People familiar with Glenbrook usually know us for different reasons. 34,000 professionals have attended one of our workshops. The Payments on Fire podcast, also part of our educational program, reaches thousands of people worldwide from all corners of the payments ecosystem.

We also advise a wide range of clients. For 24 years, we have helped providers and merchants across the industry build product strategies, analyze the payments landscape from a specific angle, and scale their payment and risk operations.

What people are less familiar with is our global practice started by Carol Coye Benson, one of Glenbrook’s founding partners. This is consulting work that we conduct alongside central banks, NGOs, and other organizations to establish and scale payments systems for countries worldwide. We are incredibly proud of the work our team does in this space, advising and facilitating the development of inclusive digital financial systems. We are also grateful for the partnerships we have formed along the way, which have entrusted us to help with this work.

With this episode, we are launching a series to explore the current state of global financial inclusion efforts from a payments perspective. Joanna Wisniecka joins Yvette Bohanan to chat with Michael Wiegand, Director of Inclusive Financial Systems at the Gates Foundation, about the work the Foundation is doing globally and the transformative impact of digital financial inclusion on economies and societies.

Yvette Bohanan: Hello, I’m Yvette Bohanan, a partner at Glenbrook and your host for this episode of Payments on Fire. People familiar with Glenbrook usually know us for different reasons. Some people, actually over 34,000, have attended one of our workshops. This podcast, also part of our educational program, reaches thousands of people worldwide from all corners of the payments ecosystem.

We also advise a wide range of clients. For 24 years, we have helped providers and merchants across the industry build products and product strategies, analyze the payments landscape from a specific angle, scale their payment and risk operations- all sorts of interesting work. What people are less familiar with is our global practice started by Carol Coye Benson, one of Glenbrook’s founding partners. This is consulting work that we conduct alongside central banks, NGOs, and other organizations to establish and scale payment systems for countries worldwide. We are incredibly proud of the work our team does in this space, advising and facilitating the development of inclusive digital financial systems.

We are also grateful for the partnerships that we have formed along the way, which have entrusted us to help with this work. With this episode, we are launching a series to explore the current state of global financial inclusion efforts from a payments perspective. Joining me for this episode is Joanna Wisniecka.

Joanna, welcome to Payments on Fire. It is always a pleasure to co-host with you.

Joanna Wisniecka: Great to be here, Yvette. It’s been a minute. Very excited to kick off this series in particular, and especially to have our guest, Michael Wiegand, Director of Inclusive Financial Systems at the Gates Foundation. Michael, welcome to Payments on Fire.

Michael Wiegand: Thank you, Joanna. I’ve been a big fan of the podcast for a long time, so it’s exciting to record an episode.

Yvette Bohanan: Oh, that’s always lovely to hear. So thank you for listening. We are actually very, very thrilled to have you on an episode of Payments on Fire, Michael. Your career, we always start talking about people’s careers, as you know, and your career is really fascinating to me because it’s part consulting, part commercial banking, and then part financial inclusion champion, which you don’t always hear as a sort of threading the needle kind of journey and career. So what were the pivotal moments that led you to your current role with the Gates Foundation?

Michael Wiegand: Yes. You mentioned I started my career as a consultant. I was with McKinsey based in Los Angeles. And in 2001, they had a program sending consultants from the US to emerging markets for a year. And I ended up going to Eastern Europe, served one of the largest banks in Poland. And that emerging markets experience was life changing.

I’d done some work in India prior to that, but as a consultant, one, you saw how banks in emerging markets were really leapfrogging US banks in terms of channels and product development, but also that you could have a dramatic effect on the overall industry.

So rather than trying to eke out another one or two percentage points of market share in the US, you’re really transforming the entire industry. So my wife and I, and we also loved living overseas and so, rather than returning to LA at the end of the year as planned, we never returned until I joined the Gates Foundation and always stayed in emerging markets. We then went to the Middle East with McKinsey.

The second was, after our child was born and I couldn’t be the father I wanted to be and a consultant, joined Standard Chartered Bank which operates across Asia, middle East, and Africa. Worked for the CEO of retail banking, who was really a pioneer in recognizing the power of payments and the evolution of payments. He was even talking about QR codes back in 2006 before they really became a big issue. They were still referred to as 2D barcodes at that time. But started to really understand the power of payments.

And then the third was, I was transferred to Southern Africa and managed retail banking across Botswana, Zambia, and Zimbabwe. This was from 2008 to 2012. As soon as I got there, we launched mobile banking, USSD based banking. And at the same time, M-PESA was just really gaining scale in Kenya, we had big business there as well. And we recognized the power of mobile money both to reach new consumers, but even as a tool for our corporate customers to reach a much larger base on a digital basis.

So I helped launch in Botswana the first mobile money offering. We were the partner bank to arrange in Botswana, but sort of saw firsthand the revolution in payments in mobile banking in Africa. And then I guess the last was in 2016 when a headhunter called me and told me about this role at the Gates Foundation. And the rest is history, as they say.

Yvette Bohanan: How perfectly suited you are for this role. Wow. That is incredible. That is really incredible. And so you landed at the Gates Foundation. A lot of times people think of a foundation like Gates, when they’re involved in this work, it’s all about charity and granting, just granting money, right? And while you’re in the business of funding grants, you have a very strong perspective on competition as well and a point of view there. Why is it important to have competition in this space?

Michael Wiegand: And it really, I think, goes back to the evolution of financial inclusion. Prior to 2010, financial inclusion was equated with microfinance or micro savings, right? And these were specialized financial offerings, financial companies serving the very bottom of the pyramid, but they were also very segregated and there was a big gap between the customers that they were serving and the customers that banks were serving.

And there were large numbers of people in the middle that were left unserved. And so when the foundation started in 2011, we adopted a strategy to try to create truly an inclusive financial system, hence our name, that can serve everyone and can provide a continuous path of additional products and services for individuals as their needs change, as they get more wealth, and their lives evolve.

Now to reach everyone in a country, and we’re really focused on low and middle income countries, that required dramatically lowering the cost to serve, to reach scale. So that means using the mobile phone as your primary method of contact, using agents, often businesses that provided other kinds of services, as sort of the in-person contact and even the sales departments are very, very different than banking. We discovered that our role was to help countries create the environment where a variety of new competitors could come in that had a different business model that were able to meet the needs of low income customers and middle income and on all the way up.

And it was never going to be a single approach or one size fits all. Many of us probably assumed that mobile network operators would be a key player because that’s what started, of course, in Kenya and has continued. It’s been the biggest driver of growth in Africa. But outside of Africa, different models, similar underlying economics, but different ownership structures and different models have evolved and we are trying to create a competitive environment so that innovation can flourish and will continue to evolve as products, needs, and services are evolving.

Joanna Wisniecka: And Michael, that’s a big task that presumably involves a whole ecosystem of players. Of course there’s the regulators that need to implement the right regulations. There are the players that are in the field that can take action towards creating better products, competing and ultimately benefiting the end users.

Who else is essential in this space to create that ecosystem. And where do you influence, where do you play?

Michael Wiegand: Even when you talk about regulators in countries, there are a range of regulators. So the financial services regulator, and in most of our countries, that’s the central bank. But also the telecom regulator. Increasingly, there may be competition authorities that get involved.

But more broadly, the government has an important role to play, right? They drive the payments themselves, including social protection payments to the poorest and most vulnerable citizens. So to the extent that they pay through these systems, they can really encourage the poorest consumers to adopt formal and digital financial services. And they also sort of prime the pump, right? They create volume in a relatively rapid way that make the agents and all the private sector pieces viable and then they can build on with other services. So the governments are another important piece.

Because of the countries in which we’re working, then you have multinational entities like the World Bank or the UN or bilateral donors that provide support to these governments, either financial support or technical assistance and technical advice. And we’re already active in advising on their financial systems. And so they’re also important players, again, both from a TA and from a funding perspective.

And then more broadly, you’ve got other companies. Agriculture is an important sector in a lot of our markets. So the whole agriculture value chain, either the sellers of inputs or the off takers to the extent that they use digital financial services can encourage and enable these products.

So it really is a broad ecosystem. And ultimately, it’s almost the whole economy that comes together to make these things reach the scale such that you can have very low cost, but still be profitable. Because at the end of the day, this is about for-profit companies serving all individuals, including the poorest individuals, at a profit. This is not a subsidized, government provided service like a lot of the work that the Gates Foundation does in health and other areas.

Yvette Bohanan: Yeah. And that’s pretty distinct actually. You can’t have competition, no one’s going to compete for a zero or negative kind of a margin business. Quite challenging, because you’re dealing with populations of people that, it’s potential volume, a lot of potential volume that you’re trying to unlock so that the small incremental margin actually manifests out into that environment.

Michael Wiegand: Yeah, and when you’re very poor, not only are your volumes small and therefore the volumes upon which companies can earn revenue is very, very small, but you’re also extremely sensitive to price, right? And so oftentimes it’s ancillary products and services that are where a provider really makes a profit, not on the payments themselves.

Yvette Bohanan: So with this kind of a mission, you’re talking about a generational type of shift, right? You’ve had a lot of patience in all of this.

Michael Wiegand: Oh, and it is really incredible. We’re one of the funders, the original funders of the World Bank Global Findex survey, which is the measure of financial inclusion globally. And we’ve gone from globally, under 50% of adults, and in many countries, 20% of adults or below that had a formal financial account, up to in the seventies and above. The latest Findex results will be released this summer, but there’s been more than 2 billion adults, incremental adults, brought into the formal financial system since 2011. It’s really incredible the scale of change that we’ve witnessed and the growth that we continue to see.

Joanna Wisniecka: Yeah. Tremendous progress and more progress to continue in the journey.

Yvette Bohanan: Absolutely. Yeah. And talking about the journey, we’ve had the pleasure of Kosta Peric, who’s the Deputy Director of Financial Inclusion Systems at Gates, he has been on twice on the podcast. We have to get you back on because-

Michael Wiegand: Not a competition.

Yvette Bohanan: He was on episode 65 in 2017 when Mojaloop was announced and then came back in 2020 with Paula Hunter, the Executive Director of the Mojaloop Foundation.

Joanna Wisniecka: Maybe to jump in for those listeners. Mojaloop is an open source, code based, was developed to support countries in implementing these inclusive instant payment systems. We refer to it sometimes as the blueprint, right, for a blueprint, reference architecture for implementing inclusive instant payment systems.

Yvette Bohanan: Yeah, and what’s really interesting is when you listen back, and there’s a lot of great info, information about Mojaloop and how it’s built and they kind of geeked out on one of the episodes. It was a lot of fun to go back and listen to it.

But the conversation then was around mobile money. As you said, the telcos are always very involved in this as stakeholders. They were talking about M-PESA in Kenya, which was a big, kind of the case study at the time in the very early days, bKash in Bangladesh. And there was this need to, they started to see where things were not working as well with those systems, and they really wanted to create something more ubiquitous or interoperable.

And that’s sort of where Mojaloop picked up and started to say, Well, how do you create that interoperability for scale so that everyone can participate in the same system and unlock all that volume that we’re talking about and build ancillary services, all that kind of stuff. What learnings since, say 2020, here we are, five more years down the road, have emerged around ubiquity and scale, because it seems so critical here?

Michael Wiegand: Yeah, ubiquity in payments is fairly obvious, right? You want to be able to pay anyone, right? And you wouldn’t imagine having a mobile phone if you could only make phone calls to people that use the same operator, right? So interoperability is natural in the telco industry.

Yvette Bohanan: I’m laughing right now because I needed to pay someone who was doing work in our house yesterday, and it was sort of like, Can you write me a check? I don’t write checks anymore.

Michael Wiegand: As a matter of principle.

Yvette Bohanan: I do not write checks anymore. And then he said, Well, do you do Venmo? And I was like, Well, no, but do you do Zelle? No. And so this is what we’re talking about, what we’re trying to accomplish in these countries. I guess you can get along without it. Here we are, kind of stumbling through in the United States, but if we were really on top of our game like some of these other countries, we would be talking a lot more about interoperability.

Michael Wiegand: Ubiquity is necessary in payments. And so if you don’t have interoperability, you end up with M-PESA, right, which is effectively a natural monopoly in Kenya. Fantastic model, tremendous reach, but we saw the limitation of having monopolies or duopolies emerge.

It goes back to your original question. We really saw competition as being a key to long run innovation and sustainability. And so interoperability between providers on a level playing field was core to that. And Kosta and his team developed the Level One principles, this was shortly before I joined, and articulated in part what an interoperable system needed to be. And it needed to be, effectively, a public good in that it was not a profit center that could extract monopoly rents, but be a service that operated more or less at cost or cost plus, and at the lowest cost possible in order to enable these sort of frictionless payments between a growing number of providers.

And at the time, a lot of Level One principles when I joined were still fairly controversial. I remember lots of conversations, Well, why does this just have to be push payments? Right? And I won’t go down that road. I think largely, certainly outside the US people accept that now that’s necessary for very low cost payment systems.

And interoperability also wasn’t seen as a priority. We were involved a bit in the early days in Tanzania, which created some sort of bilateral links between the three MNOs. And that was a step forward, but that proved to be wholly inadequate in really driving competition. And so this vision of an interoperable system that includes both banks and non-banks, right, so initially there were some that were just the mobile money operators and separate system for banks, but like we said, we want a fully inclusive payment system. And you want the corporate customers of a bank to collect money from the mobile money customers and so forth.

And so full interoperability is required. That’s now being sort of widely accepted and it’s taking off, right? The demand for the implementation of these systems is really gaining steam. We do a lot of work across Africa on it.

What are some of the specific learnings? One interesting trend and this may come from how models were developed in India and Brazil, which was sort of the largest, very successful examples of these instant payment systems, was the countries increasingly want to build and operate their own system as opposed to buying a out of the box system from a big corporate. So Vocalink, for example, that created the UK system, subsequently was bought by Mastercard, they offer this service and very good system. And a number of countries use Vocalink and there’s others that provide that.

I think there was a sense that you would have these sort of large global operators that would have the scale and expertise to operate across multiple countries. And we’re seeing a trend where more and more countries actually want to build and operate it locally for whatever reason, whether it be sovereignty, promoting the local tech sector, or just long run cost advantages that they may see. But that’s one pretty interesting trend that we didn’t necessarily predict at the beginning.

You mentioned Moja Loop, which we funded the development of some of that open source code, and I think we originally envisioned that sort of large systems integrators, rather, tech providers would take that and offer that as a service across multiple countries. Instead, we’re seeing a lot of individual countries using that as a basis to develop their own system.

Joanna Wisniecka: What’s really resonating to me is the conversation around inclusive instant payment systems has so widened. You’ve pointed to things that are controversial, are no longer controversial. Countries globally on the African continent, there are so much movement that this is almost a given that you need to put an inclusive instant payment system in place. What is next? And not necessarily the next controversial thing, but where is the focus going forward? One of the things we’re seeing, for example, is now that we’ve gotten through that little threshold, merchant payments, for example, are becoming bigger part of the conversation. It’s no longer about, let’s put a system in place that’s low cost, that scales. Now let’s really dive into where is the scale coming from. Merchant payments, at least we’re seeing in several systems, are the ones that are really contributing to scale.

What else are you seeing that’s, Okay, this is emerging as maybe a new focus, perhaps we’ve known it all along. What’s next?

Michael Wiegand: Yeah, so one is just the speed of implementation. We, a couple years ago, set sort of an ambitious internal target to help deploy an instant payment system in every country in Africa by 2030, which even now, when we tell people who aren’t deeply involved, they shake their head that that’s even remotely possible.

But we’re already almost halfway there and virtually every country, I think save five or six of the 55 countries in Africa, are in some stage either having an active system or of planning for deployment. So there’s still a long way to go and everyone by 2030 may be a bit ambitious. But it’s just amazing that you’re getting that level of scale and similar things are happening, of course, all around the world.

You’re right that merchant payments are the key to scale, right? In any economy, it’s your day-to-day purchases of goods and services that are the majority of your payments, certainly in number. And unlocking digital merchant payments has a couple of benefits. One, it just creates that scale that brings the cost down. So now you can really charge a fraction of a cent, either charge the customer or absorb that internally across billions of payments. And the volumes of UPI in India and PIX in Brazil are really incredible.

But it also, if you are living digitally, if you’re making all your purchases digitally, then you also save digitally, which is more secure. You can offer more interesting savings products. It creates a data trail that if you choose to release it, and we certainly advocate for choice and consent and data ownership, can be used for other kinds of products and services.

And it’s a real transformation away from cash and the most expensive, the most difficult part of developing a digital financial system or business is the conversion from digital to cash, right? We call cash in, cash out, right? And in these markets across Africa and Asia, these are agents, so it may be a small vendor that’s selling fruit and vegetables and FMG products in a village, also probably sold prepaid airtime, and now provides cash in and cash out service. So they’ll take your cash and put it in your digital account or vice versa.

That’s the most expensive and the most difficult part of the whole ecosystem, especially as you get to rural areas where the volumes are very small. And so if you migrate that to people living digitally and receiving and spending digitally, it dramatically lowers the whole cost of the system and has much wider benefits. So that’s, clearly a key.

And then I would say the next frontier, and we’re already seeing it, is cross border. We are providing some support to the Arab Monetary Fund who has a regional system across the Middle East and North Africa called Buna that provides largely wholesale sort of interoperability among the banks in that region. But we’re providing a connection into an instant payment system that we help support in Pakistan called Raast. Pakistan, across all the countries in which we work, has the largest volume of incoming remittances as a share of GDP, and the largest flows come from the Middle East, largely the Gulf Cooperation Council countries. And so we’re providing a real time direct link to dramatically lower the cost and increase speed and transparency of instant payments between the Middle East and Pakistan, and there’s huge interest in doing that in Africa.

And separate from work of the Foundation, as part of the free trade agreement in Africa, the central banks have expressed a desire for cheap cross-border payments, cheap, fast, safe cross-border payments. And we believe the only way, or the best way at least, that you can achieve that in scale is by connecting these domestic instant payment switches. Right? So if you already have every significant financial service provider connected into the domestic IPS, then you can leverage that for cross border connections, rather than separately having them connect into a cross border system separate from the domestic system.

Yvette Bohanan: Or a bunch of bilaterals. The interesting thing here is there’s probably a true lack of appreciation of what that gets you when you get to that point, right? Because all of the pilots, the proof of concepts, the regional connections, you have so greatly simplified all of the reconciliation around this that adds to cost and creates exception handling and all of this stuff that people are always intervening in, in the inner workings of payment systems that nobody talks about. And it’s kind of profound when you imagine these systems being stood up in all of these countries and then interconnected to do cross border and covering all these major use cases like government payments that you alluded to earlier, merchant payments in that. That’s when you really start to see this unlock and we’re not that far away. Even if 2030 is a very bold goal, it’s 2035. Okay? In the greater scheme of things, by 2040, the world starts to look very different, and that isn’t that far away.

Michael Wiegand: And there’s huge implications across an entire economy. Obviously there’s a big push to have greater Africa regional trade, and there’s businesses certainly in border areas that are already working across border and cross currency. One use case that’s important to us is is remittances.

And we’re already seeing just with the advent of the digital remittance companies, where at least if you digitize the inflow of money, largely say from Europe and the US, that dramatically lowers the cost while at the recipient end, a lot of it still is about cash pickup.

If you can have them plug into a instant payment system in country and connect to any account in the country and have it digital end to end, it dramatically brings it down. And the numbers are huge, right? The World Bank has on the monitors, remittance costs and overall costs have come down, but there’s a huge gap.

I think it’s still 12% for non-digital remittances into Africa, and it’s below 6% when it’s digital. Those are roughly the numbers, roughly the scale of digitally initiated payments. When you can bring it down digital end to end, it should come down to 3% or below, and that’s a big deal when you’re sending small ticket remittances to people in Africa. Taking 10% of the value, putting it back in the hands of the recipient is a big change.

Joanna Wisniecka: What an opportunity for remittances along with government payments, social aid payments, digital wages are often the first interaction for some people to a digital account and digital payment. And adding into that, making those cheaper just could be transformational.

Michael Wiegand: It’s also just transforming the way that governments work, right? And India saw when they had ubiquitous accounts and were making their social protection payments digitally and directly to the account of recipient rather than passing cash down through multiple levels.

One, more money ended up getting to the end. There was less loss, leakage along the way. But that also enabled them to reduce broad subsidies. So rather than subsidizing the cost of gas for everyone, you allowed the market price to prevail, but then made cash payments to poor individuals to offset the impact.

You’ve seen that across the board and it just makes the governments more effective, more trusted. You have a closer connection between a government and a citizen. So the knock on effects of these systems, again, that went from 20% of the population having a financial account to 80 or 90% is really dramatic. And the second and third order effects are things that you just never would imagine.

Yvette Bohanan: We’re talking about and we’re dancing around this idea of inclusion a lot here in this conversation. Joanna came in with inclusive instant payment systems, which inclusive IPS is what we say now. When we hit instant payment systems, because there were a lot of names for it, but we hit on instant payment systems, then we went into inclusive payment systems.

What caused that pivot to specifically call that out and what has that done? What were you exactly trying to achieve there? I think this is really important. You’re touching on this growth and bringing people in, but what does it mean exactly?

Michael Wiegand: So I’ll answer that in two ways. So, broadly, in terms of our strategy, we actually changed our name recently, but back from 2011 when we launched our digital strategy, it really was about inclusive financial systems and that sort of three key dimensions. It’s inclusive and it works both for rich and poor, for urban and rural, and for men and women.

And across each of those dimensions, there are very particular challenges and opportunities that need to be very intentionally addressed. Rich and poor, it’s largely about bringing the costs. Urban, rural, I talked about the challenges around agent networks and things in sparsely populated areas. But men and women, is a big one.

And from the beginning of that strategy, the team Articulated an objective to reduce that to completely close the gender gap, right? So there’s always been a huge gap between men’s participation in formal financial systems and women. And so we set that objective and a lot of our work, including helping governments fund social protection payments, is an important lever to reducing that gender gap, but you need to do a lot more. We’ve adopted a phrase that when you design for everybody, you design for men, This is a problem that extends well beyond financial services, but we’ve been very intentional to design all of our work in a way that makes sure and really put women at the center.

Because if you can reach women, the sort of reverse is true, right? If you can reach women, you can trust that you’re going to reach everyone. And that’s around targeting your work towards the opportunities that women have. So if you have social protection payments that are largely made to women, digitize those.

As we’ve looked at consumer protection and fraud, we’ve done surveys, which has uncovered that women have very different experiences of actual fraud. So as an example, there was some work in Ghana where they’re much more likely to be overcharged by an agent and at a much higher level per overcharging. And how they view financial systems and think about the idea of trust is very different. So we’ve been very careful to make sure we’re addressing those particular challenges, sort of authentic fraud and trust issues that impact women.

The second then is design, right? You need to understand the barriers and the ways that women live their lives in these countries and design the system. One example is in these mobile money systems or a lot of banking systems now, you use your phone number as your proxy for the account. Well, in many of the countries in which we work, there’s both sort of social barriers and social restrictions for women to give out their phone numbers.

So they go to an agent to get cash out. They’re reluctant to tell the agent, who’s typically male, what their phone number is, and in fact, if they do, they often get harassing calls. So you need to design the system where everyone, but including women, have the option of creating their own alias that isn’t their phone number so that they can use it.

Women have different mobility opportunities in different countries. So designing the solution by really understanding the way that women live their lives is critical to be successful.

And the third is measurement. Right? You need to actually track not only women’s use of these products, but also some of the unintended consequences, right? In Bangladesh, we helped digitize wages for garment workers and then went and talked to the women afterwards. The way that the wages were communicated was too transparent to their full families.

And so often when government workers previously worked overtime and were paid in cash, they could kind of keep control of that money. But when messages were going out that others could see about their wages each time, they didn’t have as much agency. By getting that feedback then, we went back into the design process and changed the way things work. So that gender intentionality is critical.

And to get to your question about what does that mean for interoperable systems, a lot of that functionality needs to be built in. But just the mindset of understanding women, monitoring how it’s used is key. And then there’s other dimensions. There’s sort of basics of an interoperable system needs to include banks and non-banks. It needs to have sort of a level playing field in terms of governance and so forth, again, with an eye to competition, innovation, and lowering costs so that new providers can come in that can really serve all individuals.

Joanna Wisniecka: Wow. So much to unpack there. I think we could do entire episodes on some of these elements you’ve highlighted. I think the fraud one in particular resonates, and really puts a fine point on, if you design for women, the ones who are less likely to trust the system, and it takes more for them to trust the system, and in cases of experiencing fraud, women are more likely to not use the system. So very quickly you can lose a woman as a customer. And if you design fraud mitigation in a really powerful way for the women, clearly you’re enhancing it for everybody else.

Fraud could be a whole separate conversation that we have there.

Yvette Bohanan: I love the dimensions that you called out on this of how you were thinking about inclusion when you started the program. I think by putting inclusive in front of the payment system noun itself, it really creates that intentionality. Because a lot of people would shrug their shoulders and say, It’s ones and zeros, it’s code, of course it’s a neutral, in itself, it’s gender agnostic, whatever they would say. Right. It’s not. As humans, we come in and we write this code with bias built in of how we think things would work or how we think people are. You’re giving some great examples that really highlight the importance of intentionality here at the design level and the feedback loop too, right?

Michael Wiegand: Yeah, and we had those debates internally, right. The, this is technology, it’s gender agnostic. And frankly, Glenbrook has provided us a lot of support and we’re working together now to further articulate what does it mean for a payment system to be gender intentional and really understand and then meet the needs of women.

Yvette Bohanan: This is really work Joanna is spearheading here, but the fact that a foundation like Gates has recognized it and called it out in particular in parts of the world where this is not something that’s discussed very much, I think that’s quite remarkable.

Joanna Wisniecka: Especially in the context of women, but applicable more broadly, there are certain foundational things that need to be in place to address barriers, and one of those things that comes to mind is an ID. Being able to open an account is the starting point, right, to entering inclusive instant payment systems. So in addition to the work that the foundation does and inclusive instant payment system design and implementation, you’ve also done work in the foundational aspects of inclusion, including ID. Can you talk about that a little bit?

Michael Wiegand: Yeah, and frankly we can’t take credit for identifying the opportunity. We saw that in India. When India launched the Aadhaar, which is their digital ID, and they made it accessible to financial service providers at signup. So when you go to open any account in India, you give your Aadhaar number, your national ID number.

You then authenticate biometrically either with a fingerprint or iris or other countries, a picture of your face. The government actually gives a financial provider access to your basic information. Your name and so forth gets downloaded. So it gives an added degree of assurance and cost reduction because the person doesn’t need to type everything in but you ensure that the account then is tied to the same information as the national ID system. And in India, the estimate was that prior to Aadhaar, it cost $16 to open an account because of all the paperwork you had to fill and then the processing and copying and storing of the paperwork and triple entry of computer systems, and that was brought down to a few cents, right?

And that completely changes the economics of onboarding low income and therefore low revenue customers because you don’t need to cover that $16 to make a profit. And so that was just dramatic. And there’s far wider both government and economy wide benefits to a digital national ID system, but just in terms of financial inclusion, and India went further to actually enable people to authenticate themselves for transactions.

So even if you don’t have a mobile phone in India. You can go to an agent, give your ID number, which is linked to an account, authenticate biometrically, maybe there’s a PIN as well, and withdraw money with no card, no phone, nothing, just with that number and your biometrics.

It’s been dramatic. So we recognize that and then advocated that that be part of a what’s come to be known as digital public infrastructure that can lower the cost across the government, across the private sector, and have dramatic impact. And that’s another thing that’s just exploded.

And the whole concept of DPI now is well known and understood and as a priority for governments around the world. And we think about foundational DPI in three big pieces. And I think that’s generally accepted as digital ID, payments as payment interoperability systems, and then data exchange being the third piece.

And that if you set up both the rules and the infrastructure and so forth to enable those, then those can be used across the economy and across the country in a variety of ways that will open up new opportunities in a bunch of different sectors, including healthcare and other things well beyond financial services.

So that actually got so big within the Foundation, it was within my team, that we’ve actually spun out a separate DPI, digital public infrastructure, team to lead the work on ID and data exchange.

Joanna Wisniecka: Oh wow. And for terminology, maybe clarification for some of our audience, we also hear DPG, digital public goods. What is the distinction between digital public infrastructure, as you just described, and digital public goods?

Michael Wiegand: Yeah, and one challenge is there’s probably a hundred different definitions out there.

Joanna Wisniecka: Depends who you ask.

Michael Wiegand: Some people have even argued that Microsoft Windows is either a digital public good or digital public infrastructure. So for us, Digital Public Infrastructure is the deployed implementation on the ground.

So it’s an ID system on the ground and how countries do that. And even, with payment systems, even like the ownership is not so critical. It’s the fact that it’s available to everyone at a low cost, even if it’s maybe jointly owned by the banks or something. Digital public goods, which is kind of a broader term, but in this context is often technology or other assets that are available to countries, usually for free or something like that, to implement digital public infrastructure or other providers. So you mentioned before, Mojaloop, which is a open source set of code that we would consider a digital public good. Anyone can go to GitHub and download it. That can be leveraged to implement digital public infrastructure.

We did something similar in the ID space. There’s a open source system called MOSIP, Mobile Open Source ID Platform, I believe is the acronym. It was developed in India, very much modeled on the functionality of Aadhaar. It was developed much later, so a little bit more advanced underlying technology.

And again, countries can take that and use that and add to it and change it as they need to implement their identity systems. So those are DPG and there’s a much wider range of digital public goods out there. There’s even a digital public good alliance that tries to promote and develop safeguards and make those available. But that’s how we use those two terms.

Yvette Bohanan: I’m just curious, we’ve covered a lot of ground here. When you look across what’s going on in the regions and the country, specifically in Africa that you’ve been focusing on in the last several years, what has really been those like breakthrough moments where you just said, Wow, this is incredible. This just happened.

Michael Wiegand: First and foremost is just the speed and scale of financial inclusion, right? And in Africa, it really has been driven by mobile money that’s provided by the mobile network operators, different configurations of other countries. But the fact that we continue to see such dramatic growth everywhere, and in countries that have really strong, fundamental, challenges just in terms of basic economy and potentially conflict and so forth. Every three years when Findex is fielded, the survey’s fielded every three years, every three years when we see the results, we think, Okay, but now we’re going to plateau.

And we still see strong growth countries that have struggled and stagnated for many years suddenly kind of get things to click and take off. And so it’s just been pretty astounding how widespread the continued growth and just basic inclusion, and we’re seeing that fairly naturally.

And there’s certainly work to be done to encourage this. Broader and deeper use of financial systems naturally fall along once you do have fairly ubiquitous use of these payment systems, maybe for domestic remittances and other sort of cash transfers, some degree of merchant payments evolves.

Savings. We’ve been really pleasantly surprised that, you know, there’s a bit of a lag, I think there’s a little trust that’s involved that needs to be developed, but digital savings is really growing rapidly and naturally following on the heels of just account ownership and general use. So that’s been really encouraging.

The work’s not done. There are still challenges. We’re now almost focused at a subnational level. There’s always some harder to reach areas in every country and that requires a little bit more targeted effort. But that’s been tremendous.

And then we are seeing the evolution of new innovations in terms of merchant payments. We’ve talked a lot about just these instant payment systems and soon I think a growing focus on cross border. I think it both validates our vision and strategy, but I think has far exceeded in both the short time and the high scale that this has created a really vibrant ecosystem that will continue to grow. And that’s just terribly exciting.

Joanna Wisniecka: One plug I’ll put in for our audience who want to follow, in particular, the evolution on the African continent, which is just so exciting as you’ve highlighted a few things. A report, the State of Inclusive Instant Payment System that is put out on an annual basis by AfricaNenda, which is a really nice way to see year to year in addition to a report like Findex, the evolution specifically on the continent and inclusive instant payment system. So certainly would encourage our audience to take a look at that.

Michael Wiegand: Yeah. And we’re not an impartial observer. They’re a close partner of ours, but I would even say if you don’t work in Africa, if you’re not primarily focused on Africa, I think that SIIPS report goes into far more detail and nuance into instant payment systems than anything I’ve seen around the world. It really, I think is a great read for anyone and in many ways, Africa is now leading the world on instant payments.

Yvette Bohanan: Yeah, which is fantastic. Michael, it’s been an absolute pleasure to have you on a podcast, and I do hope we get to bring you back. I don’t know if we’ll be talking about fraud or risk management or what. We’ll figure something out.

Michael Wiegand: There’s always, always plenty to talk about. But it sounds like I need to come back before Kosta does his third episode.

Yvette Bohanan: That’s exactly it. But thank you so much for spending time with us on this episode, and we at Glenbrook are, I just have to say on behalf of everyone, we are delighted to be a small part of the massive, massive mission that you’re working on for inclusive digital transformation. So thank you.

Michael Wiegand: And Glenbrook has always been a great partner, a great thought leader, and truly a partner. And I’ve sat in many meetings and you’ve certainly sat in a lot more with Kosta and his team. And it’s really kind of shoulder to shoulder solving really difficult, complex problems in wholly new areas that haven’t been addressed. So I’ve really enjoyed working with you as well.

Joanna Wisniecka: It’s been really an incredible journey and couldn’t be more grateful to be part of it, contribute in a small way to this important work.

Yvette Bohanan: Joanna, thank you for being here as well. You’ve put your heart, soul, and mind into this stuff every single day. It’s been great to have you joining and I’m looking forward to some of the episodes that you’re going to be hosting. For all of you listening, we hope that this shines a bit of light on what’s happening and why in financial inclusion.

Stay tuned for those episodes with Joanna. In the series, we’re going to look at what data says about financial inclusion worldwide, what it takes for each of us to help make a difference as individuals. That’s an interesting angle as well. So thanks for joining us as always, and until next time, keep up the good work. Bye for now.