Financial Inclusion

This week India's central bank, the Reserve Bank of India (RBI) rejected the government’s proposal to allow microfinance institutions to accept small deposits. The plan, outlined in the Microfinance Institutions (Development and Regulation) Bill, permits MFIs to accept savings deposits, an opportunity currently afforded exclusively to formal banks and some non-banking financial companies. In its rejection, the RBI cited apprehension as to the safety of funds deposited with MFIs due to the past year’s unfolding microfinance crisis.

A growing number of studies examine the relationships between children’s savings accounts and their educational and financial outcomes. (Please see the Center for Social Development’s website or read this review article for more information on the studies examining these relationships). Consistently, children who have savings accounts early in life have significantly better educational and financial outcomes compared to children who do not have savings accounts early in life. These findings hold true even after taking into consideration things like academic achievement, household income, and household net worth.

On November 18, 2011, D2D Fund is hosting the 2011 Prize Linked Savings Conference "More Than Fun and Games" in Boston, MA. Early registration ($150) is available until October 21^st. This one day summit will focus on the various models of prize-linked savings (PLS) that currently exist and bring experts from the academic, entrepreneurial, and policy arenas together to share information and think creatively about new approaches in the field.

By Maria Perdomo, YouthStart Programme Manager, UN Capital Development Fund

As part of the United Nations High-Level Meeting on Youth that took place in New York on 21-27 July 2011, the UNCDF-MasterCard Foundation initiative, YouthStart, hosted a side event on youth demand for financial services.

Panel participants in the event were:

This post originally appeared on the SPINNAKER Network.

In the Charles Dickens classic Great Expectations, the impoverished protagonist Pip finds himself in a constant battle between ambition and a loathing sense of dependence. As he strives toward costly goals, Pip suffers from a mental barrier to success due to a perceived reliance on Miss Havisham, a decrepit and perverse recluse, as his benefactor.

So what does Pip have to do with asset-building? He reminds us that behind the finances, the savings for the poor community is working with actual people and ambitions, not just clients and products. As funders, researchers, practitioners, and policymakers, it’s our collective responsibility as a community to ensure that savings products are developed and understood in a truly human context. As Kentaro Toyamo of the University of California, Berkeley reminds us, “What really matters in microfinance -- and much of international development -- is not just the ability of impoverished clients to consume a product provided to them on a platter, but to grow from the experience so that even if the service were suddenly to vanish, they would emerge stronger people who are better able to take care of themselves".

This presentation was given for “Coming Up with Cash in a Pinch: Emergency Savings and Its Alternatives,” a Family Financial Security Webinar by the Center for Financial Security at the University of Wisconsin.  The webinar details a comprehensive review of savings and households' ability to access cash quickly to meet unexpected expenses, policy recommendations that can support emergency savings, and the work of a non-profit counseling and financial empowerment center in New York City. 

This post originally appeared on the SPINNAKER Network.

Recently the Chief Minister of the Indian state of Kerala, Oommen Chandy, declared that at least one member of each household should now hold a bank account. Though holding a bank account is not the end goal -- Minister Chandy admitted that the State’s ultimate objective is inclusive access to a full range of banking services -- full financial access among Kerala’s 127 villages is certainly an impressive step in India’s ambitious plan to achieve financial inclusion. This is particularly true when noting that India’s village level penetration of banking services hovers around 5%.

This year the U.S. Department of Education's Gaining Awareness and Readiness for Undergraduate Programs, commonly known by the acronym GEAR UP, encouraged grantees to include children's savings programs in their applications. The Department of Education's decision to make children's savings programs a funding priority is based on research that tests the relationship between children's savings and their educational outcomes. This research, much of which is published by William Elliott (Assistant Professor at the University of Kansas and Senior Research Fellow here at NAF) and is publically available on the Center for Social Development's website under asset building, consistently finds significant, positive relationships between children's savings accounts and their educational outcomes including academic achievement, high school graduation, and college attendance and completion.

As part of building the stock of knowledge for the Savings for the Poor Innovation and Knowledge Network (SPINNAKER), the Global Assets Project partnered with MicroSave to conduct the first exploratory savings landscape country study. The goal of the study was to not only capture the range of savings products for the poor and identify opportunities for further innovative development, but also to help develop data gathering instruments and approaches and identify gaps for future research.

This post originally appeared on the SPINNAKER Network

While the Savings for the Poor Innovation and Knowledge Network (SPINNAKER) lives and breathes data, collaboration is its heartbeat. While a “community-driven data platform” may sound like an oxymoron to some, we see it as a fresh approach to facilitating new ideas among a growing yet disparate and uncoordinated field.

Here is how we see the problem: though innovations in savings products for the poor and their distribution channels have been tremendous over the five or so years, the field continues to face challenges in designing, marketing and delivering savings products that reach their market potential. Even in the many cases where financial institutions offer unique, innovative and successful savings products, the particulars of the products are very often unknown outside of -- and even sometimes within -- their own market.

Here is our theory of change: through collaborative sharing on a common platform that improves the way we produce, store, discuss and share information and data, everyone in the savings for the poor field gets more access to better data more quickly, which in turns results in a field that operates more efficiently and innovates more quickly. We’re testing this theory through SPINNAKER by:

• Aggregating and cataloguing information and data that can be used to inform policies, programs and products

• Making analysis, tools, and guides on best practices and other research easily accessible

• Providing a space for experts, donors, financial institutions, practitioners and other stakeholders to engage in dialogue with one another and explore possible collaboration and ideas to overcome challenges in mobilizing savings

Our Collaborative Model so Far

During SPINNAKER’s exploratory phase, we’ve engaged frequently with experts, practitioners and researchers in the field discuss the field’s data and information needs, as well as brainstorm new and interesting ways to collectively piece together the savings landscape puzzle. One particular exercise took place in June of this year: we convened a roundtable of 10 savings for the poor experts to present a demo site and discuss our approach to and priorities for collecting and visualizing data. Unsurprisingly, their preferences for the type of product information they thought should be collected by SPINNAKER reflected the type of work their institution leads. The technical assistance providers seem to be interested in promotion and marketing methods while researchers and consulting firms were interested in product fees. Financial institutions showed interest in operational information such as costing, technology and target populations. Clearly, lots of different data are needed and useful to the various stakeholders in the field, so SPINNAKER’s aim has so far been to aggregate and standardize as many of these variables as possible.

Thanks to everyone’s contributions, the site and its functions have since been revamped. Indeed, the current alpha version of the site would not be possible without the participation and support of various partners. For example, the framework of the resource section builds on the online savings resource guide for financial institutions developed by Women's World Banking and CGAP. Many of the institutional profiles you see in the database contain information provided by the MIX Market. The pilot “deep dive” study in the Philippines, and the corresponding institution and product data, was conducted jointly with MicroSave to survey the country’s savings product landscape. While we feel like the site is off to a good start, it is far from complete. Our hope is that with everyone’s involvement, SPINNAKER will develop into a high quality, super functional data platform that encourages and nurtures collaboration, inquiry and debate and ultimately, makes us all more effective researchers, advocates, developers or providers of savings for poor populations.

Ways to Get Involved Today

• Include your (or your affiliates’) product data in our global savings mapping exercise by completing the data entry form (all sources of information and data are attributed prominently on the site)

• Share your videos, blogs, questions and research with the larger field

• Explore our product comparison and graphing tools

• Sign up to join the network and receive updates

• Participate in our current discussion forum on innovation

• Get in touch to explore how SPINNAKER can be of service to you

• Answer our brief survey to help shape SPINNAKER’s design and offerings