How Data-driven Strategies Can Improve Impact Investing Outcomes

Wharton University | Jan 10, 2019

impact investing and data podcast 1 - How Data-driven Strategies Can Improve Impact Investing OutcomesData science is making inroads into the world of impact investing, helping program designers and beneficiaries achieve closer alignment between their goals and strategies. While some are building on models from the business world to correlate different pieces of ecosystems to understand how impact flows, others are attempting to marshal next-generation digital technologies such as blockchain to improve outcomes in areas such as disaster response and land titling.

The Rockefeller Foundation has been designing ways to harness data effectively in order to improve the effectiveness of impact investing. “Data really helps you understand the nature of the problem, and thinking about data ahead of time helps you structure your experiments and your interventions,” said Zia Khan, vice president of initiatives and strategy at the foundation. “Measuring data helps you prove what works, what doesn’t work, and then you can monitor and scale things up.”

The data movement is infectious. Khan said he sees “increasing appetite to learn more from some of the countries that have done some breakthrough work,” such as Estonia and India. In particular, he cited India’s biometrics-based identification system called Aadhaar, which has enabled millions of previously undocumented residents to open bank accounts and secure government benefits, education and jobs, among other gains.

The Power of Correlation

Locus Analytics, an economic research and data analytics firm, has developed a new model to locate, map and study the components of an economy, which allows researchers, policymakers, investors, entrepreneurs and anyone interested in economic data to sort, splice and analyze the information in new and innovative ways, according to founder and CEO Rory Riggs.

The company created the Locus Model, which it said enables “a new method of interactive data analytics for business and economic data.” The model is apt for impact investing because it brings more precision in directing resources and maximizes desired outcomes. “If I could give you transparency to all these marketplaces, you now, from a financial point of view, can think through, ‘Where is the most impact for your dollars?’” Riggs said. “It is a way to benchmark and grade your investments and make them much more targeted.”

Riggs explained how Locus harnesses the power of interrelation in data. Much like how geographic mapping uses a so-called “coordinate system,” the company uses location-based services to create “a robust classification system to understand better who you are, who’s around you, and then how to find other people who are like you,” he said. “We’ve taken a production system from inputs to outputs and allows you to figure out where you are in that process.”

“Measuring data helps you prove what works, what doesn’t work, and then you can monitor and scale things up.” –Zia Khan

For example, the model creates correlations between various functions, such as design, production, sales and transportation in a business setting, to create an “activity wheel.” That framework “captures every activity in the economy, and these activities are the same in Kigali as they are in New York,” he added.

Riggs and Khan shared their insights on innovating with data in an episode titled “Driving Data for Impact” as part of a Knowledge@Wharton podcast series From Back Street to Wall Street, where entrepreneurs, investors and policymakers from around the world focus on maximizing impact investing outcomes. (Listen to this episode using the player at the top of this page.)

Widening Interest

Riggs said one user of such data could be an entity like the Farmers Business Network, which crowdsources farmers, connects them with each other and shares real-time information on crop patterns, new agricultural products and others. “This is going to happen industry by industry” by providing participants greater visibility into their individual roles and their impact across their value chains, he said. “I’m hoping that every impact worker will have access to understanding what their business is and how their business is performed around the world.”

The Locus Model helps organizations locate their place in a value chain and then create their own networks. “It’s a neat way of saying, ‘Once I put my own code on myself, then I can find other people that do that, and we can start building neat networks that allow people to communicate,’” Riggs said. That model could be extended to country-level planning, too. In what he called a “clinical model” for economic development, policymakers could understand how their economy has developed and compare that with other countries.

See:  While Canada debates, others are commercializing our most valuable asset: data

“Our codes facilitate your creating a clinical model, because it allows you to build a standardized representation of your community, and be able to compare it to a standardized representation of Detroit or New York or Stockton,” Riggs said.

As it happens, Stockton is a transportation hub for farm areas around California. “If you’re building a merchant hub in an impact country, wouldn’t you like to know about the businesses that have formed and developed in an American distribution center? And start building your models around that?”

Locus has also identified stock indices as users of its tool, where it could correlate companies by their businesses. “The S&P, MSCI, Wilshire and Russell are now running indexes using my technology to group companies that correlate because of function,” Riggs said, adding that investors following those indices could design and diversify their portfolios based on this data.

Insurance companies also are studying the model to understand correlations between, say, disability problems and specific jobs, Riggs added. “In the financial world, we’re getting good traction by people realizing they now have a new tool to identify and then manage risk because they can see it more clearly.” He is also seeing interest in the model from companies that want to understand their peers better or map their supply chains.

Working with Governments

Riggs has been taking his model to governments. Locus recently reached an agreement with the government of Rwanda to start developing survey tools for that country that will allow it to start mapping its community in “a functional mapping context,” he said. “What we’ve told Rwanda, and we’d tell others, is that once I have your system mapped in our system, I will handle the [networks across the] developing world,” said Riggs. “The promise will be in the impact world. If you let me come in and map your community, I will allow you, then, to compare your community to all these developing world countries.” Locus has already mapped China, England, France, the U.S. and Mexico.

“It is a way to benchmark and grade your investments and make them much more targeted.” –Rory Riggs

In order to ensure that the data in the networks stays current, Riggs plans to crowdsource that effort by creating online homepages for users to update their information. “Just like people will update their Facebook page or a Wikipedia page, I’m hoping that people will take ownership of the page they care about so that that page stays current.” His firm is also building machine-learning tools that can read websites and update business summaries. Locus already has information on more than 50 million companies in its database, which together account for about 150 million jobs.

See:  Startup CEOs on how to keep the artificial intelligence ball rolling in Canada

Riggs described the Locus Model as “the ultimate free trade tool.” It allows users to get “perfect information at any given point in time, so the speed of change in business will become much faster,” he explained. Impact investors would be able to map information on new business startups, and businesses could use it to manage supply chains, plus find avenues to sell their products and services, he added.

Research work in correlation led Riggs to create the Locus Model. A math major in college, he had spent most of his earlier career working with scientists building biotechnology platforms to conduct fundamental research. That work involved using data to understand a disease by matching its attributes with those of other diseases. He wondered whether he could build similar platforms for business with a network of all economic activity based on fundamental attributes of business functions. With the Locus Model, he showed that it was indeed possible.

Data in its DNA

As for the Rockefeller foundation, using data to shape its strategies dates back to its origins more than a century ago, Khan said. “We coined the term scientific philanthropy, which was this idea of how do we get analytical and data driven around understanding problems, measuring the effect of interventions, and then scaling up the ones that really worked,” he added. “It has been part of our DNA for a while.”

Khan credited Rockefeller Foundation president Rajiv Shah with “putting data and technology kind of at the center of the vision for the foundation.” Shah joined the foundation as president in January 2017 and previously worked as the administrator of the U.S. Agency for International Development.

“Data has always been really important,” said Khan. “What is different today is how available data is.” In the past, philanthropy involved investments in producing data, but that is no longer required because plenty of data is available these days. “The arc shouldn’t necessarily be in producing new data, but in taking the biggest advantage of all of the data that is there.”

Continue to the full article --> here


NCFA Jan 2018 resize - How Data-driven Strategies Can Improve Impact Investing Outcomes The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - How Data-driven Strategies Can Improve Impact Investing OutcomesFF Logo 400 v3 - How Data-driven Strategies Can Improve Impact Investing Outcomescommunity social impact - How Data-driven Strategies Can Improve Impact Investing Outcomes
NCFA Newsletter subscribe600 - How Data-driven Strategies Can Improve Impact Investing Outcomes

FFCON20 Homepage Banner 600 - How Data-driven Strategies Can Improve Impact Investing Outcomes

World Economic Forum | Yuval Harari | Jan 24, 2020 Humanity faces three existential threats this century, warned historian Yuval Harari at Davos 2020. Technology risks dividing the world into wealthy elites and exploited "data colonies," he explained. "If you like the World Cup - you are already a globalist," he said, making the case for better cooperation to tackle the challenges. As we enter the third decade of the twenty-first Century, humanity faces so many issues and questions, that it is really hard to know what to focus on. So I would like to use the next twenty minutes to help us focus of all the different issues we face. Three problems pose existential challenges to our species. These three existential challenges are nuclear war, ecological collapse and technological disruption. We should focus on them. Now nuclear war and ecological collapse are already familiar threats, so let me spend some time explaining the less familiar threat posed by technological disruption. In Davos we hear so much about the enormous promises of technology – and these promises are certainly real. But technology might also disrupt human society and the very meaning of human life in numerous ways, ranging from the ...
Read More
how to survive the 21st century - How Data-driven Strategies Can Improve Impact Investing Outcomes
Verdict | Ellen Daniel | Jan 13, 2020 Open banking was first launched in January 2018 and received much attention from the financial community as the potential bringer of fintech disruption. The regulations require UK-regulated banks to share their customers’ financial data (with permission) with third party providers through the use of application programming interfaces (APIs) in order to make it easier for customers to access financial services and for TPPs to develop new products. Today marks open banking’s second anniversary and while it has impacted the financial landscape, prompting incumbent banks to adapt to innovation and opening up new opportunities in terms of consumer experience, some have argued that the regulation is yet to live up to expectations. See:  Open Banking in the UK: what’s happened so far Banks had until March 2019 to establish a “sandbox” environment that third party providers could access and use to test products and until June to make their APIs available to third parties, but many European banks have not adequately met key deadlines, stalling innovation. Although many traditional banks are now adhering to open banking regulations, more could be done to ensure that they also benefit from the new landscape in terms ...
Read More
open banking image2 - How Data-driven Strategies Can Improve Impact Investing Outcomes
The New York Times | Ruchir Sharma | Jan 20, 2020 To outsiders, China may seem like a surveillance state. But tech has fueled growth and helped stave off recession. Landing in Shanghai recently, I found myself in the middle of a tech revolution remarkable in its sweep. The passport scanner automatically addresses visitors in their native tongues. Digital payment apps have replaced cash. Outsiders trying to use paper money get blank stares from store clerks. Nearby in the city of Hangzhou a prototype hotel called FlyZoo uses facial recognition to open doors, no keys required. Robots mix cocktails and provide room service. Farther south in Shenzhen, we flew the same drones that are already making e-commerce deliveries in rural China. Downtown traffic flowed smoothly, guided by synced stoplights and restrained by police cameras. Outside China, these technologies are seen as harbingers of an “automated authoritarianism,” using video cameras and facial recognition systems to thwart lawbreakers and a “citizen score” to rank citizens for political reliability. An advanced version has been deployed to counter unrest among Muslim Uighurs in the inland region of Xinjiang. But in China as a whole, surveys show that trust in technology is high, concern about ...
Read More
Driverless delivery bot in China - How Data-driven Strategies Can Improve Impact Investing Outcomes
TechCrunch | Danny Crichton | Jan 17, 2020 I talked yesterday about how VCs are just tired these days. Too many deals, too little time per deal, and constant hyper-competition with other VCs for the same equity. One founder friend of mine noted to me last night that he has already received inbound requests from more than 90 investors over the past year about his next round — and he’s not even (presumably) fundraising. “I may have missed a few,” he deadpans — and really, how could one not? All that frenetic activity, though, leads us to the paradox at the heart of 2020 venture capital: It’s the largest funds that are writing the earliest, smallest checks. That’s a paradox because big funds need big rounds to invest in. A billion-dollar fund can’t write 800 $1 million seed checks with dollars left over for management fees (well, they could, but that would be obnoxious and impossible to track). Instead, the usual pattern is that as a firm’s fund size grows, its managing partners increasingly move to later-stage rounds to be able to efficiently deploy that capital. So the $200 million fund that used to write $8 million Series As transforms ...
Read More
VC funding rounds 1 - How Data-driven Strategies Can Improve Impact Investing Outcomes
NCFA and TFI | January 23, 2020 Strengthening Canada's fintech and financial reach through collaboration, competition and networking at FFCON20 TORONTO, ON / ACCESSWIRE / January 23, 2020 / The National Crowdfunding & Fintech Association of Canada (NCFA) and Toronto Finance International (TFI) announced today a collaborative partnership and the joint launch of the 2020 Fintech and Financing Conference and Expo (FFCON20) to be held in downtown Toronto on March 23-24, 2020. The theme for the 6th annual FFCON is RISE, reflecting the joint efforts of the two associations, NCFA and TFI, to build and increase the success and sustainability of Canada's fintech and financial sector. With finance and fintech touching virtually every business and entity of people's lives, FFCON draws national interest and global participation from high-growth startups and leading industry experts across a variety of disciplines and backgrounds. You will find fintech entrepreneurs from across all fintech sectors including digital banking, peer to peer finance, AI, capital markets, wealth management, payments, crypto and blockchain along with innovative financial institutions, investors, regulators, government and major industry stakeholders, all in one place. FFCON facilitates thought-provoking and relevant discussions, lively debates and personal networking for the cross-pollination of ideas and experiences ...
Read More
FFCON20 Homepage Banner v1 - How Data-driven Strategies Can Improve Impact Investing Outcomes
Wealthsimple | Press Release | Jan 21, 2020 Wealthsimple Cash offers 2.4% interest rate and lets Canadians save and spend through a mobile app and metal card TORONTO, Jan. 21, 2020 /CNW/ - Wealthsimple has launched its first hybrid saving and spending product: Wealthsimple Cash. The new account offers users the ability to save and spend with one of Canada's highest non-promotional interest rates of 2.4% - in addition to a host of features that help people earn more on every dollar in their Cash account. Wealthsimple Cash combines a saving and spending account to give Canadians the power to have both an account that allows for everyday purchases while also providing a safe place to grow their money. Cash clients will benefit from no monthly account fees, no low balance fees, no foreign transaction fees worldwide, and ATM fee reimbursements - all through a sleek, metal card designed to make spending responsibly easy. "Canadians are used to the status quo when it comes to everyday banking - multiple accounts, high fees and low interest," said Michael Katchen, CEO and co-founder, Wealthsimple. "With Wealthsimple Cash, users can enjoy the power of a high interest savings account for all of their day-to-day spending needs ...
Read More
wealthsimple account - How Data-driven Strategies Can Improve Impact Investing Outcomes
Investment Executive | James Langton | Jan 21, 2020 Grant Vingoe will take over as acting chair following Jensen’s departure on April 15 Maureen Jensen, the head of Canada’s largest securities regulator, is stepping down as chair and CEO of the Ontario Securities Commission (OSC) 10 months early. The OSC announced that Jensen will leave the helm of the commission on April 15. She has headed the OSC since 2016, and was reappointed to a second term that began in 2018 and was to run until February 2021. OSC vice chair Grant Vingoe will take over as acting chair in April. Prior to becoming head of the OSC and its first female chair, Jensen was executive director and chief administrative officer of the commission from 2011 to 2016. “It has been an honour to serve Ontario investors and market participants,” Jensen said in a statement. “These past nine years have been the most meaningful in my career. I have enjoyed every moment working alongside my respected colleagues and leadership team, and contributing to Ontario’s vibrant, healthy and internationally recognized capital markets.” As head of the OSC, Jensen championed improved retail investor protection. That effort culminated most recently with the adoption ...
Read More
Maureen jenson osc - How Data-driven Strategies Can Improve Impact Investing Outcomes
McKinsey & Company | By Martin Dewhurst and Paul Willmott | Sep 2014 As artificial intelligence takes hold, what will it take to be an effective executive? What would it take for algorithms to take over the C-suite? And what will be senior leaders’ most important contributions if they do? Our answers to these admittedly speculative questions rest on our work with senior leaders in a range of industries, particularly those on the vanguard of the big data and advanced-analytics revolution. We have also worked extensively alongside executives who have been experimenting most actively with opening up their companies and decision-making processes through crowdsourcing and social platforms within and across organizational boundaries. See:  The Enterprise Automation Imperative—Why Modern Societies Will Need All the Productivity They Can Get Our argument is simple: the advances of brilliant machines will astound us, but they will transform the lives of senior executives only if managerial advances enable them to. There’s still a great deal of work to be done to create data sets worthy of the most intelligent machines and their burgeoning decision-making potential. On top of that, there’s a need for senior leaders to “let go” in ways that run counter to a ...
Read More
Man vs machine - How Data-driven Strategies Can Improve Impact Investing Outcomes
FT Partners | Jan 2020 Executive Summary: The banking sector is experiencing a major shift globally, as Challenger Banks are becoming increasingly formidable competitors to traditional banks and have begun to capture significant market share. Furthermore, the lines between banks and other consumer financial services providers are blurring, with several alternative lenders and robo-advisors beginning to offer banking products to their customers. E-commerce / internet giants are also jumping into the fray with Google and Amazon, among others, beginning to offer banking products. In response to the emergence of Challenger Banks, a number of incumbent banks have launched their own FinTech brands, and traditional financial institutions will likely turn to FinTech solution providers in order to defend their turfs. Download this Jan 2020 FT Partners Fintech research (216 page PDF) -> Now The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in ...
Read More
FTP rise of challenger banks research - How Data-driven Strategies Can Improve Impact Investing Outcomes
South China Morning Post | Enoch Yiu  | Jan 13, 2020 Hong Kong residents can expect to benefit from cheaper and better banking services with the launch of more virtual banks this year, according to high-profile speakers at the Asian Financial Forum. Their comments came as it was revealed the Hong Kong Monetary Authority has hit an important milestone in its efforts to promote financial technology (fintech). Half the population of the city has now signed up to its Faster Payment System, which enables the free transfer of money between bank accounts via mobile phone. The development shows Hong Kong is moving quickly into a new era of branchless banking, a shift that brings up challenges for traditional lenders which must innovate to cope with the competition, said officials at the annual conference held by the Hong Kong government. “The Faster Payment System is an important move for the city to develop its fintech. The system has been very popular with the Hong Kong public,” said James Lau, Secretary for Financial Services and the Treasury during a panel discussion at the forum on Monday. See:  Banks have lost a quarter of the payments franchise to new players Hong Kong being ...
Read More
Faster payment system adoption grows in HK - How Data-driven Strategies Can Improve Impact Investing Outcomes