Week of April 4, 2014

• David Evans from the World Bank provides a nice round up of key publications at the 2014 Pacific Conference for Development Economics, including papers on cash transfers and wages in Mexico, commitment savings products in the Philippines, and flexible microcredit design in Bangladesh.
   
• Researchers at the University of Colorado – Boulder analyzed findings from 188 studies  (and over 585,000 combined participants) on the connection between financial literacy and financial decisions.  From this meta-analysis, they found that education programs that are timed to be close to the financial decision have the biggest impact but that most interventions show weak links between education and financial decisions.
   
• You may think of savings groups as typically found in developing countries but this NPR piece highlights the ways they are used among communities in the US to provide access to savings and credit.
   
• A new study from the California Reinvestment Coalition reports on the impact of ATM fees for welfare recipients that use electronic debit cards. Over 96% of recipients use the cards and are often charged fees of $3-4 per transaction. Bank of America earned $3.6 million from welfare transactions in one year.
   
• FAI affiliate Igancio Mas discusses how the very words that describe financial products can change their usage and perception.  For example, many think of “savings” as something you do when you have excess money instead of a useful tool for dealing with emergencies.
   
• NPR’s Marketplace recently reported on workplace lending – when borrowers take out a loan through their employer, with repayments taken directly from paychecks.
   
• The IRS ruled that virtual currencies are property and subject to tax, which some say severely limits the potential of Bitcoin as an alternative currency since it is no longer fungible.
   
• Eva Vivalt of NYU’s Development Research Institute posted a blog on ways to improve impact evaluations that draws on data from over 400 studies in an AidGrade meta-analysis.

Week of March 25, 2014

• The National Consumer Law Center (NCLC) published a new report analyzing claims that big data and predictive algorithms will create alternative credit scores and new options of accessing credit for the unbanked.  NCLC concludes that more customer data does not necessarily equal good customer data or accurate scores and those scores may be violating federal laws.
   
• There were a few big announcements recently in the mobile money world  – Safaricom and Airtel jointly bought out yuMobile, the third-biggest telco in Kenya, T-Mobile announced it will offer financial services in Poland through a partnership with Alior Bank, and MTN partnered with Ecobank to allow customers to transfer money between accounts and withdraw cash from Ecobank ATMs in 12 African countries.
   
• In a recent webinar, Bankable Frontier Associates discussed key findings from four recent CGAP and Better than Cash Alliance case studies that examine the e-payment experience of cash transfer programs in low-income settings in Kenya, Uganda, Haiti and the Philippines. 
   
• When RCTs include treatments at the village or district level, what happens to individual consent?  Jed Friedman discusses the ethics of consent and trials in a post for the World Bank’s Development Impact Blog.
   
• Both The New York Times and WNYC profiled the lives and financial hardships of individuals working low-wage jobs.  While the Times looks at Chattanooga, TNand WNYC at New York, the struggles of households to get by share commonalities with each other and with those of the US Financial Diaries project.
   
• FAI affiliate Daniel Rozas partners with Gabriela Erice on a new paper for the European Microfinance Platform that shows at MFIs and banks in Bolivia, Nicaragua, and Pakistan 50-75% of savings accounts at MFIs and banks in Bolivia, Nicaragua, and Pakistan are empty and balances of accounts with funds are at least double the average reported size.
   
• Tom Murphy covers the recent debate on why remittances have fallen in the US-Mexico corridor and includes excerpts from a recent Felix Salmon article on this topic, Tim Ogden’s blog response to Salmon, and Michael Clemens and Tim’s work on migration as a household investment strategy.

Week of March 14, 2014

• CFSI published its Prepaid Industry Scorecard, which analyzes 18 prepaid cards and assesses their level of quality based on criteria related to transparent communication and marketing, overall value for the customer, and ability to expand financial access.
   
• While mobile phone penetration in Ghana is over 90%, up-take of mobile money services lags behind, particularly in rural areas.  IMTFI investigates why this is the case and also looks at the role of the private sector and government in promoting the use of these services. 
   
• The ILO’s Microinsurance Facility issued its 2013 annual report with the theme “Protecting the Working Poor.”  The report not only summarizes the work of the organization over the last year but also looks at shifts and trends in the microinsurance industry since 2008, focusing on the commercial viability of products and their value to customers.
   
• Elisabeth Rhyne, Managing Director for CFI, turns a critical eye to the current state of the microfinance infrastructure, focusing on key organizations that set standards and provide information globally. 
   
• Kevin Starr and Laura Hattendorf from the Mulago Foundation write a compelling piece for SSIR that reminds readers to temper the hype surrounding GiveDirectly and to not mistake “an important experiment for a proven solution” to poverty.  Also see Chris Blattman’s response to the SSIR piece.
   
• According to the IFC, “The total supply of formal finance to women-owned MSMEs [micro, small and medium enterprise] in 2012 is around Indian rupees 2.31 trillion ($42 billion). This resulted in a finance gap of Indian rupees 6.37 trillion ($116 billion), or 73 percent of total demand.”  The organization’s new report on the state of women-owned MSMEs in India looks at why this gap in demand exists and offers recommendations on improving female entrepreneurs’ access to finance.
   
• We appear to be in another cycle of the “RCT debate”: see recent posts from Lant Pritchett, Chris Blattman, Rachel Strohm, and David Mckenzie. Here are couple of posts from FAI Managing Director Tim Ogden from the last cycle: on External Validity and  Transcendental Significance critiques.

Week of March 7, 2014

• Citibank and Imperial College teamed up to produce Getting Ready for Digital Money:  A Roadmap, a new report that assess the current state of digital money around the world; it  includes a “Digital Money Readiness Index.”  This index links socio-economic development indicators to digital money adoption.
   
• A new cryptocurrency called MazaCoin (inspired by Bitcoin) created by certain Native American tribes may have political implications for the financial future of their reservations.
   
• According to the IFC,  about 80 percent of micro, small, and medium enterprises in developing countries operate in the informal sector and are often financially constrained. A new paper (and accompanying blog post) by Subika Farazi documents the financing patterns of informal firms and identifies the most significant characteristics of informal firms that are associated with higher use of financial services.
   
• Could Starbucks be the next big bank?  Probably not but this piece in Wired describes how products like retail rewards cards, new “nonbank”, digital-only financial services, and digital wallets represent a possibly disruptive trend for the traditional banking sector.
   
• The Alliance for Financial Inclusion traces the regulatory and legislative history of Peru’s approach to e-money as a tool for financial inclusion in a new blog post.
   
• The Center for American Progress released a new report on an emerging investment trend –mortgage-backed security supported by revenue from single-family rental properties.  The report explores the questions around risk to tenants and communities if there is significant growth in this new asset class.
   
• Mastercard announced it is testing a new security measure that links the geolocation feature on a smartphone to a customer’s credit card.  If the phone and purchaser are not in the same place, a security alert is sent to indicate possible fraud.

Week of February 28, 2014

• Jake Kendall and Rodger Voorhies of the Gates Foundation discuss the potential impact of mobile phones on poverty reduction in the developing world, with a specific focus on their uses for increasing financial inclusion and providing financial services.
   
• Each year, Mobile Money for the Unbanked’s State of the Industry report contains key findings and insights on the growth of the sector. This year, for the first time, the scope of the report has been extended to include not only mobile money, but also mobile insurance, mobile credit and mobile savings. Key findings show a rapid growth in mobile money industry and increased competition among providers. (Watch for further insights from the report in an upcoming blog post.)
   
• Tigo, a subsidiary of the international telecommunications and media company Millicom, launched the first mobile-to-mobile remittance service with currency conversion for transfers between Tanzania and Rwanda. Following Orange’s announcement of a similar product last July in West Africa, the two providers show a growing interest in the South-South remittance market.
   
• In more remittance news, Pew Research released an interactive map that shows 2012 remittance inflows and outflows for countries around the world.
   
• The Federal Reserve Bank of New York released its Household Debt and Credit Report for the fourth quarter of 2013. This report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. Outstanding household debt increased $241 billion from the previous quarter, the largest quarter over quarter increase since the third quarter of 2007.
   
• Lisa Servon continues her “series” on financial services for lower-income households with a look at  the demand side of the payday loan industry, investigating the reasons why low-income borrowers are willing to pay high fees for small dollar credit products.
   
• According to data from the Federal Reserve, less than 1% of all federally chartered banks are owned by African-Americans.
   
• The New York Times featured an opinion piece on the potential for Obamacare to spur job creation through entrepreneurship.
   
• PBS Newshour highlighted the work of Hunger Free Colorado, a nonprofit that recently sponsored a participatory photography project aimed at chronicling what it’s like to be hungry in America.
   
• Freedom from Hunger CEO Steve Hollingsworth details the organization’s perspective on “what we know” about microfinance and where the industry should focus now  in a new blog post on NextBillion.net.   

Week of February 18, 2014

This week’s New and Noteworthy includes results of an RCT on behavioral economics and savings, an in-depth look at legal procedures for debt collection, and a review of new cash transfer research in sub-Saharan Africa.

• A new report from Dean Karlan of Innovations for Poverty Action (and an FAI co-founder) discusses the role of nonprofit organizations in fostering financial inclusion. Karlan highlights innovations in microfinance delivery, draws attention to financially underserved groups, and provides recommendations for building client trust.
   
• M-Pesa is pushing toward international transfers. Safaricom seems to be linking up with Skrill, a US-based remittances/online payment company, to allow people to send money directly to M-Pesa accounts from abroad. 
   
• According to the Federal Reserve, 40 percent of people in the prime working years of 25 to 64 have no current pension or retirement plan. Floyd Norris reviews the history of pensions and the future retirement options for the generation President Obama hopes to target with his new “MyRA” initiative.
   
• On April 8th, Microsoft plans to end support for Windows XP, leaving about 95 percent of US-based ATMs open to security and compliance risks.
   
• Grameen Foundation and ideas42 report findings from a behavioral design project on improving savings outcomes for clients of CARD Bank in the Philippines. When researchers linked a focus on saving through goal-setting and planning at the point of account opening, they saw a positive effect on savings balances over time.
   
• This American Banker article exposes the common practice of “rocket dockets,” or unsupervised debt resolution conferences that exist in a legal gray area. They are being targeted by the CFPB since the proceedings may give debt collectors unfair advantages in court.
   
• Markus Goldstein evaluates recent research on cash transfer programs in sub-Saharan Africa and their impact on productive activities such as agriculture and small businesses for the World Bank blog. 
   
• Last year, the Reserve Bank of India unveiled new licenses that allow various financial institutions to act as banks. The New Yorker looks at the impact of this on financial inclusion, the microfinance sector, and the unmet demand of banking services for the rural poor.

Week of February 7, 2014

In this week’s New and Noteworthy, we highlight responses to the USPS’ white paper on providing financial services, the impact of small dollar fees on the US health care system, and a new publication projecting the potential for digital payment markets in Africa.

• A new McKinsey & Co. publication shows the gap between current levels of payment digitization and what levels in other African countries would look like if they matched Kenya. The report demonstrates that there certainly is a business case for supplying digital payment services if demand puzzles can be solved.
   
• Last year on our blog Dan Rozas pointed out the risk of a substantial repayment crisis in Chiapas, Mexico. Hugh Sinclair has a new post laying out the case that Peru, and MiBanco in particular, is at high risk of a repayment crisis.
   
• Now that the Affordable Care Act is in full swing, so is the Innovation Center, a research outfit funded by ACA to discover how to most effectively deliver health care. However, many researchers say the Innovation Center is missing out on key opportunities for deeper insights into health care policy by conducting demonstration projects and not RCTs.

• In a post for NextBillion, FAI affiliate Ignacio Mas outlines three types of “money stories” people tell (or in other words, ways of mental accounting) and how providers can translate those stories into financial products that serve the needs of the poor.
   
• Danielle Ofri, a physician and an associate professor of medicine at NYU, authors an opinion piece for The New York Times that discusses the impact of small dollar fees on low-income patients’ health. She asserts that it is “literally the pocket money, that often has the most profound and palpable effect on the concrete currency of health.”
   
• Last week’s white paper from the USPS Inspector General exploring how the U.S. Postal Service could offer non-bank financial services spurred a number of interesting responses (many thinking the plan doesn’t go far enough), including articles from Adam Levitin for American Banker, Felix Salmon at Reuters, and David Dayden for The New Republic.
   
• Is there value in microinsurance? Drawing on several years of original research as well as other evidence from the field, the MicroInsurance Centre’s MILK Project and the ILO’s Microinsurance Innovation Facility provide concrete insights into how, when, in what ways, and to what extent clients receive value from microinsurance in a new brief.
   
• Transport for London announced plans to go completely cashless on its fare systems for central London buses, beginning this summer.
   
• Last year, Rebecca Ackerman, a Code for America Fellow working with the San Francisco Human Services Agency, signed up for food stamps to view enrollment from the client’s perspective as part of a larger project to improve the program's retention. The Atlantic profiles her experience and the results of the project, which include an interactive timeline of over 20 letters she received in her seven months of benefits.

Week of January 31, 2014

This week’s New and Noteworthy includes resources to help distinguish between e-money and Bitcoin, find out more about the US Postal Service’s possible expansion of financial services, and explore the impact of the financial crisis on banking behavior in the US.

• A new paper from Una Okonkwo Osili and Anna Paulson show that individuals who have experienced a banking crisis are 11 percentage points less likely to use banks in the US than their peers who emigrated from the same country but did not experience a crisis.

• As Bitcoin gains in popularity, it’s easy to confuse the digital currency with other forms of e-money. CGAP’s new infographic provides a quick reference that contrasts these products.

• PopTech profiles the Trust Card, a product developed by IPA with support from the Ford Foundation, designed to act as an “un-credit card” – establishing access to affordable credit coupled with debt consolidation and financial counseling with the goal of improving financial stability for cardholders over time.

• In his annual State of the Union Address, US President Barak Obama advocated raising the federal minimum wage, a topic of recent debate in Washington. The Economic Policy Institute released data showing the value of minimum wage is 23 percent less than its peak inflation-adjusted value in 1968 but low-wage workers are more highly educated than they were in the late sixties.

• Writer Dylan Love shared his experience with Slate of using an invitation-only, no fee, virtual bank called Simple. Spoiler alert – after two weeks, he swore off brick-and-mortar banks for life.

• FAI’s Julie Siwicki recently shared her musings on the potential for SMS-based reminders to encourage savings among low-income Americans.  America Saves might make her vision a reality through its free service that motivates users to reach their savings goals through SMS tips and reminders.

• Piggy-backing on the success and rapid growth of M-Pesa, Safaricom now offers a number of additional mobile financial tools like savings tools and ways to pay school fees electronically.  But are these services reaching those who could potentially benefit from them the most?  NextBillion says no - research shows the poor or those in rural areas are currently the least likely to use these add-on products.

• A new Postal Service Office of Inspector General white paper explores how the U.S. Postal Service could offer a suite of non-bank financial services (in addition to the current money order and transfer services) targeted to serve America’s unbanked populations.

Week of January 24, 2014

This week’s New and Noteworthy highlights the power of heuristics in decision making, a theory on the future trajectory of Bitcoin as a global currency, and the economics of strengthening payments security.

• Antoinette Schoar of MIT’s Sloan School of Management and ideas42’s Saugato Datta released a new paper on using heuristics (or simple rules of thumb) to help individuals make “reasonably good decisions,” even in complex situations. The paper builds on Schoar et al.’s previous research that found evidence in the Dominican Republic that microentrepreneurs who received a rules of thumb business training curriculum fared better than those who participated in a more traditional accounting course.
   
• FAI Affiliate David Roodman has a new paper reflecting on the current state of the microfinance industry and where it can and should go next: Armageddon or Adolesence? Making Sense of Microfinance’s Recent Travails.
   
• In light of its recent customer information breach, Target leadership is calling on retailers and banks to strengthen credit card security by adopting a PIN credit card system, similar to what is used in Europe. However, The Washington Postexplores the economics behind digital payment systems in the US and argues that building a more secure payments system is not as easy (or as cheap) as one might expect.
   
• Social media sites like Facebook and China’s RenRen have a combined membership of almost 2 billion users worldwide – many of whom are in the developing world and might have profiles but no bank accounts. CGAP explores the potential of these sites to enter the money transfer sector and what that could mean for remittances.

• T-Mobile announced a new personal finance service that integrates a prepaid debit card, ATM access, and mobile banking – free for wireless subscribers and fee-based for all others.
   
• The New York Times featured an opinion piece on the impact of providing unconditional cash supplements to the poor. The author reviews a longitudinal study of a Cherokee community that divided profits from a casino to tribe members. The study found that income supplements had long-term mental health benefits, specifically for children and actually saved the community money over time.
   
• The most recent Pop Tech features various perspectives on financial inclusion, in the US, including thoughts from FAI’s Tim Ogden on the US Financial Diaries Project.
   
• Bitcoin is paradoxically one of the most publicized and least understood new technologies. Marc Andreessen explains Bitcoin, its potential as a digital currency, and why it matters for the future of online commerce.