20 September 2016

Technological stagnation is the fastest-growing risk in the financial inclusion field

Capitalizing on new IT developments or suffering losses from IT mismanagement is the fastest-growing risk for organizations in the financial inclusion field. This is one of the findings of the 2016 “Banana Skins” report, prepared by the Centre for the Study of Financial Innovation (CSFI). The study interviewed nearly 180 practitioners, investors, regulators and observers in 60 countries and evaluates the risks in the provision of financial services to people in emerging markets.

Technology related risks are also ranked number four among the risks in the growing financial inclusion sector. The highest rated risk is strategy, the ability to design and implement business models among the organizations which makes them relevant and competitive in a changing marketplace. Risk management, the concern that service providers will fail to identify and manage the risks of their business, and change management, the risk that service providers will fail to keep pace with the scale of change were ranked second and third. Rounding out the top five is also the repayment capacity which is related to the risk that clients will fail to settle their accounts because they have borrowed too much or are unwilling to pay.

Another observation in the study shows that nine of the top ten risks are considered internal, meaning that they are under the direct control of the financial institutions. The only risk ranked by the respondents as external is the macro-economic risk, which concerns the global uncertainties that could threaten the markets. The study concludes that the financial inclusion sector is widely exposed to the ups and downs of the global economy and many of the risks may deepen in the future. For the complete study please visit here.

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