There were two topics that dominated debate at the recent European Microfinance Week (EMW) conference: the threats and opportunities brought about by the fintech revolution in inclusive finance, and the issue of financial inclusion for refugees and internally displaced persons. The event, organized by the European Microfinance Platform (e-MFP), provided the venue for a discussion of these issues that ranged from hopeful to surprisingly cautionary. EMW 2018 focused heavily on the spectre – or, depending on your perspective, the promise – of technology. The theme was approached from many angles, as panelists explored the opportunities and risks of digital financial services, Big Data and new fintech entrants into the sector. It was even the focus of the 2018 European Microfinance Award, Financial Inclusion through Technology. The opening plenary captured both sides of the issue, with a keynote speech from Graham Wright of MicroSave – who played the Cassandra role that suits him so well to implore the inclusive finance sector to pay attention to the risks that technology can pose to clients and institutions.
european microfinance week
As outlined in a workshop session at European Microfinance Week 2017, Financial Education (FE) is one of the pillars of financial inclusion. Without it, microfinance clients are not able to make informed and appropriate choices; they cannot compare the costs of financial products, understand the risks of failing to repay their own loans or of taking on someone else’s risk in cases of guarantees, or accurately assess how much credit, and what type, they actually need – if any. FE may be important, but there are key challenges to its provision. First, the link between offering FE and achieving positive impacts are not always direct and clear. Evaluation of the outcomes of FE shows impact to be inconsistent – a function of that impact’s sensitivity to the content and delivery of the education. Second, it is also unclear how, even if the content and delivery to achieve impact were standardised, financial education can be provided sustainably at scale. Provision of any type of training is costly.
When we use the word sustainability in financial inclusion terms, what does it mean? Does it stand for profit or a long-term perspective that looks beyond the next reporting deadline? Is it a code word for triple bottom line accounting – people, planet, profit?