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An Introduction to Financial Services for the Poor
Janine Firpo, Deputy Director
September 2015
ALL LIVES HAVE
EQUAL VALUE
© Bill & Melinda Gates Foundation | 2
BMGF Global Reach and Presence
1,2002012 active grantees
~1,200Employees worldwide
US $3.6B2013 grant payments
Ethiopia
Europe and
Middle East Office
ChinaWashington, D.C.
India
Nigeria
South Africa
Seattle
US $40 BAsset Trust Endowment
TrusteesBill & Melinda Gates,
Warren Buffett
© Bill & Melinda Gates Foundation | 3
GLOBAL HEALTH
Discovery & Translational Services
Enteric and Diarrheal Diseases
HIV
Malaria
Neglected Infectious Diseases
Pneumonia
Tuberculosis
GLOBAL DEVELOPMENT
Agricultural Development
Emergency Response
Family Planning
Financial Services for the Poor
Global Libraries
Integrated Delivery
Maternal, Newborn & Child Health
Nutrition
Polio
Vaccine Delivery
Water, Sanitation & Hygiene
Reinvent the Toilet
U.S. PROGRAM
College-Ready Education
Postsecondary Success
Washington State
EVERYONE BENEFITSThe Gates Foundation believes that
from an economy that includes everyone.
BILLIONS ARE EXCLUDEDfrom a formal economy.
Yet today
© Bill & Melinda Gates Foundation | 4
• The economics of traditional transactions don’t work at scale - for providers or the poor
• Payments are a universal need for all people, including the poor
• Digital channels are much less expensive than alternatives
• The design of digital payment systems – the decisions made upfront – determine the cost
The economics and other barriers require a new, digital financial system that is inclusive & sustainable
© Bill & Melinda Gates Foundation | 6
Key observations
To help poor people move out of
poverty and stay out of poverty, we
seek to:
• Generate economy-wide ef f iciencies
by digitally connecting all people to
the f inancial system
• Reduce the amount of t ime and
money that poor people spend to
conduct f inancial transactions
• Increase poor people’s capacity to
smooth cash f lows, weather f inancial
shocks and capture income-
generating opportunit ies
Our Objectives
Focus countries : Bangladesh, India,
Indonesia, Kenya, Nigeria, Pakistan,
Tanzania, Uganda
© Bill & Melinda Gates Foundation | 7
Stages of Market Development
EnablingEnvironment
Digital Payment Platform
Digital Payment Ecosystem
High Impact Digital Financial Services
Basic Connectivity
Critical mass of mobile coverage and penetration amongst rural poor
1Enabling regulations that support poor people to open accounts and providers to outsource distribution, and to protect users
2Poor people adopt and use low-cost digital systems for P2P and basic transfers.
3Poor people get money, spend money, and conduct a majority of financial transactions digitally, including proximity payments .
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India
Nigeria
Indonesia
Pakistan
Tanzania
Uganda
Bangladesh
Poor people adopt and use digital to move out of poverty and stay out of poverty
© Bill & Melinda Gates Foundation | 8
Enabling EnvironmentResearch and
Emerging TechnologyLevel One Project Ecosystems and Services
FSP is Organized Across 4 Initiatives
© Bill & Melinda Gates Foundation | 9
Enabling EnvironmentResearch
and Emerging Technology
Level One ProjectDigital Ecosystems
and Services
Enabling EnvironmentResearch and
Emerging TechnologyLevel One Project Ecosystems and Services
The Level One Project
© Bill & Melinda Gates Foundation | 10
Enabling EnvironmentResearch
and Emerging Technology
Level One ProjectDigital Ecosystems
and Services
© Bill & Melinda Gates Foundation | 11
Retail and Commercial
Banks
Retail, Commercial
and Settlement
Banks
Central Bank
Card Networks
ACH
RTGS
National Digital FinancialService System
Interoperability Service for Transfers
Fraud and Risk Management Service
Agent and Merchant Account Management
Digital Financial Service Providers
Account Opening Service
Consumer Account Mgmt.
Digital Financial Service Providers
Account Opening Service
Consumer Account Mgmt.
Agents
Lower Income Consumers
Small Payees (Merchants,
Schools, Clinics)
Large Payees (merchants,
utilities, hospitals)
Higher IncomeConsumers
Large Payers (Governments,
NGOs, Employers)
Agents
Lower Income Consumers
Small Payees (Merchants,
Schools, Clinics)
Large Payees (merchants,
utilities, hospitals)
Higher IncomeConsumers
Large Payers (Governments,
NGOs, Employers)
The Level One Project Framework
- Open-loop interoperability between providers
- Immediate funds transfer and same day settlement
- A push payments model
- Adherence to well-defined and adopted international standard and open application program
interfaces (APIs)
- Adequate system-wide shared fraud and security protection
- Efficient and proportional identity and know-your-customer (KYC) requirements
- System level transaction irrevocability
© Bill & Melinda Gates Foundation | 12
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The Level One Project Design Principles
Enabling EnvironmentResearch and
Emerging TechnologyLevel One Project Ecosystems and Services
Digital Ecosystems and Services
© Bill & Melinda Gates Foundation | 13
Enabling EnvironmentResearch
and Emerging Technology
Level One ProjectDigital Ecosystems
and Services
Enabling EnvironmentResearch and
Emerging TechnologyLevel One Project Ecosystems and Services
Four Pillars of Next Generation DFS Strategy
© Bill & Melinda Gates Foundation |
Inclusive Growth Usage and Impact MetricsEcosystem Development High Impact Digital Financial Services
Catalyze the development of key ecosystem building blocks that pave the way for a wide portfolio of digital financial products for our target consumers
Drive growth of existing digital financial services by combining the best of human-centered design with data-driven growth analytics to the entire customer experience
Explore the digital financial services that deliver positive impact at the household level and have the potential to achieve significant scale
Develop metrics that move beyond access to adoption, usage, and impact
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Thanks to the rapid rise of
DIGITAL PAYMENT SYSTEMS…and the ubiquity of
MOBILE TECHNOLOGY…
WE HAVE THE POWERto change this inequality.
© Bill & Melinda Gates Foundation | 15