A frog in the well: risk in the age of digital financial services

Too often, financial inclusion providers don’t think about risk until it is too late. The ability to identify, understand, and develop strategies to mitigate risk are key to ensuring the sustainable growth of the market.

Since 2008, the Center for Financial Inclusion has partnered with the Center for the Study of Financial Innovation (CSFI) and Citi Foundation to carry out Finance for All, a survey to identify and assess the risks associated with providing financial services to the financially excluded – people who lack or have limited access to banking, savings, or insurance products. Advances in technology have created new opportunities to reach the financially underserved and have brought new players into the market, but large scale change has also created new sources of risk, which are often poorly identified and understood. Finance for All, formerly known as Microfinance Banana Skins, is the first research effort of its kind to identify key sources of risk, and in doing so, provide perspective on the security and regulation of markets, their vulnerability to political manipulation, and the robustness of business models to meet the challenges posed by these risks.