Open finance can be a transformational enabler to unleash the power of data to increase financial inclusion. Data-driven strategies and open finance ecosystems can revolutionize access to financial services, especially for underserved communities.
Data sharing can unlock a number of opportunities for the financial inclusion of poor individuals in EMDEs. To understand how, we must look at the various models of data sharing and how they may result in an inclusive data ecosystem.
Customer Data Trails
The knowledge products covered here provide an overview of the landscape of data trails generated by low-income individuals, especially women as well as excluded segments. Through these products we uncover where and what data is available and on whom.
India is pioneering open finance in developing economies, with 64 million accounts linked through its Account Aggregator ecosystem as of March 2024. As India continues to scale the ecosystem, early insights could help shape AA's future direction.
Brazil's rapid expansion of open finance shows its potential to transform financial services, and recent CGAP research offers valuable insights into Brazil, as well as other markets interested in implementing open finance.
Many low-income people generate rich data trails that are not being fully leveraged in the design and delivery of financial services. CGAP's reading deck puts a spotlight on the specific data trails generated by digitally included yet poor people, the sources of these data trails, and variations of data trails across different segmentations.
Women are lagging behind men in digital access and the generation of digital footprints, which can lead to further disadvantages in financial access and usage. We discuss how financial service providers and authorities can address these gaps.
In this webinar, the authors will present the main findings from research on the growing availability of data trails and shed light on the gender gaps and other trends identified in the data trails of DIP people.
Many people who generate significant amounts of digital data are poor. Who are they? What sort of data are they generating? And how can it be used to make financial services more useful to them?
Use of Data by Providers
The knowledge products covered highlight the opportunity that data opens within financial services. Specifically, how financial services providers can leverage data to design inclusive financial services by leveraging data to innovate, expand access, and improve services.
Evidence suggests that women have often demonstrate higher loan repayment rates than men, despite facing greater loan approval barriers, indicating the need for gender-intentional credit scoring. To learn more, a virtual workshop is being offered for lending service providers, credit risk managers, data scientists, and others working on credit scoring techniques and implementation strategies using Excel, R, and Python.
With 3.8 billion people in emerging markets lacking adequate insurance coverage, data plays a crucial role in enabling insurers to comprehend these segments' specific needs and risk profiles. This, in turn, helps develop more accurate risk assessment and pricing models for inclusive insurance offerings.
The use of transactional data for credit underwriting can play a part in closing the estimated US$4.9 trillion global financing gap for micro and small enterprises. This case study examines the data and experience of two fintechs in India that use different sets of transactional data for credit scoring.
Evidence shows women often demonstrate higher loan repayment rates than men, suggesting they are lower-risk borrowers yet face higher barriers to loan approval. This guide introduces a gender-lens analytical framework for lenders to determine whether lending decisions and outcomes in their portfolios differ by gender and, if so, how.
Financial services providers that see an opportunity to reach financially excluded people in rural areas can use new technology to remotely gather and analyze data on potential customers. This guide explains foundational concepts of machine learning and how FSPs can apply those methods.
Financial services providers can improve their businesses by using segmentation to develop a more accurate understanding of their customers. This guide shows providers how they can use data analytics to understand their customers by performing more complex analyses and extracting insights that were previously hidden.
Statistical models can help lenders in emerging markets standardize and improve their lending decisions. This guide emphasizes that the effectiveness of data analytics approaches often involves building a broader data-driven corporate culture.
Microfinance institutions that successfully generate value for their business and customers through digitization anchor these efforts in business intelligence. This Technical Note outlines an approach for improving business intelligence with interventions that require minimum or no investment in technology. CGAP also offers a customer dashboard library with detailed instructions for data teams and a tutorial video.
The CGAP Customer-Centric Guide explores challenges, strategies, and actions that lead to value for the business and for the customer.
Inclusive Data Ecosystem
These knowledge products cover how data sharing frameworks like Open Finance can help advance financial inclusion. They highlight how ecosystem-related factors like regulation and infrastructure can reduce provider barriers and spur innovation.
Open finance in India has grown rapidly, with a significant rise in linked accounts through Account Aggregators (AAs). New CGAP research offers insights on key drivers of AA adoption and areas for improvement to enhance customer experience.
Open finance frameworks have the potential to increase innovation, boost competition, empower customers, and deepen financial inclusion. However, they also introduce new risks that necessitate careful design and robust safeguards. As more countries explore or implement these frameworks, CGAP, BIS, IMF, UNSGSA, and the World Bank offer key considerations for designing effective and inclusive open finance frameworks.
India is pioneering open finance in developing economies, with 64 million accounts linked through its Account Aggregator ecosystem as of March 2024. As India continues to scale the ecosystem, early insights could help shape AA's future direction.
This working paper introduces the concept of an inclusive data ecosystem as one where low-income people’s data trails are used to improve their financial inclusion. The paper highlights open finance as a catalyst for inclusive data ecosystems and identifies key enabling layers that drive the success of open finance and, by extension, an inclusive data ecosystem.
This technical guide introduces the open finance self-assessment tool and development roadmap. It provides practical tools for policymakers to use to decide whether to implement an open finance regime to advance financial inclusion and outline a development roadmap to guide the implementation process.
Open finance gives low-income consumers greater control of their personal information, helping make their data work for them, giving them access to more products at lower costs through multiple and easy-to-access channels, and allowing for remote consumer onboarding. Under open finance, with consent from the customer, banks and financial service providers (FSPs) would be required to share consumer data with other FSPs and/or third-party providers, such as fintechs. However, this unprecedented ability to move entire financial histories both empowers consumers and poses risks. For example, data
This webinar features insights from CGAP research, as well as a panel discussion with experts from the Brazilian open finance ecosystem.
Brazil's rapid expansion of open finance shows its potential to transform financial services, and recent CGAP research offers valuable insights into Brazil, as well as other markets interested in implementing open finance.
Open finance gives consumers control over their personal financial data, leading to more suitable and better-targeted financial services. But this ability to move entire financial histories both empowers consumers and poses risks.
Open banking initiatives must be well designed to deliver the benefits they promise consumers and financial service providers - Nigeria’s framework offers a look at both the opportunities and potential pitfalls of implementing such a scheme.
In this webinar, the authors of a new CGAP Technical Note on open finance discussed how to address data protection concerns in an open finance world so that wary, low-income consumers in Emerging Markets and Developing Economies (EMDEs) can take advantage of what open finance has to offer.
Building on CGAP’s paper, Open Banking: How To Design for Financial Inclusion, this webinar featured regulators in Latin America and Africa who are implementing or planning to implement open banking regimes in emergin
While many regulators in emerging and developing markets understand the potential benefits of open banking regimes, they are uncertain how to design them in ways that support financial inclusion. CGAP has identified 12 critical design components.
When banks and other financial institutions responsibly exchange customer data with other providers, the result is better products for low-income customers.
Although growing numbers of low-income people are entering the formal financial system, many are not yet leveraging its full value. Emerging regimes for data sharing and payments flexibility have the potential to bypass traditional financial sector development and give poor customers better products and more choices.
CGAP's Ariadne Plaitakis presented what types of open banking-enabled products and business models CGAP believes would be most beneficial for financial inclusion, and how these may alleviate pain points of low-income individuals.