World Bank
Report Year
1st MAR Year

Find and replicate innovative models for delivering financial services to the poor through sequenced and evidence-based approaches. To deliver sustainable, low-cost services, the Bank Group and its partners should research, pilot, and scale up innovative business models and approaches to reach underserved (especially rural) clients. Such an approach would focus on delineated and evaluable interventions and ensure a feedback loop in the design of new projects. A key part of this is to ensure that the Bank Group effectively applies its research and evaluative resources to better understand the extent to which its interventions actually support poor households and microenterprises (as well as other excluded groups), and how best to adapt its interventions to different country conditions.

Recommendation Adoption
IEG Rating by Year: mar-rating-popup SNTNTNT Management Rating by Year: mar-rating-mng-popup SNTNTNT
NANot Accepted
NRNot Rated
Findings Conclusions

Innovation is still needed to enable to the poor to sustainably access a range of financial services. The promise of financial inclusion is that credit, savings, and payment and insurance services help the poor manage their day-to-day lives and offer choices and risk mitigation mechanisms. Yet the evidence to date suggests only modest and mixed benefits of major approaches, emphasizing the need for a sequenced approach toward innovations facilitating financial inclusion.
Lowering transaction costs through innovation is recognized as an essential challenge in the context of sustainably reaching the poor and underserved. This evaluation found that financial inclusion faces persistent obstacles in reaching the rural poor. Among promising areas of innovation are delivery models such as mobile, correspondent banking, agent, and "branchless" banking, as well as innovations in underlying technology platforms and initiatives such as universal IDs and biometrics to satisfy the know-your-customer requirement. An important way forward is to systematically use a sequenced approach building on comparative advantages of development partners and the Bank Group to develop, test, and scale up these and other innovations, rigorously monitoring the benefits (and costs) for the poor.
Such a sequenced approach focuses on clearly delineated and evaluable interventions, building on lessons from past and ongoing interventions and dynamically feeding these lessons into the design of future projects. Given that only 2 percent of Bank Group operations report on beneficiary outcomes, such a feedback loop clearly does not yet exist even within the Bank Group's own portfolio. The weak evaluative evidence of a clear connection between the Bank Group's interventions and increased financial inclusion emphasizes the need for a more robust approach to M&E as part of this sequenced approach.

Original Management Response

The WB and IFC systematically identify and support innovative approaches to financial inclusion already. For example: (a) the Universal Financial Access 2020 conceptual framework identified critical reforms and government actions to drive the expansion of transaction accounts, including through e-money and "digital" delivery mechanisms, and the WBG is orienting its financial inclusion support accordingly and (b) in early 2015 the WB, IFC, and CGAP launched the cross-WBG "Harnessing Innovation for Financial Inclusion" program, which will cover over 20 countries.

The WB and IFC have strengthened reporting and monitoring of financial access/inclusion activities, for example through evaluations conducted by DEC on financial literacy and consumer protection. Management will further explore how to apply a similar approach more systematically to other areas relevant to financial inclusion. Monitoring and evaluation is already central to the global initiatives introduced to strengthen and scale up the WBG's support to financial access/inclusion, including through the Financial Inclusion Support Framework and the Harnessing Innovation for Financial Inclusion program.

Through the Universal Financial Access 2020 initiative a reporting model has been developed and is being rolled out in WB lending and ASA projects, in close coordination with the IFC (which has a similar model).

Action Plans
Action 1
Action 1 Number:
Action 1 Title:
Action 2A: Identify and scale-up promising approaches to expand financial inclusion based on digital (technology-enabled) financ
Action 1 Plan:

Action 2A: Identify and scale-up promising approaches to expand financial inclusion based on digital (technology-enabled) financial services.
Indicator: a) Number of country programs that address the innovative models dimensions of delivering financial services b) UFA lab established for brainstorming on innovative approaches c) WBG knowledge products focused on this theme.
Baseline: F&M GP, CGAP, IFC FIG, DEC and other parts of the WBG identify promising, innovative approaches and cases for expanding financial inclusion (i.e. there is a knowledge base to be leveraged and further refreshed) no UFA lab in existence during IEG evaluation period.
Target: a) F&M GP, CGAP, IFC FIG, DEC initiate innovative financial activities with potential to scale-up in a minimum of 15 countries b) UFA lab “operational” c) at least 1-2 relevant knowledge products per fiscal year.
Timeline: FY20

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IEG Update:
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Management Update:
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IEG Update:

IEG is impressed with the substantial work achieved by WBG in its contribution to knowledge, global standards, and piloting innovations in the area of digital financial services. As many of the activities are under implementation, the "scale-up" is a work in progress to be monitored going forward. IEG notes that substantial supportive materials were communicated bilaterally and should be added as attachments in the MAR system.

Management Update:

Action 2A Response:
a) Innovative financial activities:
- The Inter Agency Social Protection Assessments (ISPA) initiative approved the toolkit for social protection (SP) payment assessment, developed by a joint Social Protection/Jobs and F&M GP team. The toolkit identifies fostering financial access as one of the priority design criteria for a SP payment mechanism. This is expected to be widely used in WBG SPJ projects and also by other UN agencies and DFID. The tool was piloted by WB in Indonesia and Tanzania, and is informing the redesign of SP payment mechanisms there, as part of current WB operations. Other countries in which the tool is currently used as part of WB operations are South Africa, Nigeria, and C&ocirc te d'Ivoire. [5 countries]
- Development and implementation of the innovative Retail Payments Cost Tool: so far in 2 countries (Albania, Guyana) with &gt 5 more countries planned or already in process. This tool is being used to advocate for and guide the digitization of payments. This is proving to be a valuable new tool in accelerating digital financial inclusion, through payments digitization and the expansion of transaction accounts. [2 countries]
- Digital ID as a platform for financial inclusion: pilot activity initiated in Indonesia, with the Identification for Development (ID4D) cross-WBG initiative. [1 country]
- Digital Transaction Accounts and payments platforms, to expand financial inclusion: innovative approach to expanding financial inclusion through digital transaction accounts (DTAs) and payment platforms, introduced in the Pakistan IPF (P159428). This includes the design of a roadmap and a national platform to support the digitization of bulk and retail payments including major G2P payments and corporate payments. (Planned in a number of countries, e.g. C&ocirc te d'Ivoire, Bangladesh.) [1 country]
- Use of digital delivery channels, FinTech innovations, and behavioral insights, to improve financial capability/literacy and financial inclusion: Zambia (in process), and other countries planned, e.g. (C&ocirc te d'Ivoire) [1 country]
- Fintech Accelerators, Regulatory Sandboxes: assistance provided (in process) to Jordan central bank, and planned for Mexico authorities. [1 country]
b) UFA Lab is operational. Physical space: MC 10-410.
c) Relevant knowledge products published during FY16H2 through end-FY17:
- Committee on Payments and Market Infrastructures (CPMI) and World Bank Group (2016). Payment Aspects of Financial Inclusion, BIS: Geneva, and World Bank: Washington, DC. [This influential reference document was produced by a task force of financial regulators chaired by the World Bank and the CPMI, with WB drafting support]
- Global Partnership for Financial Inclusion (2016). G20 High Level Principles for Digital Financial Inclusion. [Drafted by a G20 technical team led by the F&M GP, with the PBOC, and with input from other GPFI implementing partners including OECD.]
- World Bank Group (2016). Cash vs. Electronic Payments in Small Retailing: Estimating the Global Size, World Bank: Washington, DC.
- World Economic Forum and World Bank Group (2016). Innovation in Electronic Payment Adoption: The Case of Small Retailers, World Economic Forum: Geneva, and World Bank: Washington, DC.
- Global Partnership for Financial Inclusion (2017). Digital Financial Inclusion: Emerging Policy Approaches. [Drafted by the F&M GP with input from the GPFI implementing partners.]
Working Papers:
- Arab&eacute h&eacute ty, Pablo Garc&iacute a, Greg Chen, William Cook, and Claudia McKay (2016). "Digital Finance Interoperability & Financial Inclusion: A 20 Country

Additional links to relevant resources are provided in the attached document.

Additional links to relevant resources are provided in the attached document. Additional links to relevant resources are provided in the attached document.