Fintechs and Financial Inclusion

This paper documents CGAP’s work with 18 fintech pilots in Africa and South Asia. The goal of the paper is to explain innovations in a detailed way and generate insight on whether the services (i) work as stated, (ii) create value for underserved customers, and (iii) ease age-old pain points in delivering financial services to underserved customers. A separate set of case studies describes for each pilot the service that was piloted, the nature of the testing, and emerging lessons.

The paper is written for funders - donors, investors, development finance institutions, or philanthropic organizations - who engage with fintechs to advance financial inclusion. Many early-stage fintechs that have potentially game-changing ideas are considered too risky for private capital, so they depend on patient capital from global development and impact investing communities. The lessons learned through the pilots can help funders better understand the potential impact of fintechs in the financial inclusion space and inform their funding decisions. The research identifies five types of fintech innovation that offer potential for financial inclusion, and highlights challenges that these fintechs, particularly those in early stages, face that inhibit their ability to impact financial inclusion. 

The set of case studies describes for each pilot the service that was piloted, the nature of the testing, and emerging lessons. As is the nature of start-up innovation, not all pilots were successful. In fact, few were successful in exactly the way the researchers envisioned; however they exposed valuable learnings about areas that need to be reconsidered and reworked.