Digital payments in India have grown phenomenally over the past decade. But critical barriers continue to hinder the current trajectory of this progress for the low0 and middle-income (LMI) segment. MSC worked on building the retail payments landscape in India and strengthening social benefit transfers to vulnerable communities.

In the area of strengthening retail payments, MSC worked with National Payments Corporation of India (NPCI), NPCI Bharat BillPay Ltd. (NBBL), Reserve Bank Innovation Hub (RBIH), and banks or agent network managers to strengthen pro-poor payment systems. We worked closely with institutions to improve their products and distribution channels to deliver financial services to last-mile customers. We worked toward designing programs with a gender lens to increase financial services usage among women and other vulnerable segments.

On the subsidy front, while India has one of the most advanced systems to manage social transfers, it has yet to bridge the existing gaps in the uptake and inclusion of LMI segments. To overcome these barriers, we extensively partnered and worked with line ministries of the Government of India (Ministry of Consumer Affairs, Food and Public Distribution (MoCAF&PD), Ministry of Petroleum and Natural Gas (MoPNG), Ministry of Agriculture and Farmers Welfare (MoA&FW), Ministry of Chemicals and Fertilizers (MoC&F), and NITI Aayog). We also worked with state government machinery to drive the implementation of policies at the ground level. We work alongside NITI Aayog, Meity, and DFS, among others, to drive our work in the payment space.

This project has improved the lives of one billion LMI segment population in India, particularly women and vulnerable groups.

The Bill & Melinda Gates Foundation commissioned this project.

Governments at all levels struggle to make public expenditure more effective and efficient. Float or an unused surplus of public funds in various implementing agencies’ bank accounts and delays in government payments to private vendors are key sources of inefficiencies in expenditure management. MSC has been working with Odisha’s finance department and a line department to pilot the solution. We used digital principles and tools to develop the solution. These include a single source of truth, just-in-time funding, and smart payments.

MSC ran detailed diagnostics of the programs managed by various line departments to identify a suitable use case to deploy the solution. We did a process analysis to identify payment gaps once we identified the program. We developed detailed “should-be” maps for the reengineered process. MSC designed the solution as the last step.

We expect these projects to emerge as helpful solution templates across India and the developing world for public finance reforms. Government agencies’ improved budget execution capabilities would reduce fiscal deficits due to float reduction. It would also remove barriers to private sector participation caused by payment delays.

The Bill & Melinda Gates Foundation commissioned this project.

Bangladesh Bank wanted to introduce an e-KYC system to boost financial inclusion countrywide. Under the system, customers would not need to provide paper-based copies of authentication documents to open bank accounts. The e-KYC will use the national identity number and biometrics to make the authentication process seamless. United Nations Development Programme (UNDP) Bangladesh commissioned MSC to evaluate the e-KYC pilot and suggest reforms to the existing e-KYC guidelines for key stakeholders. MSC finalized the work plan, approach, methodology, and expectations of key stakeholders for the e-KYC pilot. We finalized the research tools and conducted a representative survey with the service providers and end-users.

MSC delivered an interim report that highlighted key findings and recommendations on the present state of the e-KYC process. We delivered the final report based on the analysis with recommendations on fingerprint-based, face-matching, and OCR-based (optical character recognition) e-KYC; a unified identity database; data privacy; and customer protection.

Bangladesh Bank modified the processes based on our recommendations and brought necessary changes to the draft guidelines.

United Nations Development Programme (UNDP) commissioned the project.

The Alliance for Financial Inclusion (AFI) contracted MSC to develop a regional policy framework on e-KYC and Digital ID for seven Eastern Europe and Central Asian countries. These countries included Armenia, Belarus, Russia, Mongolia, Kazakhstan, Tajikistan, and Uzbekistan. MSC provided end-to-end technical support to these countries, which included extensive regulatory analysis and policy advisory of the digital ID system, e-KYC norms, and compliance with Financial Action Task Force (FATF), Anti Money Laundering (AML) or Countering the Financing of Terrorism (CFT) regulations for enhanced financial inclusion. MSC also conducted ideation workshops with global experts from AFI to finalize the assessment framework.

MSC’s intervention led to the development of a regional framework on e-KYC and Digital ID. The framework includes three broad components—policy development, infrastructure and development, policy implementation, and ecosystem development. These components detail specific principles AFI members in these countries can consider as they formulate digital ID and e-KYC policies.

The findings and recommendations helped the regulators and policymakers improve the Digital ID system and e-KYC norms in the seven Eastern European and Central Asian countries.

The Alliance for Financial Inclusion commissioned this project.

The Small Firm Diaries is a global research initiative managed by the Financial Access Initiative at New York University. It intends to understand low-income small firms’ role in poverty reduction. It also sought to identify barriers that impede their growth and productivity and limit their contribution to local economies. This research focused specifically on firms that employed between one and 20 non-family member employees.

The study used the financial diaries methodology for data collection. The methodology involved the gathering of high-frequency quantitative and qualitative data. In each country, a team of locally hired field researchers visited a sample of small firms weekly for a year. They meticulously captured daily data on financial flows and the decision-making processes behind these flows.

MSC served as the lead implementation partner, alongside L-IFT (Low-Income Financial Transformation), to manage the data collection for the Small Firm Diaries study’s Indonesian segment. This involved critical tasks, such as the selection and screening of research locations, recruitment and training of field research teams, supervision of the field research implementation, and rigorous data quality control procedures. The study included 162 firms from Bandung, Makassar, Medan, and Yogyakarta in Indonesia.

The MSC Indonesia team also contributed significantly to the research design to ensure its relevance and effectiveness in the Indonesian context. We also collaborated to produce various research outputs, which included research reports and case studies.

Furthermore, MSC Indonesia played a critical role to convene the project’s Indonesian Advisory Group. This esteemed group served as a valuable sounding board throughout the project. They actively responded to research findings and provided advice on Indonesian priorities and context. The Advisory Group boasted the participation of more than 300 esteemed members, which included ministers, deputy ministers, C-level leaders, and directors from more than 80 organizations. These organizations spanned government ministries, private sector entities, non-governmental organizations, and international development agencies.

The New York University commissioned this project. This project is currently active in seven countries: Colombia, Ethiopia, Kenya, Nigeria, Indonesia, Fiji, and Uganda from 2021 to 2023.

MSC has been conducting women’s business diaries-based action research in Bangladesh to reduce financial barriers to access for women entrepreneurs. MSC will track all financial and nonfinancial transactions of about 500 women entrepreneurs for this project. This research is set against the backdrop of the minimal evidence available on how women-owned businesses are run and the unclear impact of social norms that restrict women’s agency. Research on microenterprises has only recently revealed hypotheses, such as men making business decisions for women-owned micro and small enterprises (WMSEs) and women’s preference for different types of businesses than men.

Through this research, MSC will take a comprehensive view of the lives of female business owners. This includes their financial, business management, digital, and personal lives. MSC will then collaborate with financial institutions to use insights from the action research to develop gender-centric financial products and help WMSEs in Bangladesh.

The Bill & Melinda Gates Foundation commissioned this project.