Advans Côte d’Ivoire (Advans CI) of Ivory Coast was announced as the winner of the European Microfinance Award 2018 by Luxembourg Minister for Development Cooperation and Humanitarian Affairs, Mr. Romain Schneider, at a ceremony at the European Investment Bank on 15th November 2018. Advans CI won for its innovative digital savings and credit solution, in partnership with a leading MNO, for cocoa farmers. The High Jury reported a close decision, with outstanding applications from the two other finalists, ESAF Small Finance Bank of India, and KMF of Kazakhstan.
The ceremony at the European Investment Bank (EIB) involved speeches by Dr. Werner Hoyer, President of the EIB; Mr. Romain Schneider, Luxembourg Minister for Development Cooperation and Humanitarian Affairs; and a keynote speech by Michael Schlein, President and CEO of Accion.
In his welcome, Dr. Hoyer observed that we are living in an era of technology that has brought tremendous benefits to our lives, and can be a clear driver of change through disruptive business models in inclusive finance. Dr. Hoyer advocated partnerships with FinTechs and regulators and implored the sector to embrace the clear and significant challenges that the FinTech revolution brings, and not to shy away from them.
“Digital financial services, and especially mobile money, are a clear driver of change, via disruptive business models. It clearly has tremendous potential to move us to the next level of financial inclusion”, said Dr. Hoyer.
Michael Schlein, President and CEO of Accion gave a keynote address, in which he said that each of the three finalists exemplifies the ‘digital revolution’, and described them all as “pioneers and role models”. They represent Accion’s – and all of our – vision to create a financially inclusive world. MFIs have led this movement for decades - to borrow, to save, and contribute to economic and social development of communities around the world. It is a movement that reaches 200 million people today. However, microfinance’s two greatest contributions, he said, are indirect: “changing how we think about the Base of the Pyramid- that we need to harness capital markets; and secondly, showing you can have great social impact and strong financial returns…impact investors and entrepreneurs are following that lead”, he said.
Referencing the 2017 Global Findex, which showed pace of progress slowing, reduced resiliency among low-income groups since 2014 and 1.7 billion people still excluded, he observed that there remains much more to do, and it is a “failure of imagination” on our part that keeps 3 billion people left out of or poorly served by the financial system. Technology can create value for the customer, and if MFIs are ambitious, Mr. Schlein argued, they will ensure the customer is “at the centre”.
How will we get to these 3 billion people? “By harnessing new technology to lower cost and improve products and services…new technology shows us that there is no such thing as a transaction too small to be commercially viable” in the “golden age of FinTech”, Mr. Schlein said.
Even though we have gone “from data scarcity to data abundance”, ‘thin file’ customers are being rejected not because they have bad credit but because they have no history at all. There is much that can help with this, Mr. Schlein argued, from electronic invoices to satellite data, all informing decision-making – and early stage companies are using these sources to make decisions sooner. This is the heart of FinTech innovation. Technology is also changing people’s behaviours and expectation. “We demand that banking become instantaneous and can be done anywhere. We used to think of financial credit scores as a ‘black box’; now it is possible to add to one’s own credit profile by uploading data such as utility bills.”
Finally, we used to think about FinTech versus the banks as a sort of competition, he said. But now, we see it is all about partnerships. “When we can combine the innovation of FinTech with the scale and experience of larger financial institutions, we can really expand financial inclusion”, he said.
As with previous ceremonies, there was a follow-up profile of the previous year’s winner, and so a video was presented of Cooperativa Tosepantomin’s work in low-income housing during the past year, which showed that as a result of the 2017 Award, over 1000 families were now investing microcredits into sustainable technologies, part of an overriding focus at the cooperative on clean energy finance.
Before the announcement of the winner of the 2018 Award, films documenting the technology initiatives of Advans CI, ESAF Small Finance Bank and KMF were shown, followed by a speech by Romain Schneider, Luxembourg’s Minister for Development Cooperation and Humanitarian Affairs.
Mr. Schneider outlined the work the Luxembourg Government is doing in expanding financial inclusion, especially in the context of achieving the Sustainable Development Goals. Technology can help by improving transparency, offering new channels, and at the macro level promoting growth and stability for the economy. “For people living on a few dollars a day, access to the Internet, and in rural areas, even basic technology, is the first gateway to information, education and financial services – and even access to basic social services”.
Mr. Schneider argued, however, that the potential for digital financial services remains largely unexploited. For many MFIs, the embrace of technology means the risky rethinking of business models. But it is imperative that all aspects of finance undergo digital development, he said, emphasising the High Jury’s explicit message that they asked to be relayed, that “we must put the customer at the core of digital financial services”. Customer protection has become even more important in the context of the advance of financial technology, and “not all actors have the same approach and capacity for maintenance of social performance”.
Mr. Schneider finished by commending the three finalists for how they have creatively used technology to improve their services, and said that “the real winners are the clients or future clients, who will have affordable quality, financial services facilitated by technology”.
The members of the High Jury were then welcomed on stage, and Advans CI was announced as the winner, with the prize accepted by Albert Sié Dah, Head of Agriculture Operations. In his short acceptance speech, he thanked the organisers, including the Government of Luxembourg, e-MFP and InFiNe.lu, and promised to use the prominence that the Award offers to talk to other providers, share their experiences openly, and work for all of those excluded from traditional financial services.