While client protection is a foundation of responsible finance, implementing it requires wrestling with a fundamental question: when does protection become a paternalistic limitation on client choice? Among responsible finance adherents, there is universal agreement that clients should be provided with clear, simple information in order to make financial decisions. But often this is seen as insufficient, and institutions and regulations go further, limiting or prohibiting certain practices because they are deemed irresponsible -- thus also limiting client choices. The EMW 2019 Closing Plenary used a free debate format to explore the challenge of balancing between these two objectives -- client choice and client protection.
It's now a tradition that the European Microfinance Week opens with a plenary session featuring the finalists of the European Microfinance Award, the €100,000 prize awarded by the Luxembourg Ministry of Foreign and European Affairs. In 2019 on the topic of "Strengthening resilience to climate change", the Award aims to highlight the critical role the financial inclusion sector plays at strengthening the resilience of vulnerable communities to the effects of climate change.
Climate change is a major threat to financial stability and poverty alleviation. Financial regulators and policy makers are recognizing the urgent need to develop financial markets that are able to cope with climate-related risks and that, at the same time, support financial policies that help strengthen the resilience of the population. This resilience is especially crucial for the low-income and financially excluded populations that the financial inclusion sector serves: their livelihoods depend on activities most affected by climate change (such as agriculture, forestry and fisheries), and their countries are usually among the most exposed to climate change hazards and the less ready to face them. This session discussed how to best manage systemic climate-related risks as well as the policies that the financial inclusion sector should develop and support to strengthen the resilience of the sector itself and its clients.
The less money you have, the more time you spend managing it! The panel aimed at exploring and highlighting the specific in Financial inclusion for refugees and Internal Displaced Populations (IDP's): Who are they ? What are their income sources ? What are their spending's? What are their financial needs? How to serve them? How regulation helps to financially include the most vulnerable? How to speed up and scale up?
The session aimed at sensitising participants about the risks related to financial services provision and child labor and unsafe labor practices and invited participants to contribute to an emerging tool that aims at integrating mitigation measures in women’s economic empowerment (WEE) programmes.
The session aimed to introduce the concept of ethical banking (EB) and discussed how it is similar and different to microfinance and how EB operates. Since 1930 the banking business, which originally had a social involvement, has been progressively losing this original social features. This has made necessary the birth, through a bottom-up process of a new generation of social banks, the so-called "ethical banks". But which are the criteria that a bank that wants to be defined ethical should meet, how does EB select and evaluate the ethics of their investment? Where does microfinance stand in comparison of recent EB's development? How does EB assess the environmental and social impact of their investees? These are among the topics that will be discussed during the panel. Throughout the session, we learned about which are the financial instruments available for the promotion of the ethical banking sector and which challenges EB have still to face in order to move the sector forward.
Technology is reshaping the financial inclusion market opening up opportunities for reaching scale and efficiency. But how can technology be a way to reduce gender inequality in the financial systems and better serve the specific needs of women? How can financial institutions, investors and the microfinance sector as a whole, leverage technological solutions to promote gender equality? Microfinance has always had a focus on women and has proven effective in addressing several forms of inequality, such as income, health, education, etc. Nonetheless, the gender gap in access to financial services and to the internet is still a challenge, especially in emerging markets. This panel explored the barriers faced by women and the solutions to address them form the direct experience of investors, financial service providers and consulting companies.
The digitization of banking and payments offers great promise for advancing financial inclusion. But cyber threats have become a growing concern in emerging financial markets across the world and are affecting both consumers' trust and confidence in financial service providers (FSPs) and FSPs' financial assets. Governments in emerging markets are also becoming aware of the need to develop regulatory frameworks, industry guidance and supervisory processes. However, cyber security management and monitoring require new expertise and resources for both FSPs and governments that are often scarce in developing countries due to the lack of capacity and affordable support services.
Focusing on the needs of customers remains a challenge in Africa, according to 2019 report to be published by WSBI's Scale2Save Programme, a partnership between WSBI and Mastercard Foundation. The report finds that member banks offer a variety of accounts as part of their drive to attract and satisfy customers. But it also found their product and service mix still falls short of customer needs. The panel presented the key insights from the "Savings and Retail Banking in Africa" report and discussed the major challenges to encourage savings for low-income customers following the 4 pillars of the financial inclusion: usability, affordability accessibility and sustainability. Different perspectives from both the demand and supply side from the panelists were discussed.
This session, entitled "Looking back; looking ahead" focused on how financial inclusion changes over time - the trends and shifts in attitude that have taken place over the last decade, and what stakeholders think is yet to come. The session brought together representatives of Convergences and e-MFP, to present a decade of the Microfinance Barometer and the findings of the just-launched Financial Inclusion Compass 2019, respectively. The first presentation, from Convergences (which publishes the annual Microfinance Barometer) looked back at how over ten editions of the Barometer, attitudes and priorities have shifted among readers and contributors. The second presentation looked ahead, to present the second Compass, a mixed-methodology survey of various sector stakeholders' predictions, concerns and focus areas. A panel discussion of these trends included a response by an eminent sector leader with a multi-decade career.