FIDWG Quality Indicators Sept 2011

8/3/2019 FIDWG Quality Indicators Sept 2011

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Rodrigo Porto

Central Bank of Brazil

Quality IndicatorsFinancial Inclusion Data Working Group


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Concept Note: The importance of indicators

Indicators of Quality

Dimensions

Summary

Example

Index

AFI | Riviera Maya (Mexico)| 27.9.11 | Page 2


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Indicators are important to:

understand the current stage of financialinclusion of the population;

monitor its progresses and barriers in differentdimensions, several indicators should becreated.

They can be divided according to their purposesinto three main groups: Access, Use and Quality.

Concept Note The importance ofIndicators



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Purpose:

Indicators of Quality are designed to:

complement the analysis related to

identification of other barriers to financialinclusion when access to services is available

verify the sustainability of the use of financial

services.

Concept Note Indicators of Quality



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Indicators of Quality can provide information on:

The convenience of services

The level of security of users

Consumer protection issues

Financial education of potential clients

Choice

Concept Note Indicators of Quality



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These indicators should measure the extent to whichfinancial services are made available to users,observing the existence of implicit barriers, such as:

high cost of service

waiting time in queues

requirement of criteria to admission, such asdocumentation, minimum wage etc, not easilyavailable to all potential customers suitability

complexity (such as contractual complexity,hindering the understanding of the obligations andrisks of services) of services

Indicators of Quality - Convenience



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Client security encompasses:

issues related to the possibility of losses bytransaction or registration errors due to poor

infrastructure or fraud the stability of the financial institution

the continuity of services in the locality

the access to safety net, such as depositinsurance.

Indicators of Quality Security of users



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The consumer protection scope should embraceboth preventive and corrective measures.

Preventive measure:

Users should have access to accurate financial

information, clearly and transparently available, thusenabling decision-making with full knowledge of theirrights and obligations.

Corrective measures:

focus on conflict solution between clients andinstitution. Accessible channels to clients must beprovided to resolve any problems in their relationshipwith financial institutions

Indicators of Quality Consumer protection



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Financial education should be emphasized due to: the lack of financial education,

the existence of information asymmetry regardingthe use of financial services and

the uncertainty over the budget of low-incomepeople

the complexity of choosing one among many ofservice conditions offered

It is also important to monitor the level of indebtednessof users in order to evaluate whether access to credit issustainable, increasing welfare of its users

Indicators of Quality Financial Education



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Choice is also an important dimension socustomers have the opportunity to select the bettercombination of:

price

quality of services

treatment

Moreover, it reduces the risk of the discontinuity ofservices in their locality.

Indicators of Quality Choice

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Summary


Dimension Scope

Convenience Cost of services; Waiting time in queues;

Complexity of services; Opening hours;

Product fit

Client security Possibility of transaction or registration errors; Stability of the financial institution;

Continuity of services in the locality; Access to safety net

Consumer protection Preventive actions;

Corrective actions;

Complaints resolution;

Level of indebtedness of consumers Financial literacy Level of financial literacy of users;

Level of financial capability of users Choice Level of competition


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Quantitative Indicators: Distribution (mean and variance) of interest rate on loans

by range of users income (Convenience/costs)

Average waiting time in queues / Number of clients

(Convenience/waiting time in queues)

Qualitative Indicators: Required information to buildconcepts:

Does regulation defines a standard to simplify loancontracts to low income clients?(Convenience/complexity)

How is financial literacy measured? Is measurement of

financial literacy already in progress? (Financial literacy)

Indicators of Quality Different Approaches



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[email protected]

www.afi-global.org

Thank you!

Rodrigo PortoCentral Bank of Brazil

[email protected]

FIDWG Quality Indicators Sept 2011

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