Financial services for low income population
Under the topic, Financial services for low income population, the MIF is working with the following agendas.
Microinsurance
The objective of this Agenda is to increase the availability of microinsurance products tailored-made for low income population in LAC, such as health, life-savings, agriculture, and catastrophic insurance. In Latin America and the Caribbean there is a potential microinsurance market of 250 million people, but only about 10 million have access to microinsurance, mainly as a result of a gap in product development, and distribution channels.
In this context, this Agenda aims to provide a key support in developing support to new microinsurance products development and marketing, new distribution channels for microinsurance, and more enabling policies and regulatory environment. This Agenda will seek to provide an increase in around 1.5 million new low income people using microinsurance products.
Technologies for financial inclusion
The objective of this Agenda is to get leading Financial Intermediaries (FI´s) in LAC to adopt or replicate disruptive uses of technology to deliver high scale low cost financial services to low income population, and do so in a commercially viable way. Financial inclusion in Latin America and the Caribbean (LAC) still faces many challenges. Most people served by microfinance institutions (MFI’s) receive only loans for commercial activities, and usually in urban settings. Among the low income population, there’s limited access to other financial services such as payments management, insurance, and specially savings, both for short-term and long-term liquidity management, and for capital accumulation. Innovative uses of information and communication technologies offer a great potential to increase scale, reduce costs, reach clients in remote areas, and improve quality and variety of services.
This Agenda will test and pilot new uses of technologies for financial inclusion in order to prove the commercial viability in these new uses of technologies for financial inclusion. This will be done mostly with the Technologies for Financial Inclusion Program (www.tec-in.org). Also the Agenda will focus on establishing new partnerships: among FI’s, between FI’s and technology providers, and also with support entities such as FI’s networks, payment services providers, and financial sector clearinghouses (such as central banks), due to its role in payments.
This Agenda will seek to provide 12 successful new uses of technology for financial inclusion developed and adopted by FI’s and an increase in 200,000 low income people with access to financial services, as a result of new uses of technologies.
Banking the Unbanked through Payments and Transfers
The objective of this Agenda is for a large number of financial institutions in the region to provide financial products and services tailored for senders and/or recipients of transfers and payments. To achieve this systemic objective, the Agenda will increase the availability of financial products and services targeted to senders and recipients of payments and transfers –whether these be international remittances, domestic transfers, or government payments- in urban as well as rural and remote areas in LAC. Approximately 20 million adult LAC migrants sent close to US$60 billion in international remittances in 2009, in about 250 million separate financial transactions. Also, conditional cash transfers now benefit about 21 million families – or 93 million people – in the region. These transfers combined reach a growing proportion of the low income population of the region. However, access to banking services remains as a major challenge for this population.
Over half of
remittances senders and receivers, and most recipients of government payments, remain unbanked. Innovative approaches with key partners are needed to promote larger-scale adoption of effective methodologies to reach larger numbers of people in both urban and rural areas, based on the MIF´s experience in harnessing the potential of technological innovation, strategic networks and knowledge of targeted client demands and preferences.
The Agenda will seek to provide 1 million low income people with access to a financial product/service linked to payments and transfers, and at least 150,000 low income people with access to a savings account for the first time.