This note analyzes the evolution of CISs, including the emergence of new technologies that use alternative data in credit decisioning and the opportunities and risks associated with these trends. This paper also predicts the potential development effect of these disruptive technologies and proposes a role for the World Bank Group in leveraging these technologies to promote inclusion and stability.

An estimated 2 billion adults globally do not have access to a transaction account that can be used to receive payments and make deposits.1 Research shows that low-income and financially excluded populations have active financial lives and need a range of financial services to take advantage of economic opportunities and manage and mitigate risks. Small and medium enterprises (SMEs) generate the greatest number of new jobs and employ the largest number of people in aggregate; thus they are important for job creation and economic growth. And yet, according to the World Bank Group’s SME Finance Forum,2 65 million or 40 percent of formal micro, small, and medium enterprises (MSMEs) in developing countries have unmet financing needs. The MSME finance gap in developing countries is estimated to be $5.2 trillion or approximately 1.4 times the current level of MSME lending, and women-owned businesses comprise 28 percent of MSMEs and account for 32 percent of the MSME finance gap.