Looking to Achieve Financial Inclusion, IFC, Experts Embrace Innovation
Around the world, some 2.5 billion adults and 200 million small and medium enterprises lack access to adequate financing and capital. Considering the size of the challenge, achieving global financial inclusion will require not just hard work and commitment, but also the creation of a 21st century financing ecosystem that puts a premium on technology and innovation.
Brick by Brick, IFC’s three-day forum on technology and finance held last month in Istanbul, may have placed a few building blocks. The early focus was on mobile banking, which has proven one of the best means of extending financing to people in remote and rural areas.
“Over the past few years we have substantially expanded our work in mobile and other electronic payment solutions and alternative delivery channels, taking a long-term perspective to grow the clients’ businesses in a way that achieves both financial and social sustainability and allows for innovation in this space,” Peer Stein, Director of Access to Finance Advisory at IFC.
The conference welcomed over 70 attendees, including representatives from 20 IFC clients around the world, to discuss the challenges of technology-enabled innovation and ways to transform markets and expand their reach with IFC.
Keynote speaker Saul Kaplan of the non-profit Business Innovations Factory urged the crowd to think outside the box and seek transformational change. The author of The Business Model Innovation Factory explained his theory of disruptive innovation and advised leaders to create sandboxes for invention and have the courage to test their new products in real-life settings. "I found the keynote speech extremely inspiring and thought provoking," said Paresh Rajde, of Suvidhaa, an Indian firm.
Officials from several cutting-edge firms such made detailed presentations, providing attendees with new business insights. Tiaxa provides its customers “nano credits” ranging from $.20 to $1, helping users top up airtime via complex algorithms to calculate credit worthiness. Lenddo uses social network data to make credit decisions about potential clients. Maana maps credit data and social behavior, such as informal lending practices, on mobile devices integrated with banks.
All those ideas inspired Arnaud Ventura, the founder of Microcred Group, a microfinance investor. “When I think of Microcred in five to ten years, I am not thinking thousands, but tens of millions of clients,” said Ventura. “We need to take a fresh look at the company and transform it by leveraging technology.”
Attendees enjoyed peer-learning sessions and discussions with industry experts on product design, customer education, and ways to develop new business models. “I really like this format of peer-to-peer learning,” said Jenny, of China-based financial services firm F-Road. “It provides us to with the opportunity to learn from others, their challenges and their tricks up the sleeve; it helps us to promote ourselves and the event has given us new ideas for new products and services.”
IFC has been facilitating payment services since 2008. During this time, IFC’s investment portfolio has grown to $41.4 million in 8 equity investments. Additionally, advisory services have committed over $24.1 million in 22 projects. IFC has also conducted market scoping studies in 28 countries to assess market readiness for extending reach through technology enabled payment services. IFC has in recent years expanded its work in mobile and electronic payment systems, building a global advisory practice, taking a long-term approach and partnering with nearly 40 clients, including providers like FINO, Suvidah, and Yellowpepper.
At the forum, IFC highlighted its cashless supply chain system, while Bank South Pacific detailed its IFC-assisted financial transformation, which has led to a dramatic increase in customers, mobile transactions, and revenue after just one year. IFC's new strategy focuses on helping our clients take a lead role in creating best-practice models and scaling up to 150 million clients in five to seven years.
The Istanbul forum sought to help firms share successes and failures and break down the challenges of innovating in mobile finance, starting discussions likely to bear fruit in the months and years to come. "Learning what others are doing, their experiences and solutions to challenges, is very useful to benchmark ourselves,” said Ozlan Hudaylogluglu, of TEB, Turkey.
As they departed, participants rated the event a 4.5 out of 5. “I would like to thank and congratulate you and the whole IFC team for the organization of the Istanbul seminar,” wrote Claude Falgon, CEO of Horus Development Finance. “This was a rich and learning experience.”