Trends for 2016

As the calendar turns to December, we reflect on the year and look forward to what’s ahead. Many of the key issues and trends from 2015 have been highlighted on our blog – MTN’s fraud case in Uganda, increasing focus on challenges to branchless banking and mobile financial services uptake, omni-channel strategies – but as we reflect on the year past, we ask ourselves: what do we look forward to in 2016 ? Here are our thoughts:

Mobile Data for Development – Khurram Sikander

Over the past few years, the term ‘big data’ has been promoted as a potential solution to development challenges that exist in many of the developing and emerging markets in which we work. Automated analysis and interpretation of large data sets is not new. However, in the markets where we work, use and interpretation of data has been largely restricted to multi-national corporations or sophisticated commercial banks with the resources to consolidate data from disparate systems. With 4.6 billion unique mobile connections expected by 2020[1], we now have a single view of the customer through the mobile device. The increased utilization of mobile data, specifically call detail records (CDR)[2], can provide exciting opportunities. As smart(er) phone penetration increases in these economies, there will be richer data sets available for decision making in the next five years. In the immediate future, we have to maximize the opportunity that CDRs present to inform decision-making by governments, donors and the private sector.

There is real potential for CDRs to provide actionable data for industry stakeholders, and there are four key segments[3] where it could prove an important addition: economy, financial services, agriculture, and health.

I also look forward to Arsenal winning the 2015-2016 English Premier League title in May.

Governments taking hands-on approach to financial inclusion – Roland Pearson

Although financial inclusion has been a long-term goal for many, we are seeing more concrete and articulated national plans to reach previously un(der)served markets. In these new strategies, DFS is a key channel with which central banks, ministries of finance, and other key officials plan to reach new populations. Though the initiation of these plans is commendable, it is important that governments position themselves for an active approach in the development of inclusive, sustainable, and profitable financial ecosystems.

Governments and their agencies are among the few stakeholders that can influence all areas of the financial ecosystem, from industry-level actions to working with specific financial service providers. The unique nature of their position highlights the importance of their role and also the inclusive atmosphere that they must create. Governments cannot rely upon one player to develop the financial ecosystem, they must enlist a wide-range of stakeholders to develop the ecosystem at all levels (banks, payment service providers, MNOs, MFIs, SACCOS, and many others). They must also take initiative and drive issues themselves, such as creating an interoperable payments system – an important aspect of the ecosystem and often reliant upon the push from officials.

While their actions and influence is required throughout, there are several areas of focus, including: creating an enabling environment for all stakeholders, with regular industry input; designing and implementing a non-restrictive, but comprehensive, regulatory framework; ensuring consumer protection and empowerment; and tracking results and performance of the ecosystem. A government’s cross-cutting impact and pervasive influence is key to ensuring that the financial ecosystem is developed in a collaborative manner and with a focus on including un(der)served populations.

Concrete actions to advance national payment system development and financial inclusion at a macro level – Tricia Cuna Weaver

With the first set of commitments to the Maya Declaration pledged in 2011, government-level support for financial inclusion is not a new trend. However, governments are increasingly taking action to execute on these commitments in concrete, actionable ways. These actions include the development of national payment system strategies, which acknowledge the role of new financial players and innovations in promoting development of the national payment system, while also ensuring the safety and soundness of the system. Within these national payment system strategies, governments are also stating financial inclusion as a direct objective.

Increasing investments in financial inclusion through digital financial services at a meso level – Tricia Cuna Weaver

At a meso level, global financial sector players are also increasingly investing in initiatives that promote financial inclusion, broader inclusive growth, and cashless economies. It is not the foundations tied to these institutions which are making these investments, but rather the corporations themselves, which recognize the importance of broad-based economic growth and financial inclusion to their business objectives. For example, Enclude is supporting MasterCard’s Center for Inclusive Growth with the development and execution of its strategy to connect one million microentrepreneurs to the formal economy by 2020. In Mexico, MasterCard also has a model in place that enables microfinance institutions to issue MasterCard-branded products.

More innovation in SME analytics and Fintech solutions – Vanina Vincensini

Fintech companies have started providing solutions to further expand access to finance to small businesses, moving away from a focus on the mass consumer market. They provide tools and platforms to help connect businesses to financial institutions, or build financial track record and transaction history as alternative measure of SMEs’ risk profiles. For example, Kopo Kopo promotes the acceptance of digital payments at merchants while building business intelligence analytics and cash advance services for these merchants. Yet few solutions propose to leverage technology to build adapted interfaces for businesses’ day to day financial lives. We could expect solutions to develop financial literacy and management applications for SME clients, as well as an adaptation of smartphone digital finance interfaces to incorporate menus for business purposes, e.g. accounting and record keeping.

Emergence of Big Data Ecosystem – Michael Adenuga

Big data is changing the way companies do business, and, when leveraged well, it can create new opportunities, transform business models, and disrupt industries. In financial services, the proliferation of big data will create an ecosystem where data can be obtained from multiple sources, aggregated, harmonized, and transformed. These emerging ecosystems will be made up of various actors, ranging from large incumbent companies, such as mobile networks operators, insurance companies, commercial banks and microfinance institutions, to start-ups such as fintechs, social media and internet businesses. At the heart of the ecosystem, together with the support of regulatory bodies, data scientists and data engineers will drive data aggregation, harmonization and transformation. The harmonized or transformed data will provide support towards the development of financial products that are disruptive, cheaper, and customer centric. The development will require support of regulatory bodies on consumer protection and data privacy issues.

Mobile phones assisting responses to the refugee crisis – Paul Newall

The world is facing the greatest humanitarian crisis since WWII. While there have been many instances of mass migration in human history, there is one key difference to today’s crisis, and it’s a trend that may provide an avenue to reaching/connecting those in-need: the mobile phone.

At a time when ignorance and fear about the refugees is at an all-time high (Hello, Mr. Trump), the mobile phone provides the tool to reach refugees and learn from their behaviors. Through mobiles, governments/donors can connect to those in-need, allocate cash-transfers, provide health and re-settlement information, and break down any language barrier. Using the data generated from the refugees’ usage of the mobile phone, we can better target our response to their needs (transfers, products, etc.). Such a targeted, data-driven approach was not available in mass migrations of the past; we must make sure we do not waste it now.

Proliferation of the budget smartphone – Mark Nichols

The proliferation of smartphones globally will continue to change mobile money services and players. While this trend is skewed towards more developed economies (in sub-Saharan Africa, smartphones are only 25% of total mobile subscriptions), smartphones’ relative market share is growing much faster in sub-Saharan Africa than in North America or Europe.[4] Affordable handsets (MTN, Tecno, and Google already offer smartphones at or below $50) and mobile internet access (driven by initiatives including Facebook’s Internet.org) allow mobile money providers to move beyond the constraints of feature phones.

An immediate consequence of the spread is improved user interfaces and integration with smartphone capabilities for existing mobile money services, but this shift cuts deeper. Third parties can develop apps built on the mobile money service, such as pesaDroid and m-ledger, money management applications built on M-PESA. With the service delinked from SIM cards, competitors using mobile and web-based interfaces, such as Facebook’s remittance/e-money services, can enter the market, and existing services can expand to a customer base beyond that of a specific telco.

[1] http://www.gsma.com/newsroom/press-release/one-billion-new-unique-mobile-subscribers-by-2020-gsma/

[2] http://www.unglobalpulse.org/sites/default/files/Mobile%20Data%20for%20Development%20Primer_Oct2013.pdf

[3] https://docs.gatesfoundation.org/Documents/Using%20Mobile%20Data%20for%20Development.pdf

[4] http://www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf

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