Digital financial services have been a robust part of the development sector for over a decade and their impact continues to grow. This blog post is part of a series produced by mStar that focuses on successful projects that achieve results-driven impact in people’s lives. This post was originally published on the mStar digital development blog.
It’s an exciting time for mobile money expansion in Haiti. Digicel’s MonCash—Haiti’s largest mobile money deployment—has reached nearly 1 million customers and $400 million in yearly transacted value in 2017. This customer base represents a +1500 percent increase from 2015, the same year Digicel rebooted its strategy, marketing approach, product offering, and sales and training force.
Digicel has achieved these impressive results despite a generally unfavorable enabling environment for mobile money. The digital financial service sector, including mobile money, still operates under the original e-money policy that was drafted in 2010 in response to interest and significant donor investment, particularly by the Bill & Melinda Gates Foundation-funded Haiti Mobile Money Initiative and the USAID/Haiti HIFIVE project. There also have not been partnerships or active dialogue to further develop interoperable systems, shared or common agent networks, or opening of APIs to encourage fintech innovation. These results also came at a time where there was no broad digital financial services donor support or programming in Haiti. Thus, Digicel’s recent results are largely attributable to its own internal, sustained effort.
Yet despite the 1500 percent increase in MonCash clients, Haiti still has the highest unbanked population in the Latin America and Caribbean region. Even if doubling the findings from the 2014 Global Findex, Haiti would still exhibit some of the lowest financial inclusion not just in the Latin American and Caribbean region, but globally. There’s no doubt that there is still a lot of work to do in Haiti. Issues such as diversity of products that focus on including the poor, women, and marginalized populations, financial education, consumer protection and product cost and quality are not well understood. Efforts to promote digital financial services in Haiti and broader financial inclusion must lead to the safe delivery of a variety of financial services at affordable costs to sections of disadvantaged and low-income segments of society.
The USAID/Haiti Finance Inclusive (FinInc) project, which started in April 2017, is designed to promote broad-based financial inclusion, including the expansion of digital financial services in Haiti. FinInc’s activities began amidst MonCash’s rapid growth. Thus, the key question for FinInc is what is the right role for it to play so it does not get in the way of natural market growth. Below, I explore four key principles that drive our strategy and specific portfolio of activities to ensure that the digital financial services market growth actually contributes to pro-poor, inclusive economic growth. Taken together, our approach mixed data-driven, evidence-based methodologies with people-based co-creation and behavior change tactics.
1. Start with an arms-length, neutral mapping, and gap analysis of the market
At the heart of FinInc’s project design is the market systems approach, which relies on contributions from the totality of the digital financial service sector’s players. A tenet of the market systems approach is to develop a deep and nuanced understanding of the macro-, meso-, and micro-levels within the market. The myriad markets that affect digital financial services— commercial banking, microfinance, insurance, and mobile money all have supervisory structures, financial infrastructure, and demand and supply dynamics. As a first project activity, FinInc undertook a market system mapping to gain insights into how various market players provide, interact or view digital finance offerings to gauge current trends and potential developments in the sector. This activity looked at how market players contribute to an understanding of the current sector and relevant perspectives, constraints, and incentives associated with expansion and the extent to which growth in this sector might strengthen or compliment financial inclusion efforts. From this effort, market players, functions, and regulations were clearly articulated and recommendations were defined to ensure digital finance market development considers pro-poor growth dynamics. A sustained understanding of these dynamics throughout project lifetime remains critical.
2. Develop data in partnership with market players to ensure utilization and uptake
The FinInc program seeks to develop, share, and encourage utilization of new data and insights, particularly for the demand for digital finance services. Demand-side interrogation is critical to developing new products and marketing, and it also supports advocacy, behavior-change communications, and financial literacy campaigns and facilitates partnering. The process to develop the data products as well as to encourage utilization of the data is equally critical. FinInc’s data development approach ensures that local stakeholders are part and parcel of the data collection efforts. Our approach also mixes a variety of data products to contribute to a more comprehensive understanding of the financial sector including through nationally representative demand-side research such as FinScope Consumer, consumer-centric data such as from DAI’s Frontier Insights product, gathering ethnographic insights about technology usage among target client groups; and data mapping and analytics in partnership with MixMarket through the production of a finclusion map data analytics platform designed to help users make sense of financial inclusion data.
3. Ensure policy and regulation support takes an ‘all of government’ approach
Financial inclusion is not the purview of a single government unit. While Haiti’s Central Bank (the BRH) is responsible for the country’s National Financial Inclusion Strategy (NFIS), and it has a distinct financial inclusion unit; its mandate is cross-cutting. It works closely with several other key ministries on issues of education, identification, and sector-specific investment strategies. Keeping abreast of policy and political economy issues requires engaging key government champions, maintaining positive momentum, and leveraging local, regional, and international networks and forums such as the Alliance for Financial Inclusion, of which Haiti is a member. FinInc built its project support strategy directly with the BRH NFIS team; signing a letter of cooperation within the first month of project operations. This not only allowed us to clarify our implementation plan, but it built huge credibility with the BRH NFIS team and avoids duplication of existing efforts and other donor initiatives. FinInc’s work with the BRH focuses on donor coordination, data and information, and consumer protection, all key issues to support the further development and expansion of digital finance services and which link to other government objectives such as shared data and education.
4. Use co-creation with local stakeholders to achieve buy-in for change
Sustainable changes require building the capacity of and linkages between local market actors and encouraging local ownership of interventions. Market systems approaches stimulate the conditions in which local market actors can collaborate, innovate, and adapt. FinInc uses co-creation models, creative problem-solving techniques, and cross-sector collaboration activities to ensure local knowledge and capacity is not only leveraged but merging toward common vision and purpose. One of the project’s strategic initiatives was a cross-cutting co-creation event with representatives of the financial sector (banks, microfinance institutions, credit unions, insurance companies, and mobile money providers), nongovernmental organizations, and community-based organizations. The group worked together to define synthesized market constraints and targeted strategies to tackle them, which included specific recommendations and next steps for work around interoperability and shared digital financial services infrastructure. Together, the participants also developed a common vision and joint purpose statement to “work together to improve people’s lives and stimulate wealth creation for all through access and use of financial services by all, especially based on technology.”