Marissa Dean of Caribou Digital (and i2i Advisory Panel member) talks to us about data and digital development in the financial sector.
Your report Can Big Data Shape Financial Services in East Africa suggests that (for the credit market at any rate), many alternative datasets have limited value in extending financial inclusion. Could you explain your thinking?
According to FiDA’s research, most market-wide datasets (agricultural data, household income levels, crop prices) have limited value as inputs into credit scoring or segmentation. This is because the data quality is poor, meaning coverage is spotty either geographically or over time. There is also a problem when these datasets don’t agree with one another, especially where the margin of error among sources is very wide. As noted in the report, Off Grid Electric mentioned that publicly available data on sources of electrification range from 10% to 92% in some regions. There is certainly a role for technology in making publicly available big data sets more reliable and more complete in their statistics.
You suggest that a data market will never emerge in Africa in the same way that it has in the United States. Why is that, and is there a possibility that the market could develop in such a way that it leapfrogs the lessons that have characterised the data journey in other markets?
The US data market is driven by an advertising technology behemoth that has been fuelled by Silicon Valley. Underpinning this is a desire for brands, retailers, etcetera, to capture greater shares of consumer-spending budgets or, as it were, credit-card spending, which is effectively debt. No other country in the world is allowed to fuel its economy with debt the way that the US has in recent history. My hope for African countries is that data analytics help digital marketplaces emerge in ways that allow the economies to leapfrog unscrupulous behaviours and mass indebtedness for the sake of growth.
In the broad field of digital development and financial services for lower-income individuals, which organisation, company or person is doing or publishing interesting things (i.e. who are you watching)?
I will read anything that Ignacio Mas writes. He’s a good writer, and we have also had interesting side chats at events. I also love reading Julie Zollman and Rafe Mazer – in very different ways I think they both publish interesting research on complex topics. In terms of doing interesting things, I’ve always been curious to learn more about Jumia’s approach with SMEs on their marketplace platform. More recently, I have been watching Sokowatch and will be looking more closely at their model.
Are you concerned that the push for digital financial services (especially digital payments) by donors and other influencers may ultimately result in further exclusion of those Africans who are most vulnerable?
Certainly, we (implementers and influencers) need to be careful about digital divides that are reinforced or widened by the “platformatisation” of the internet. We also need to take caution about how imposing individualistic values might affect group dynamics and group resilience, leading to some folks being even more vulnerable.
Do you think the backlash against super-platforms and pervasive data collection is likely to affect the ability of companies to continue to harness data to provide visibility for the lives of those who are financially underserved or unserved?
The media backlash against, let’s be honest Facebook, is affecting corporate advertising budgets, primarily in the US, which in turn recently affected Facebook’s stock price as asset managers changed up their portfolio mix.
The pension funds bought low and sold high, so the only folks that really are affected by the backlash are Joe on the street who bought a few shares of Facebook stock and company employees who hadn’t sold high.
Companies that harness personal data have a responsibility to be transparent about what they do and who they work with, as well as safeguard the authorised data they store. There is no Machiavellian trade-off between responsible (or irresponsible) corporate behaviour and innovation. What does this mean for those who are financially underserved or unserved? I suspect very little. There is plenty of opportunity to gain visibility to underserved markets, without being sneaky.
Marissa Dean is a senior director at Caribou Digital, a consultancy that works to build inclusive ethical digital economies in emerging markets. After 11 years as a business and technology consultant, Marissa plunged into international development in 2011, focusing on early-stage start-ups in sub-Saharan Africa. Since then, she has advised mobile industry, international development organisations and private-sector companies on nudging entrepreneurship ecosystem development and shaping digital economies to be ethical and inclusive.