Our Approach
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“CGAP's policy work focuses on building favorable policy and regulatory frameworks for financial service providers serving the billions of poor people worldwide who lack access to safe, appropriate and affordable financial services.” Tim Lyman, Team Leader, Government and Policy
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Basic, everyday financial services are out of reach for more than two billion people in developing countries. But the rapid growth of branchless banking - which combines technology with retail channels - is reducing the cost and increasing the availability of such services.
As has happened in advanced economies, branchless banking is now changing the way people get financial services worldwide. In the past five years, Brazil has brought 13 million people into the banking system. Technology powered that explosive growth. In the Philippines, people would rather pay 1 percent to remit money via their mobile phone network than the 3-18 percent they are often charged by others.
While much of the current buzz is around mobile phones, other branchless banking applications are gaining traction as well. Brazil's increase in access to finance has been accomplished largely through the more than 95,000 banking "correspondents"--local merchants and post offices that act as agents for banks, equipped with card-swipe and barcode-reading point-of-sale (POS) terminals. In Russia, a broad network of bank ATMs, POS terminals, and online e-money providers offers transaction services outside of traditional branch offices.
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Law Library
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Increasingly, banking regulators and supervisors, MFIs, national microfinance networks, and other stakeholders are seeking to understand the optimal mix of regulation and supervision for microfinance. The Law Library addresses that need by disseminating information on world-wide experiences in regulating and supervising microfinance.
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Policy Developments From Around The World
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Regulating Branchless Banking
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CGAP defines "branchless banking" as the delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents. In addition to permitting banks and other traditional financial institutions to reach unbanked clients in a more cost-effective manner, branchless banking can allow nonbank actors (such as mobile phone operators and other parties) to provide financial services to the unbanked and underserved.
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Consumer Protection
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As the range of financial products and services offered to the poor and unbanked grows and the number and diversity of providers of these services also increase, it is likely that concerns about consumer protection as it relates to microfinance will only intensify. The challenge is to ensure that clients can make informed choices, products are designed to work for both the user and the provider, and mutual rights and obligations are understood and respected.
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Regulation & Supervision
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Many developing countries and countries with transitional economies are considering whether and how to regulate microfinance. Experts do not agree on all points but there is a surprisingly wide area of consensus.
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Role of Government
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Governments play different roles in answering the needs of poor unbanked and underbanked clients. Three broad, and sometimes overlapping, roles of the public sector are prevalent with significant differences across countries. Known as the “3 Ps”, they include the role of: (1) provider of financial services; (2) promoter of improved financial service access and quality by providers; and (3) protector of financial consumers. While many governments want to play a helpful role, it is still unclear which roles (and in which combinations and under which circumstances), tend to work best.
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