Recap of Financial Inclusion Week Twitter chat: Getting digital inclusion right

A woman checks her cell phone while selling produce in a market in Kenya. Photo: FranciscoMarques |

Globally, 1.7 billion adults remain unbanked without an account at a financial institution or mobile money provider according to the World Bank’s Global Findex 2017 report. Yet, two thirds of these unbanked adults have a mobile phone, making digital technology a great opportunity to broaden financial inclusion.

On October 31st, J-PAL’s Finance sector and the Center for Effective Global Action’s Digital Credit Observatory hosted a Twitter chat about digital financial inclusion as part of Acción’s fourth annual Financial Inclusion Week 2018.

This year’s #FinclusionWeek theme was “Getting Inclusion Right,” so we invited the Twitter community to join our discussion and ask questions about getting digital inclusion right.

Over fifty people participated by asking questions, sharing evidence, or liking and retweeting posts, including J-PAL affiliates Dean Karlan, Paul Niehaus, and Tavneet Suri, Innovations for Poverty Action (IPA), and the World Bank’s Global Findex.

Some of the main take-aways include:

  • Early evidence suggests the promising potential of digital finance to increase financial inclusion and improve households’ welfare.
  • Digital finance may also expand access to financial services and products to the most marginalized populations, particularly women and the very poor, but barriers remain to achieving equal access.
  • Digital finance also brings risks to consumers and financial providers; regulations and consumer protection are necessary to ensure responsible digital finance.
  • Researchers continue to pursue new and exciting research on digital finance (many shared during the Twitter chat), with many interesting, open questions left.

Read on for a recap of the lively conversation about the research on digital finance.

Is digital finance leaving anyone behind?

We kicked off our chat by discussing how digital finance may be a promising way to expand financial inclusion for those who are currently unbanked. A participant asked about how we can achieve financial inclusion for the very poor, especially because traditional financial services tend not to reach low-income customers. Researchers agreed that last-mile access remains a challenge.

Lowering costs for providers and users

Even when traditional financial services are available, user fees and other barriers may be prohibitively costly for low-income customers. We discussed ways that financial service providers—both digital and otherwise—can help lower these transaction costs.

Closing the gender gap in digital finance

Digital finance may also be an effective tool to expand access to accounts for women, who currently have lower rates of financial access than men. And with expanded access, there is evidence of improved outcomes for women and their families.

Gender-specific barriers in digital finance

Economic constraints like the costs associated with owning a mobile phone and technical literacy required to operate it disproportionally impact women. Additionally, social norms may limit if women have and how they use mobile phones. Researchers are continuing to explore barriers women face in accessing mobile money.

Innovative opportunities with digital transfers

Mobile money accounts can also be used to deliver unconditional cash transfers and other safety net programs. Researchers chimed in with results from evaluations of Give Directly’s programs that provide unconditional cash transfers to eligible households via mobile money and also shared a study on a state welfare program in India.

Evidence on digital financial services and migration

Another participant asked about ways mobile money could facilitate migration and we shared randomized and non-randomized evaluations on this topic in response.

Ethical questions remain

Digital platforms can also facilitate alternative credit scoring methods based on borrower’s mobile phone data. This can help further expand access to credit by improving lenders’ ability to assess creditworthiness—even for potential borrowers who lack a credit history. The DCO shared some key considerations when it comes to ethics of machine learning and credit scoring algorithms, as well as ongoing research on the topic in Kenya.

With opportunities come challenges

Despite the promise of digital finance, quicker and easier access to credit also poses risks. Appropriate regulation and consumer protection is important—this is an area where more research is required.

Moving beyond access to impact

A big picture question cuts across all financial inclusion research: how does access to financial products and services affect wellbeing? The Global Findex shared how digital financial inclusion can help us achieve the Sustainable Development Goals.

What’s next?

With so many unanswered questions around digital finance, J-PAL’s Executive Director Iqbal Dhaliwal asked what interesting open questions researchers are exploring.

In response, Dean Karlan, our Finance Sector chair, raised questions he and other researchers are considering and offered his insightful summary of the opportunities and challenges that digital finance presents.

Thanks to all who participated and shared resources during the discussion. Check out the J-PAL website to read a recap of the Financial Inclusion week Twitter chat we co-hosted last year and to access more evidence on digital finance and more topics in financial inclusion. For a review of the current literature on digital credit, check out the Digital Credit Observatory’s landscape analysis “Digital Credit in Emerging Markets: A Snapshot of the Current Landscape and Open Research Questions.

Posted by Mikaela Rabb, Policy Associate, J-PAL Global