five of the main takeaways from the week:
The Underserved Refugee Population
The Social Performance Task Force (SPTF) is helping to provide financial services to the refugee population, which is now approximately 20 million people In reality we don’t know very much about the socioeconomic needs of refugees, and much of the research is focused on humanitarian efforts. SPTF is working to research and provide guidelines to financial service providers to better serve the financial needs of this population. The guidelines will be published on SPTF’s website in the coming months. Learn more about leading organizations supporting refugees from CFI’s blog series on refugees.
Opportunity in Myanmar
Representatives from VisionFund, Advans, UNCDF, and M-CRIL provided a look at the economic landscape of Myanmar and the future of financial inclusion there. In Myanmar, 70% of the population was excluded from formal financial services until 2011, when microfinance rapidly expanded. After 2011, 267 licensed Monetary Financial Institutions (MFI’s) opened. This opportunity comes with many barriers to inclusion, such as a lack of government regulation and funds and capacity building issues. However, there is widespread optimism with an adoption of regulations proposed by the Smart Campaign, as well as further demand for microfinance in Myanmar. Investors should consider moving into the region for long term impact.
New research from FIEC
The Financial Inclusion Equity Council (FIEC) hosted a discussion at EMW about their latest research on offshore financial centers. Daniel Rozas and Sam Mendelson of the European Microfinance Platform have been working with FIEC members, raising questions about the key drivers in deciding to domicile funds offshore, and why this is important for the impact investing space. This session was a good introduction to the research, and their publication will be released early next year.
Cyber security and Digital Finance
Expanding digital finance is important to everyone working in the financial inclusion space. Unfortunately, operational costs are too high to open banks in remote areas. The threat of cyber-attacks and the challenge of gaining trust in emerging markets are also important topics to review. International Development organizations, investors, regulators, and innovators gathered to highlight the risk. One topic that was discussed was the risks specifically faced by smaller banks: they are much more vulnerable to cyber-attacks and they don’t have enough capital to invest in security measures. Organizations like Suricate Solutions (an electronic banking and IT security firm) and UNCDF are working with regulators to collect data from the market and set up preventative measures to avoid vulnerability for the financial inclusion sector.
Microfinance and Access to Education
This year, access to education was the theme of the European Microfinance Award. It was represented by three finalists from around the world: Kashf Foundation (Pakistan), Fundación Génesis Empresarial (Guatemala), and Opportunity Bank (Uganda). The winner was Kashf Foundation, an organization that provides loans to private schools, training for teaching staff, and educational opportunities for women and girls. In a country where 25 million children are out of school, this €100,000 award by the Luxembourg Ministry of Foreign and European Affairs will make a great impact. The organization is also SMART Certified by the Center for Financial Inclusion.
These are just a few of the important discussions about innovations in financial inclusion. Each presents not only challenges but unique opportunities to learn and collaborate to make progress in inclusive finance.