Abstract
innovations / volume 10, number 1-2 © 2015 Kathleen McGowan and Priya Jaisinghani We now have the tools and knowledge to radically reshape financial infrastructure to be ultra-inclusive, to spur the proliferation of diverse financial products that help the poor weather financial shocks and seize opportunities, to enable governments to operate more transparently and efficiently, and to foster new models of service delivery that can scale sustainably. Realizing this vision, however, will take deliberate, coordinated action by policymakers and regulators, and far more collaboration between the financial services industry and government than exists today. Above all, it will mean recognizing that ending “economic untouchability,” to quote Indian Prime Minister Modi, is an imperative for societies committed to shared prosperity and accountable governance. Today, some two billion people around the world manage their already precarious financial lives without the help of tools the world’s banked population uses to make retail purchases, buy a home, access health care, educate their children, and save for emergencies and retirement. Not surprisingly, most of this unbanked population live in developing economies, are disproportionately poorer than their countrymen, and more likely than not are women. Furthermore, despite recent World Bank data indicating that account ownership globally has increased over recent years, the types of financial products available often do not meet the urgent needs of the poor to even out highly variable incomes and reach longer-term goals.1 Thus, the oft-cited figure of two billion unbanked worldwide undoubtedly masks a far greater number of underbanked—the individuals and institutions poorly served by the financial products that are available to them. Until it becomes profitable to bank the poor, financial inclusion will remain illusory. Creating a market for commercially viable financial services relevant and affordable to the poor requires investing in shared infrastructure and aligning economic incentives so that serving the poor isn’t just possible but profitable. To make this happen, governments and their partners in the development community must redefine which
Highlights
We have the tools and knowledge to radically reshape financial infrastructure to be ultra-inclusive, to spur the proliferation of diverse financial products that help the poor weather financial shocks and seize opportunities, to enable governments to operate more transparently and efficiently, and to foster new models of service delivery that can scale sustainably
Despite recent World Bank data indicating that account ownership globally has increased over recent years, the types of financial products available often do not meet the urgent needs of the poor to even out highly variable incomes and reach longer-term goals.[1]
With the underlying digital payment infrastructure in place, the most basic financial service becomes available to the majority of people—the transaction service that allows people to pay and be paid without the burden of having to use physical cash but with the comfort of knowing that, when needed, digital value can be claimed in cash
Summary
We have the tools and knowledge to radically reshape financial infrastructure to be ultra-inclusive, to spur the proliferation of diverse financial products that help the poor weather financial shocks and seize opportunities, to enable governments to operate more transparently and efficiently, and to foster new models of service delivery that can scale sustainably. Entrepreneurs in pockets of the developing world are leveraging the remarkable growth of mobile telephone infrastructure to reinvent banking services for the mass market without relying on the traditional retail banking paradigm In doing so, they are redefining personal (and retail) finance, often stripping the costly conventional banking model down to bare-boned transaction accounts, and leveraging data—big and small— to design affordable, relevant products and drive the uptake of electronic payments and related financial services. They are redefining personal (and retail) finance, often stripping the costly conventional banking model down to bare-boned transaction accounts, and leveraging data—big and small— to design affordable, relevant products and drive the uptake of electronic payments and related financial services This banking renaissance in the developing world has profound implications for policymakers struggling to eliminate extreme poverty and promote inclusive economic growth. The End of Financial Marginalization Is in Sight is our view that transformational change will require the fundamental reconfiguration of the underlying payment infrastructure as well as the broader system that determines governance and, usage and affordability.[2]
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Innovations: Technology, Governance, Globalization
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
