[Case study] Understanding impact performance: Financial inclusion investments

  • Rachel BASS, Global Impact Investing Network (GIIN)
  • Noshin NOVA, Global Impact Investing Network (GIIN)

During this session, Rachel BASS and Noshin NOVA of the GIIN Research Team presented the key findings of GIIN’s published study about impact performance of financial inclusion investments.

Nova opened the session by articulating the importance of their analysis in this period of crisis. The impact investment industry is evolving and maturing rapidly, and it is therefore critical to measure and report on the industry’s impact performance. Nova called upon the audience to actively engage, based on how this study resonates with their own personal field of work.

Nova contextualised the study’s objectives in view of GIIN’s mission statement. Measuring and reporting on impact performance is aligned with all three focus areas of GIIN, which are: mobilisation of capital for global impact investing; safeguarding of impact investing integrity; and, changing mindsets concerning the role of capital in society.

Nova next described the study’s methodology, explaining that the findings reflect on the results of nearly 800 financial inclusion investments. The GIIN Research Team leveraged standardised and evidence-based impact metrics. The questionnaire they used, as well as the final report were aligned with the five dimensions of ‘The Impact Management Project’ and UN’s SDGs. As for the analytical methodology, the study shifted focus from outputs to longer-term outcomes. According to Nova, investors have shown interest in these outcomes, which enables them to measure progress with respect to their impact objectives, and share these results externally in a transparent manner.

Nova presented four impact pathways for the financial inclusion sector that were identified in the study:

  • Decreasing reliance on solely informal networks, by providing clients first-time access to formal financial services;
  • Increased spending on basic services;
  • Accelerated business expansion by means of financing MSMEs;
  • Improved financial resilience.

The study results show that the impact investments promote active usage through the offering of a bundle of credit, insurance, and savings products. However, Nova articulated that more progress can be made in terms of better reaching underserved populations, and embedding a gender lens in financial inclusion investments.   

Bass continued by presenting an analytics demo showcasing real-world results. She introduced the interactive dashboards that show investee performance related to impact investment in the financial inclusion sector. These dashboards provide insights in the sample and the four impact pathways, and offer an opportunity to customise the segmentation of the data per investee type, investee products and services, target financial returns, and stage of business.

Nova further pointed out that the range of organisations that have impact investing assets in the financial inclusion sector is getting more diverse. This also affects the stage at which business investments are done. Bass illustrated this by explaining that Fintech financial service providers are better suited to investing in early stage companies or venture stage companies. Bass closed the session by emphasising the critical role of financial inclusion in building the foundations for client resilience to external shocks.