Event Summary: Protecting the Poor through Financial Innovation

This past Tuesday, June 18^th, the Global Assets Project (GAP) launched its interactive website and held a panel discussion on the opportunities for promoting savings-linked social protection payments. The event, Protecting the Poor Through Financial Innovation, kicked off with GAP Director Jamie Zimmerman introducing the recent movement towards linking financial inclusion efforts to cash transfers, specifically within the context of electronic payments. She highlighted the work done in the past months by New America’s Global Savings and Social Protection  (GSSP) initiative to create an online platform that examines the growing trend towards electronic cash transfer payments, as well as studies the potential to leverage this trend to introduce financial inclusion as a means to promote savings and reduce poverty.  

The website was introduced by GAP’s Vishnu Sridharan, who offered an overview of several key features and functions of the site. He began by providing context behind the idea of its creation, as well as the data that was used to produce it. He emphasized the mission of the website, which is to offer a comprehensive “state of the field”—a dynamic field that entails a rapidly growing number of stakeholders, programs, and beneficiaries—to understand where innovation is occurring and where it is possible when it comes to incorporating asset building within social protection programs. He explained the underlying theory behind focusing on the potential for savings linkages, relaying that one of the trends of the financial inclusion field includes greater emphasis on graduating from poverty; that is, not only maintaining a level of subsistence and consumption, but also achieving long-term economic security.     

The event was capped off with a panel of experts representing a wide variety of sectors involved in work pertaining to the intersection of cash transfers and financial inclusion.

Sarah Rotman, Financial Sector Specialist at the Consultative Group to Assist the Poor (CGAP), started off the panel discussing CGAP’s emphasis on branchless banking, and how it is attempting to spur innovation on the payment side of programs to link flows of money to financial inclusion. After discussing some examples of CGAP pilot programs in this regard, she explained how GSSP’s website, as well as its Trends paper, will be useful tools in showing the huge shifts governments have made on the payment side of cash transfers. She also pointed to how the website’s data highlights the important difference between countries that use government to person (G2P) payments to build up their financial sector and those that have G2P payments that are facilitated by existing payment infrastructure. She closed by saying that although many interpretations exist as to what “savings” means—from asset building to consumption smoothing, to simple storage—the overall objective is to provide the poor tools to manage  their limited resources.

Next, Jorge Rubio Nava, Regional Director for Microfinance at Citibank, talked about Citibank’s commitment to emerging markets and its view of financial inclusion.  He referred to it as the core of the bank’s mission and a “key priority of the bank from the highest level.” He explained that, from the bank’s perspective, financial inclusion is both a business and philanthropic opportunity. He offered the example of the recent partnership between Citi and USAID to accelerate the adoption of mobile financial services, and explained how the GSSP website will be used to enhance its dialogue with governments and other partners with respect to how to increase efficiency around payments. He also added that the website’s data will be utilized to help develop products that will eventually reach the unbanked. 

Sahba Sobhani, of the Growing Inclusive Markets Initiative at the United Nations Development Programme (UNDP), followed, explaining how the United Nation’s (UN) overall agenda heavily prioritizes aid accountability & transparency, with electronic payments playing a large role. He said that the UNDP has been trying to pinpoint initiatives in which there is potential to move toward electronic payment systems, citing an example of mobile cash transfers for a housing repair project in Haiti. He offered cautious optimism regarding fragile states, explaining that although evidence points to the use of electronic payments as a storage tool in such areas, there is hope to eventually incorporate financial inclusion. He emphasized that a big message from the UN is that in order to really push the agenda of financial inclusion, more thought must be put into its outcomes; in other words, financial inclusion needs to be seen as an enabler of livelihoods development.

Dorcas Robinson, Director for Food Security at CARE, ended with speaking about financial inclusion as a tool to build dignified livelihoods, citing CARE’s work on savings groups and the village agent model.  She discussed the non-financial benefits of savings programs, including experience in group organizing, governance, and negotiating. She also reiterated CARE’s emphasis on expanding social protection programs as a means to provide healthy and productive lives, which also includes providing financial services. Robinson echoed the excitement in the field over mobile banking from the programming perspective, but also pointed out that saving-led approaches are another revolutionary technology to be leveraged.

Questions from the audience included inquiries about the factors that went behind choosing programs to track, regulatory frameworks, and the inclusion of credit/insurance schemes. To hear more on the insights of the panelists, as well as view the entire event, you can check out the recording here.