Paving the impact pathway: What do we know about the impact of digital financial services on low income clients?

Snapshot 16: “Digital Finance Impact Evidence Summary” is one of 16 Snapshots designed to address a range of questions within the digital finance space. These questions cover a number of client, institution, ecosystem, and impact level topics. The Snapshots give a current view of “What we Know” about the topic in question, highlight “Notable New Learnings” and call attention to “Implications” for future research and investment.

Why we wrote this Snapshot

The Digital Finance community’s foundation depends on our understanding of and research on the impact of traditional financial services on low income clients. Several studies have explored the impact of traditional credit, savings, and insurance products. From these studies, we understand that the impact on client welfare has yielded mixed results for credit, positive results for savings, and promising results for insurance.

The potential benefits of Digital Finance are highly dependent on the product, its design and delivery, and the target demographic. However, insufficient attention has been given to the ways in which the digitization of these products and services may alter or improve client outcomes.

The Partnership for Finance in a Digital Africa has reviewed a range of studies in order to catalog evidence of the impact of Digital Finance on clients. Based on this review, we have developed the first Digital Finance Evidence Gap Map (EGM).

What we found

The Digital Finance EGM comprises 40 impact studies and covers 21 countries. It examines product types, design and delivery approaches, and a range of potential client outcomes. In the EGM companion report, Snapshot 16, we emphasize that as an industry we have made significant progress in establishing that digital payments and transfers benefit low income households.

While we have learned a great deal about the adoption of Digital Finance products—over a quarter of the outcomes studied focused on product uptake—the examination of longer term effects is largely limited to digital payment and transfer products. Looking beyond digital payments and transfers, the Digital Finance community is not yet comprehensively measuring the effects of digital credit, savings, and insurance products on low income clients.

Despite the growing number of Digital Finance products available and the depth of the client base, evidence of client impact is lacking. Read Snapshot 16 for more details on our findings on the long term effect of digital credit, savings, and insurance products. Click here to sign up for alerts when new Snapshots are released.

We are tracking several “in progress” impact studies. Those studies as well as others released after the initial literature review will be included in the next version of the Digital Finance EGM and its companion reports, slated for June 2018.