Access to finance is crucial for financial inclusion. Digital platforms enable the rollout of innovative financial products, such as digital credit in Kenya, which led to increased uptake due to easy access and quick application processes. However, the credit bureau blacklisted clients who had loans unpaid for more than 90 days. BMGF funded a study focused on access and loan term transparency to understand the high default rate. MSC conducted market research, qualitative studies, and data analysis. The study yielded recommendations for effective and sustainable digital credit. As part of the study, the MSC team prepared the research, reviewed the literature, held stakeholder discussions, and generated a concept note.
Consumer protection and grievance management at India Post Payment Bank: An assessment of existing policies, processes, and systems to identify areas of improvement
Customer protection is crucial for improving customer service and experience. MSC thoroughly researched IPPB’s customer protection policies and complaint resolution system. MSC conducted stakeholder consultations with IPPB teams to identify areas and branches with high complaint cases. MSC also conducted primary research with customers and branch officers in different parts of India to understand the gaps and opportunities to improve customer protection policies for IPPB. The recommendations were used to re-engineer the customer protection policies at IPPB.
Impact of climate change on smallholders and their coping strategies
Climate change is already altering weather patterns in the fertile plains of Bihar. These changes are wreaking havoc on the livelihoods of smallholder farmers. Our study on the impact of climate change on smallholders and their coping strategies elicits how the poor and vulnerable smallholder communities in Bihar are coping with declining marginal returns from cropping and how institutional interventions and financial services can strengthen their resilience against the impact of climate change.
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Payments Instruments Rails
India’s digital payments story is akin to none. The past five years have seen a massive transformation. UPI hit record-high numbers, AePS transformed the transfer of subsidies to beneficiaries, merchants now conduct digital B2B payments, and FinTechs have disrupted the payments space with unique solutions.
Despite this accelerated growth, a large share of the population still lacks access to these services, indicating considerable room for growth in digital payments. The proliferation of mobile phones and internet connectivity in rural markets can be the game-changer that will lead to the growth of digital payments in India in the coming years.
We have been at the forefront of analyzing and reporting these trends using pitchbook formats for the past few years. We have now automated the analyses and reporting of the payments data.
With an unwavering focus on India’s growing digital payment ecosystem, we built an in-house dashboard—Payments Instruments Rails (PIN Rails). It provides deep insights, data trends, and multiple features for analysis with a holistic view of the transformation of digital payments.
PIN Rails will serve as a public good for various industry players, such as FinTechs, banks, thought leaders, and other development consulting firms.
Diversification and digital transformation of HFC
HFC commissioned MSC to conduct a digital readiness assessment and provide a proof of concept report for digital products and services. We were also expected to provide project management services for the pilot and launch HFC’s mobile application—HF Whizz.
MSC carried out a comprehensive digital readiness assessment to further HFC Bank’s insights into its offerings and uncover gaps and opportunities that digital financial services can address. We conducted market segmentation of HFC’s customer base and developed use-cases for low-income earners and the mass market. We provided strategic and tactical advice and recommendations on implementing the digital banking app and USSD used for account opening, savings, digital loans, and payments. We designed digital financial planning tools for personal financial management. Further, we formulated the broad contours and concepts of digital credit and savings for HFC and provided recommendations on the data sources for the digital algorithms.
HFC had acquired more than 200,000 new virtual accounts through the HF Whizz app by the end of 2020. HFC saw an annual growth of nearly 20% in transactions on digital platforms, reaching 1.24 million in 2020, representing more than 70% of all transactions at the bank. The project was a success. HFC mobilized more than KES 100 million (USD 1 million) from these new accounts and disbursed more than 15,000 loans with a cumulative loan book of KES 58 million (USD 0.5 million) within a year of the application’s launch.
Agent network study in India, Indonesia, and Kenya
CGAP commissioned MSC to conduct a study to assess the different pricing mechanisms for the distribution of digital transfers.
MSC analyzed the different transfer models that a G2P program designer could adopt. MSC also offered examples of how different G2P programs distribute their cash transfers to understand the distribution model’s cost centers and ways to reduce these costs while maximizing the choice of providers for recipients.
MSC analyzed various payments models to explore how beneficiaries receive payments from the government in the context of digital social protection. Such models were assessed through single entity state-owned or public sector banks, single entity commercial or private sector banks, and multi-entity banks or telco-financial models. We developed a pricing tool to guide the efforts of program designers and help them determine the distribution model based on different cost areas and actions to reduce these costs. Further, we developed a dissemination strategy that included recommendations for program designers on how to package lessons for delivery and terminologies associated with payments in digital social protection.
The project involved an extensive analysis of different social protection programs in Asia and Africa. The project formulated a reference for social program managers by analyzing current approaches to distribute transfers through continuous discussions between CGAP and the MSC team.