Social Investor Meeting on Responsible Inclusive Finance Tuesday - PowerPoint PPT Presentation

As social investors, due diligence is a key part of what you do

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FSP ID/ Org Info S P I 4 . x l s m Green Index

AL igning IN vestors due diligence with the U niversal S tandards 37

Development of ALINUS 68 CERISE analyzed this list, and These iterative rounds of Each participating MIV asked MIVs to reconsider input made it possible to In July 2016, SPI4 revised , with 20% fewer indicators. selected from SPI4 the their choices when they had finalize a list of 80 indicators from the SPI4. indicators they wished to selected indicators that few ALINUS 2.0 frozen at 68 indicator until 2020. use during due diligence/ other MIVs were interested in. monitoring. 38

www.cerise-spi4.org

Demo ALINUS

SPI4-ALINUS, Why? Who?

CONCENTRATE CONVINCE COMPILE COMPARE COMMUNICATE

CONCENTRATE on what counts Analyze results through social dashboard Make informed investment decisions

CONVINCE and guide partners to improve Clear road map Technical resources

COMPILE results at the por_olio level Aggregate results to iden7fy profiles or TA needs

COMPARE to benchmarks Use benchmarks to guide investment strategy or set performance thresholds

COMMUNICATE using a common language

MIV/DFIs using ALINUS • 10 MIVs/DFIs using SPI4 ALINUS: ADA/LMDF, AFD/Proparco, Alterfin, Blue Orchard, BNP Paribas, Cordaid, GAWA, GCAMF, Incofin, Pamiga finance • 6 MIVs/DFIs in tes0ng/strategic planning: Deutsche Bank, European Investment Bank, GrassRoot, Oikocredit, Symbio0cs, Triple Jump. • About 15 MIV/DFIs in contact with CERISE/SPTF, for awareness raising, strategic discussions

Interna0onal/Na0onal Networks using SPI4/ ALINUS • 13 Networks using SPI4 : 7 Interna0onal: ACEP, Advans, Opportunity Intern’l, Oxus, Pamiga, Vision Fund, CIF West Africa 6 Na0onal: Amcred Brazil, Copeme Peru, Finrural Bolivia, RFD Ecuador, MCPI Philippines, PMN Pakistan • 13 Networks in training or using reduced network op0on: 3 Interna0onal: AgaKhan, Grameen Founda0on, Microcred, etc. 10 Na0onal: AMA Albania, AMFA Azerbaijan, AMFI Kyrgistan, AMFOT Tajikistan, ASOMIF Nicaragua, CMF Nepal, LMWG Laos, Radim Argen0na, RedFasco Guatemala, UCORA Armenia, etc.

Growing use of SPI4 Audits SPI4 by region (updated May 2017) ECA 5% May 2017 SSA ASIA 31% 26% • 341 SPI4 audits completed (16 underway and 71 pipeline) LAC 34% MENA • From 88 different countries 4% • 298 ques0onnaires in SPI4 database • 71% are accompanied self- Audits SPI4 by legal form (updated May 2017) assessments Other 16% NGO • +610 people trained in SPI4 (CERISE & 28% SPTF) Coop/ Credit union 18% • 84 qualified auditors Bank 11% http://www.cerise-spi4.org/#/benchmarking/ NBFI 27% 50

Benchmarks • For MFIs Ex. FUCAC: repor8ng to Board members & annual report • For interna0onal networks: Ex. Opportunity Intern’l => guidance for improvement • For na0onal networks: Ex. Copeme, Finrural, etc.=> country reports • For research: Ex. USSPM & SME finance => paper for the African MF Week • For Investors : Ex. Grameen Credit Agricole Founda8on=> communica8on to Board, selec8on process, TA focus

ALINUS ASSESSMENT OF MIV PORTFOLIO Example of Grameen Crédit Agricole • Data collec0on • Data analysis/selec0on process • Data benchmarking • Board Presenta0on on SP and next steps – Extracts

GCA Social Performance due diligence based on SPI3 and since inception in 2009 SP Evaluation Continued testing of SPI4 during the development and updating phase (2014/15) Systematic use of ALINUS in DD since Oct 15 End of 2016: 45 partners in standard portfolio

Selection of � FSPs in SSA, MENA, ASIA and ECA the relevant � Results from LAC excluded, as GCA does CERISE not work in LAC database � SPI4 ALINUS v1.0 database � Results are based on SPI4 ALINUS sub-set of indicators, not the full SPI4 � Some of the assessments were conducted with the full SPI4 but not the Green Dimension, so the Green results on ALINUS may be underestimated (not analyzed).

Description of the sample � GCAMF PorIolio : 61 partners for GCAMF (16 African Facility, 45 standard por_olio) � SPI4 ALINUS available: TOTAL 39 � From GCA due diligences: 24 � Completed by GCA partners in CERISE database (=MFI SPI4 evalua7ons): 15 � 1 from version 2.0 (not integrated in the analysis) � 38 come from version 1.3 = basis of analysis Nbr SPI4 * Only the highest quality audits taken ALINUS into account: done by experienced evalua7ons auditors + 100% complete + include comments to jus0fy scoring GCAMF porIolio 38 * LAC and Europe audits are excluded of this sample CERISE Database 85*

Benchmarks by dimension –SPI4 ALINUS Database GCAMF Average s score b by d y dime mens nsion n CERISE N=38 N=85 DIM 1: DEFINE AND 56% 46% MONITOR SOCIAL GOALS DIM 1 DIM 2: COMMITMENT TO 100% 54% 47% SOCIAL GOALS 80% DIM 3: PRODUCTS THAT 60% 61% 57% MEET CLIENTS' NEEDS AND DIM 6 DIM 2 PREFERENCES 40% DIM 4: TREAT CLIENTS 20% 69% 60% RESPONSIBLY 0% DIM 5: TREAT EMPLOYEES 76% 68% RESPONSIBLY DIM 6: BALANCE FINANCIAL DIM 5 DIM 3 63% 62% AND SOCIAL PERFORMANCE TOTAL 63% 57% DIM 4 GREEN DIM* 14% 26% GCAMF Database CERISE * Only 36 % of MFIs from CERISE database have filled in the green dimension

Benchmarks by SSA region - SPI4 ALINUS Av Average s score b by d y dime mens nsion n CERISE GCAMF Database (SSA region) DIM 1 (SSA region) 100% N=20 N=49 80% 60% DIM 6 DIM 2 DIM 1 55% 40% 40% 20% DIM 2 48% 42% 0% DIM 3 57% 53% DIM 5 DIM 3 DIM 4 64% 56% DIM 4 DIM 5 72% 66% GCAMF (SSA region) CERISE Database (SSA region) DIM 6 56% 57% Total 59% 52%

Benchmarks by Tier 3 - SPI4 ALINUS Average s score b by d y dime mens nsion n CERISE DIM 1 80% GCAMF (Tier 3) Database (Tier 60% 3) DIM 6 DIM 2 40% N=20 N=52 DIM 1 55% 42% 20% 53% 42% DIM 2 0% DIM 3 56% 51% DIM 4 64% 55% DIM 5 DIM 3 73% 63% DIM 5 DIM 6 59% 59% Total 60% 52% DIM 4 GCAMF (Tier 3) CERISE Database (Tier 3)

Extract from Social Performance Presentation to GCA Board of Directors on March 11th 2017

Our partners show beher commitment to social goals at Board, Management and Employees level than their peers Ra#onale: An ins#tu#on’s social strategy is only strong if the Board and all employees understand and uphold it. Outperformance especially in Board accountability: 11% above benchmark Dimension 2: Commitment to social goals Standard 2a : Board 47% accountability CERISE 70 60 54% GCA score 50 40 0% 20% 40% 60% 80% 100% 30 20 10 0 Dimension 2 by Tier Standard 2b : Senior 61% Standard 2c : Staff 53% 53% Management accountability accountability CERISE Database (N=85) GCAMF Por_olio (N=38) Tier 1 Tier 2 Tier 3 60 Grameen Credit Agricole Founda7on

Our partners protect their clients beher than their peers Ra#onale: Ins#tu#ons that seek to bring benefits to their clients must ensure that they “do no harm.” Dimension 4: Treat clients Outperformance especially in Preven7on of over-indebtedness: responsibly 12% above benchmark CERISE 60% GCA score 69% Standard 4a: Preven7on of over-indebtedness 80 0% 20% 40% 60% 80% 100% 60 40 Standard 4e: Mechanisms Standard 4b: Transparency Dimension 4 by Tier for complaint resolu7on 20 84% 68% 64% 0 Standard 4c: Fair and Standard 4d: Privacy of respecIul treatment of client data Tier 1 Tier 2 Tier 3 clients Client Protec7on by geographic area 62% 75% CERISE Database (N=85) 66% 67% GCAMF Por_olio (N=38) SEA West Africa East Africa MENA 61 Grameen Credit Agricole Founda7on

Our key strengths: Sub-Saharan Africa, Asia and small size MFIs SUB- DIM 1: DEFINE AND DIM 1: DEFINE AND SAHARAN MONITOR SOCIAL MONITOR SOCIAL GOALS GOALS 80% AFRICA 100% 60% 80% DIM 6: BALANCE DIM 6: BALANCE DIM 2: COMMITMENT TO 60% DIM 2: COMMITMENT FINANCIAL AND FINANCIAL AND SOCIAL 40% SOCIAL GOALS SOCIAL TO SOCIAL GOALS PERFORMANCE 40% PERFORMANCE 20% 20% ASIA 0% 0% DIM 3: PRODUCTS DIM 3: PRODUCTS THAT DIM 5: TREAT DIM 5: TREAT EMPLOYEES THAT MEET CLIENTS' MEET CLIENTS' NEEDS EMPLOYEES RESPONSIBLY NEEDS AND AND PREFERENCES RESPONSIBLY PREFERENCES GCAMF (ASIA region) N=11 GCAMF (SSA region) N=20 DIM 4: TREAT CLIENTS DIM 4: TREAT CLIENTS CERISE Database (ASIA region) N=25 RESPONSIBLY Database CERISE (SSA region) N=49 RESPONSIBLY GCAMF vs benchmark by region: Sub-Saharan Africa GCAMF vs benchmark by region: Asia DIM 1: DEFINE AND MONITOR SOCIAL Our achievements GOALS TIER 3 80% • Strong ALINUS score for Africa 60% DIM 6: BALANCE • 5 out of 6 dimensions above benchmark. DIM 2: FINANCIAL AND • Well above for Dimension 1: Our partners have a clear social 40% COMMITMENT TO SOCIAL SOCIAL GOALS strategy and properly measure these social goals. PERFORMANCE 20% • ALINUS score for GCAMF porIolio in Asia above benchmark for 0% all dimensions. • Strong over-performance on staff (5) and client protec7on (4) DIM 3: PRODUCTS DIM 5: TREAT THAT MEET CLIENTS' EMPLOYEES NEEDS AND RESPONSIBLY • Tier 3 partners of GCAMF PorIolio are well above the PREFERENCES benchmark. • Our Tier 3 partners are in par7cular highly commihed to social DIM 4: TREAT GCAMF (Tier 3) N=20 goals and their Boards, management and staff are aligned with CLIENTS CERISE Database (Tier 3) N=52 RESPONSIBLY these goals GCAMF vs benchmark by size: Tier 3 MFI – 0<GLP<10M 62 Grameen Credit Agricole Founda7on

Our areas for improvement: West Africa, social goals in Tier 1 DIM 1: DEFINE and 2 AND DIM 1: DEFINE AND West MONITOR MONITOR SOCIAL SOCIAL GOALS Africa GOALS 80% 80% DIM 6: 60% DIM 2: 60% BALANCE DIM 6: BALANCE FINANCIAL COMMITMEN DIM 2: COMMITMENT 40% T TO SOCIAL FINANCIAL AND SOCIAL 40% AND SOCIAL TO SOCIAL GOALS PERFORMANCE PERFORMANC GOALS TIER 2 20% 20% E 0% 0% DIM 3: PRODUCTS DIM 5: TREAT THAT MEET DIM 5: TREAT DIM 3: PRODUCTS THAT EMPLOYEES CLIENTS' EMPLOYEES MEET CLIENTS' NEEDS RESPONSIBLY NEEDS AND RESPONSIBLY AND PREFERENCES PREFERENCES GCAMF (Tier 2) N=12 DIM 4: TREAT GCAMF (West Africa region) N=11 DIM 4: TREAT CLIENTS CLIENTS CERISE Database (West Africa region) N=21 RESPONSIBLY RESPONSIBLY CERISE Database (Tier 2) N=22 GCAMF vs benchmark by region: West Africa GCAMF vs benchmark by size: Tier 2- MFI – 10M<GLP<100M DIM 1: DEFINE AND MONITOR SOCIAL GOALS Areas for improvement 100% TIER 1 80% • Performance of Sub-Saharan Africa is due to East Africa. DIM 6: BALANCE DIM 2: 60% FINANCIAL AND • West Africa below benchmark for dimension 2 COMMITMENT TO SOCIAL 40% SOCIAL GOALS (governance), 3 (product adap7on) and 6 (balancing PERFORMANCE 20% financial and social objec7ves). 0% • Tier 2 partners’ social performance globally just at benchmark DIM 3: PRODUCTS DIM 5: TREAT THAT MEET CLIENTS' EMPLOYEES NEEDS AND • Tier 1 partners globally at or below benchmark RESPONSIBLY PREFERENCES • Main area for improvement is defining and monitoring of Social Goals GCAMF (Tier1) N=6 DIM 4: TREAT CERISE Database (Tier 1) N=8 CLIENTS RESPONSIBLY GCAMF vs benchmark by size: Tier 1- MFI –GLP>100M 63 Grameen Credit Agricole Founda7on

Keep the momentum and strengthen our social performance requirements Social Performance Management • Strengthen our partner selec7on based on social performance through the implementa0on of social covenants and performance targets Global Social Preven7on of over- Client Protec7on Performance score indebtedness score (dimension 4) (All six dimensions) • TIER 1 > 70% • TIER 1 > 70% • TIER 1 > 50% • TIER 2 > 60% • TIER 2 > 50% • TIER 2 > 45% • TIER 3 > 50% • TIER 3 > 50% • TIER 3 > 40% Monitor the poverty level of our partners’ clients and their social outcomes • • Offer Technical Assistance missions to reinforce social performance End clients focus Introduce specific funding products for agriculture • Focus on vulnerable clients , such as refugees (project in partnership with the UNHCR) • 64 Grameen Crédit Agricole Founda7on

Tes0monies from other users • Deutsche Bank • INCOFIN • Locfund • Banco Pyme Ecofuturo • Opportunity Interna0onal • Others…

Feedback from the groups and Q&A

Thank you! spi4@cerise-microfinance.org

Resources available • ALINUS Step by Step (for guidance on the SPI4 tool usage) • ALINUS toolkit (for strategic planning and implementa0on)

More info on ALINUS www.cerise-spi4.org/alinus

Agenda • 9.00-9.30am: Welcome and Updates • 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich) • 10.15-10.45am: Coffee Break • 10.45-11.45pm: Opportunities to improve SPM in Mexico • 11.45-12.45pm: SPI4 and ALINUS • 12.45-1.45pm: Lunch • 1.45-2.45pm: Simulation on Data Platform • 2.45-3.30pm: Gathering the stakeholder voice throughout investment process • 3.30-4.00pm: Coffee Break • 4.00-5.00pm: The future of microfinance • 5.00-5.30pm: Discussion on SPTF membership model • 5.30-6.00 pm: Wrap up and conclusions

Data Pla_orm Validated data on Financial Service Providers’ pricing, SPI4 and ESG SPTF, Investor mee0ng Mexico, June 2017 72

Outline 1. Why 2. What 3. Who 4. When 5. How: simula0on 6. Q&A, Feedback 73

Why 74

What SPI4 Annual IRIS, ESG, ALINUS Percentage UN SDG Rate ( APR ) Client Financials, protec0on Outcomes, RIM green index Data of investees and benchmarks for Due diligence and por_olio monitoring 75

Who Steering commihee : SPTF, SMART, Cerise, MFT, ADA, MIMOSA, John Owens Data providers Users Service : peer Advisory board : Ra0ng DFIs, group data, AFD, Swedish agencies Founda0ons tailored Agency (Sida) reports, APR SMART cer0f. MIVs model & assessment Data Manager : Cerise MicroFinanza Ra0ng Regulators Subscrip0on MIVs and DFIs Free: visibility, guide, Standard consistency check, FSP networks se{ng bodies overview report. Service : training, Individual Research valida0on, award. FSPs ins0tutes 76

When √ 0 Concept 2016 I Pilot 2017 Prototype development Simula7on & feedback Value & viability review Start-up plan & fundraising II Start-up 2018 III Ongoing 2019 77

How Simula0on Q&A Feedback 78

Thanks Data Pla_orm project Aldo Moauro Execu0ve Director, MicroFinanza Ra0ng Data Pla_orm Steering Commiiee member Milan, ITALY Lucia Spaggiari Business Development Director, MicroFinanza Ra0ng Data Pla_orm Project Manager Douala, CAMEROON 79

Agenda • 9.00-9.30am: Welcome and Updates • 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich) • 10.15-10.45am: Coffee Break • 10.45-11.45pm: Opportunities to improve SPM in Mexico • 11.45-12.45pm: SPI4 and ALINUS • 12.45-1.45pm: Lunch • 1.45-2.45pm: Simulation on Data Platform • 2.45-3.30pm: Gathering the stakeholder voice throughout investment process • 3.30-4.00pm: Coffee Break • 4.00-5.00pm: The future of microfinance • 5.00-5.30pm: Discussion on SPTF membership model • 5.30-6.00 pm: Wrap up and conclusions

Overview WEF Effort: Accelerating Impact Measurement and Management Kicking off now 2018 AG1 and 2: AG3: AG4: AG5: AG6: AG7: Evidence & Stakeholder Conventions Resource Training & Training & Cases Voice and Norms Hub Capacity Safeguardin Translate and Capture the Establish Explore Building g Integrity synthesize the voice of all shared common IMM Create a Explore existing those who are conventions practices that training inclusive ways evidence, and affected by the and norms align to norms; program to to safeguard develop impact/ based on case Connect users build capacity and maintain additional intervention studies and to tools, within integrity of case studies (both during existing techniques, organizations measurement design and content and resources and throughout the management investment) practices • Work of all action groups will be connected and coordinated • And integrated with other ongoing initiatives (IMP, Navigating Impact, etc) 81

SPTF is leading Action Group 3 • Lead contacts : � American Evaluation Association (John � SPTF (Laura Foose & Leticia Emme) Gargani) • Contributors � Anton Simanowitz (Independent) � Julian King & Associates (Julian King) � Acumen (Kat Harrison) � LIEDERSHIP (Carl Liederman) � BBVA FM (Stephanie Garcia Van Gool) � Mercy Corps (Michael MacHarg) � Bamboo Finance (Ximena Escobar de � Microfinance Opportunities (Monique Nogales) Cohen) � CERISE (Jon Salle) � Social Value Intl (Jeremy Nicholls) � Claremont Eval. Center (Deborah Rugg) � Social Value US (Sara Olsen) � EDA Rural (Frances Sinha) � The Good Economy (Sarah Forster) � Ellen Carey (Independent) � UBS (James Gifford, Andrew Lee) � GIIN/Navigating Impact (Kelly McCarthy) � UNPRI (Kurt Morrisen) � Impact Mgmt Project (Clara Barby) 82

Why is SPTF involved and how is this relevant to you? • Share the experience of financial inclusion ▫ Collaboration, working towards common objectives ▫ Development and implementation of standards, common audit and monitoring tools, advancement of outcomes management work, etc • Financial inclusion can help pave the way of less-mature sectors – seen as “example” • Opportunity to shape frameworks and tools that can be used by asset owners and investors throughout the broader investments sector ▫ Can help investors differentiate themselves • Help avoid impact-washing – gathering the voice of the stakeholder is at the core of impact management... and something SPTF has experience with (standards, outcomes) 83

Action Group 3: Objective • Provide guidance on best ways to get stakeholder input to promote resource allocation decisions that would be endorsed by all those who may be affected by impact investment/intervention � Engage all affected stakeholders in the design phase and throughout the impact investment/intervention � To create value that stakeholders affected want and need To understand the user experience and the intended and un- � intended effect of the impact investment/intervention 84

Key definitions/clarifications – let’s make sure we are all on the same page • What do we mean with stakeholders? – all affected � Beneficiary/end customer Those not included – but still affected by intervention � • Levels of impact � Direct effect on direct beneficiaries (target of the intervention) MINIMUM BAR Direct effect on other stakeholders (not the target, still affected) � � Indirect effect -- harder to measure IDEAL • Creating value = understanding what the stakeholders want and need (not just what the investor wants) • Gathering input should be an iterative, “multi-touch” process • Impact investors might not engage on this process themselves – but should ask/require of it from their investment managers 85

Action Group 3: Proposed Deliverables 1. Outline of ideal process to engage CORE stakeholders DELIVERABLES PHASE 1 2. (Self-assessment) checklist/rubric for (May-December investors to assess extent to which 2017, pilot testing 2018) investments align/achieve to “ideal process” (#1) 3. Document that provides guidance for ADDITIONAL RECOMENDED improvement (add-on to be used after results DELIVERABLES of #2 in order to get closer to #1) PHASE 2 4. Business case for the impact investor (i.e. why (Jan-June 2018- depending on engaging and understanding all stakeholders is funding) key to delivering impact) 86

The work of AG3 is aligned with the IMP , Navigating Impact, and the WEF agenda 87

Understanding the user experience is at the core of managing impact 88

Discussion: Key elements of an “ideal process” to engage stakeholders 1. What can investors do, via direct and indirect investments, to support the gathering of stakeholder input as part of the investment/intervention? 2. What should be the “minimum” effort and what is the “ideal” effort”? (e.g., direct vs. indirect impact, iterative process/multiple touch-point) 89

Action Group 3: Timeline & Milestones May : June : July-Sept: Oct-Nov : Dec : Jan-June : • Group Kick- • Group call • Monthly • #1 finalized • #1 and #2 • #1 and #2 off, agree on #2 calls and ready finalized and piloted and Group activity scope and for pilot ready for refined • Draft of #1 • #1 refined & Milestones timeline pilot started and (with expert • #2 refined • #3-4 • Ongoing discussed review) (with expert • Plan for #3-4 developed gathering of review) in place (if funding) • #2 started input Dec ‘16-Jan: July: Chicago September: December: June 2018 GSG meeting NYC WEF Europe TBD In-person WEF sets action Forum events agenda to Awareness & Final versions of (voluntary) and advance IMM Update Report on Report on #1-2 sharing of overall progress progress & share #3-4 (if work/ & share draft of #1-2 (ready for funding) deliverables #1 pilot) with external audiences 90

Agenda • 9.00-9.30am: Welcome and Updates • 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich) • 10.15-10.45am: Coffee Break • 10.45-11.45pm: Opportunities to improve SPM in Mexico • 11.45-12.45pm: SPI4 and ALINUS • 12.45-1.45pm: Lunch • 1.45-2.45pm: Simulation on Data Platform • 2.45-3.30pm: Gathering the stakeholder voice throughout investment process • 3.30-4.00pm: Coffee Break • 4.00-5.00pm: The future of microfinance • 5.00-5.30pm: Discussion on SPTF membership model • 5.30-6.00 pm: Wrap up and conclusions

The Future of Microfinance • Discussion about the role of investors, challenges, and opportunities given the emergence and growth of DFS and Fintech • Perspectives from ▫ Investors (Grassroots) ▫ FSP (Fundacion Genesis Empresarial) ▫ Smart Campaign ▫ CGAP • Open discussion with participants

FUTURE OF MICROFINANCE

Grassroots’ Experience • 2 financial inclusion equity funds in India and Latin America; 1 multi-sector debt fund in India • Investment in fintech has been lagging in LAC compared to other regions, despite higher potential: � Financial access in LAC (only 51% of adults own an account) pales in comparison to both the East Asia and Pacific region (69%) and rest of OECD countries (94%) • In our portfolio: • India – all MFI portfolio companies using fintech/ DFS; • LAC – adoption more nascent/ limited 94

DFS Initiatives – India Clients: - Repay their weekly, bi-weekly or monthly loan installments with their mobile phones - Visit digital micro payment provider in own villages, rather than traveling up to reach a branch - Gain critical time-saving bridge to access financial services, and knowledge of mobile money products and services Loan Officers: • Process loan applications on tablets or phones • Paperless loan processing by operations & credit departments saves time, costs • Shorten underwriting process at the branch level 95

DFS Initiatives – LAC • Mobile Points of Service reach rural, remote clients • Portable computer system at the client's business or property to: 1. Make a preliminary credit assessment of the loan application 2. Collect loan repayments 3. Conduct client surveys 96

DFS and Microfinance: Opportunities • Complement, not replacement • Keep client at the center New Product Launch Cost Reduction Customer 97

DFS and Microfinance: Investors’ Role • Due diligence: MFIs’ abilities to effectively embrace and leverage fintech is key • Take long-term view and provide the guidance and capital for investments in new technologies, products and services • Monitor fintech risks and protect clients: often unregulated, charge higher rates, may not participate in credit bureau, over-lending, lower operating costs mask higher write-offs 98

Discussion / Q & A www.grassrootscap.com 99

ELECTRONIC MODEL OF CREDITS ORIGINATION