Building mutually beneficial financial inclusion communities through data

The first language that l was exposed to as a child was Sotho/Tswana. My maternal grandfather had this saying as one of his favourites, “Noka etlatswa ke dinokana”, meaning “a river gets full through its tributaries for it to flow yearlong”. This is a proverb that emphasises the importance of community building and working together to tackle a big task. No one entity can do it alone, the bigger the entity, the more tributaries it needs for it to flow efficiently. Growing up in Zimbabwe I often heard the importance of working together, be it in the fields or building a bridge, neighbours would always come together and as a community combine their efforts, face a mammoth task and win.

For example, in Zimbabwe, communities play a strong role in helping individuals to manage their day-to-day financial lives. Money is short in Zimbabwe and nearly all adults regularly send and receive money to meet their daily needs such as to cover a meal, pay a bus fare or health expense. The underlying driver of this behaviour? Mutual benefit and working together.

At insight2impact, I am observing the same importance of joint efforts, combining people’s strengths, allowing fresh and young talent to feed into the existing for there to be a difference and bringing together financial inclusion communities under our DataHack4FI competition. The competition promotes the use of data in designing and delivering valuable financial services to the communities that need them most. This is no easy tasks as these communities are typically outside of the reach of traditional providers and their needs more diverse than the products that are able to meet them.  By bringing together data enthusiasts and financial service providers (FSPs) we aim to crowdsource innovative solutions to reach these communities with products that ultimately improve their lives.

The competitions are currently being rolled out in 8 countries in sub-Saharan Africa in partnership with key country-level stakeholders. The finalists from the 8 countries will then compete in the ultimate DataHack4FI competition in Kigali, Rwanda in May 2017. There they will battle against other African champions and have the chance to pitch their solutions to investors at the Transform Africa Summit.

Today is the last round of the DataHack4FI competition in Rwanda to select the finalists for the ultimate competition in May. It has been an exciting journey to this point and the local ownership taken by our partners Access to Finance Rwanda (AFR) and Rwanda ICT Chamber highlights just how important these events are in driving real impact for communities.

But, while the competition is primarily advertised to encourage FSPs and Fintechs to start thinking data, data analytics and alternative sources of data, it goes well beyond that. Financial inclusion is not new to Africa. The challenge of reaching new consumers has been embraced for quite some time, but the results have been mixed. In many countries, significant portions of the population are excluded. In others, the products available don’t meet the needs of consumers and informal financial services and cash remains the order of the day. The result is that these consumers and communities lack financial services that can meet their needs and act as tools to build and protect their welfare.

However, this tide may be shifting. FSPs (being the rivers) and Fintechs (as the tributaries) need one another and it is good to note that they are embracing the potential of data and unlocking new markets for financial services. For example, EcoCash, a mobile money provider in Zimbabwe, is able to offer microloans to their customers using several alternative data points in their model. There are now more adults in Zimbabwe that borrow from EcoCash, than from banks or MFIs, many of which are first-time borrowers. The product has been so popular that some in Zimbabwe have declared “We do not need banks anymore because we have EcoCash”.

But not so fast. Even I, who was involved in EcoCash from day one, recognise the mutual benefit and reciprocity of working together. The front-end of the EcoCash product may be through the mobile phone, but the back end is in partnership with a traditional bank. These partnerships are critical for building these new markets that offer valuable financial services to the communities that need them most, but they do not always happen organically. In many markets, FSPs see Fintechs as competitors rather than collaborators and there are few data scientists that can help them bridge this gap. The result is they often work in isolation and those that can afford it, which is not many, go to the McKinsey’s of the world for data science expertise.

This is exactly what we are trying to change through the DataHack4FI competitions. Take the competition in Rwanda. It started with the FSPs presenting their problems and challenges so that the solutions designed by the Fintechs and data analysts are aligned with their needs, but that is only the beginning. We are also continuing to nurture the mutual benefit that can be derived from this community. Manoj Chiba, a part-time lecturer in data science (at the Gordon Institute of Business Science (GIBS) in South Africa) and my colleague at i2i, delivered a training on data science last week for the finalists of the competition in Rwanda. In addition, we are linking these teams with proven data scientists across the globe who can mentor and help them grow these skills over time. A similar approach will be taken for the competitions taking place in the other countries as well.

Today marks a major milestone in our journey to build the foundations for new financial inclusion communities around data that will not only have mutual benefit for these different players but ultimately the individuals, households, and communities who need these services most. It might be rocky at first, but if we can help them see the mutual value, the Sotho proverb might just turn into a reality. The big financial service providers with all their resources are the rivers that can flow all year long and be of great benefit to the communities they flow across if they let the tributaries (Fintechs) provide more insights and new ideas into the system.

Nkosinathi is the head of the Applications Lab team at the insight2impact (i2i) data facility.

insight2impact (i2ifacility) was funded by Bill and Melinda Gates Foundation in partnership with Mastercard Foundation. The programme was established and driven by Cenfri and Finmark Trust.