This is a summary of a paper published by the Microfinance Information Exchange (MIX), January 2020, 45 pages, available at https://www.themix.org/s/MIX_Toward-Data-Standards-for-Inclusive-Fintech_January2020.pdf
To test its Data Standards for Inclusive Fintech, MIX asks, “What can we learn about fintechs as businesses and how they address challenges of inclusion?” Based on information from 45 fintechs, the majority of which are based in Sub-Saharan Africa, this exercise produced insights concerning “customers and growth, potential to scale, profitability, consumer protection and inclusivity.”
The authors argue that fintechs can grow their customer base by targeting women and those who do not have traditional identity documents. Fintechs also may be able to increase growth by researching effective management strategies, including those that take into account the differing characteristics of female-led and male-led fintechs. Regarding profitability, MIX highlighted the importance of understanding how costs and revenues change over time. The authors also found that fintechs can reduce costs by: (1) bundling financial and non-financial services into single products; and (2) leveraging agents to perform cash-in and cash-out services.
While most of the fintechs studied have basic consumer protection in place, “only 33 percent align with the GDPR”, the General Data Protection Regulation of the EU, which took effect in 2018. In terms of inclusion, nearly all of the fintechs report being committed to addressing inclusivity. However, most focus on addressing only one of these factors: accessibility, affordability or appropriateness. As a result, gaps remain in terms of equality among employees and customers alike.
By Anna Gravois, Research Associate
Sources and Additional Resources
MIX report
https://www.themix.org/s/MIX_Toward-Data-Standards-for-Inclusive-Fintech_January2020.pdf
MIX homepage
https://www.themix.org
More about MIX from MicroCapital
https://www.microcapital.org/?s=MIX
GDPR webpage
https://gdpr-info.eu/
Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at http://www.microcapital.org/products-page/.
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