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09.15.2014

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How data could help financial services for the poor

Few years ago we still didn't have much digital data, particularly real-time ones, on the life and behavior of the poor. However, with the diffusion and adoption of mobile phones, there are now billions of devices generating data in emerging markets.

How data analysis can improve financial services for the poor?

Mobile data can be as a solid base to record reliable information on the lives of poor populations . And, when combined with other sources such as satellite, banking and agricultural data, they are able to support powerful analytical applications .

Indeed, data have always been an essential element to provide financial services . Providers and insurers use the demographic and geographic information to know what market segment they want to target; lenders can use their income, credit history, age and other factors to make a judgment on credit.

This information, often collected by paper are difficult to aggregate and verify, that is why the development of other forms of information gathering in real-time, such as mobile data , will improve the understanding of the lives of the poor and at the same time their financial services .

Analytical applications that are developing, bring together data from different sources, analyze trends with many variables, help deduce financial habits and other aspects of user behavior.

These advanced analytics can affect positively financial services for the poor:
- Simplification of the activation process
- Acceleration of the adoption of products by customers
- Enhancement of mobile services offers
- Enhancement of fraud detection and monitoring systems
- Knowledge of key data in product design decisions

What are the next steps and challenges?

To use and exploit these digital data in the most beneficial way for the poor, we must begin to rise to the significant challenges such as get creative to find new sources of data in limited environments, find models that allow better sharing of data, or provide adequate protection for customers.

We need also to create norms and regulations relating to the protection of sensitive data so that such applications can be developed in accordance with the users.

If all these elements can be combined, interesting financial services and innovations will follow and help improve the lives of poor .

Sources : CGAP Article Blog, CGAP Article Blog 2

Tags : data, mobile, financial services, poor, digital data, analytical applications, MicroWorld