How can financial services reach the unbanked?

The vast majority of the world’s population has little or no access to banking – and that needs to change. How can financial services help?

Our Digital Project Manager Deborah Rothenberg recently attended MoneyConf at Web Summit 2017, where financial inclusion was the major topic of conversation.

Speakers from JP Rangaswami’s of Deutsche Bank to Ismail Ahmed, Founder of WorldRemit all covered the subject, and with good reason. Consider:

– In China, there are more people using digital finance than the entire population of America

– The inverse is also true: China has more people without access to digital finance then the entire population of America

– There are over 100 million small businesses around the world who don’t have access to finance

– India alone has 40 million merchants that need to be brought online

Of course, these problems don’t exist in isolation. Access to finance intersects with many other factors – and perhaps unsurprisingly it’s also a women’s issue.

There are 564 million women working in agriculture globally. In Latin America they make up 20% of the labour force, while in East Asia and sub-Saharan Africa that number is closer to 50%. Many of these women are paid irregularly – sometimes as rarely as once a year.

Not only does this require some difficult financial planning, but a year’s worth of cash is heavy. And that means that, despite women doing the work, it’s men who often end up handling the payments. In some places it’s not unusual to see men pushing wheelbarrows of cash through the markets.

So what can the industry do to help? The panel on Financial Inclusion – Collaboration had a few solutions.

Ann Cairns, President of Mastercard, believes that global changes can only come from collaboration between international financial institutions and local FinTech players.

She points to Mastercard’s work with the Gates Foundation in Kenya. Here, the two organisations are collaborating on a platform that allows farmers to sell direct to buyers, empowering smaller growers to take control of the supply chain. Meanwhile in India, Mastercard are offering open APIs for local FinTechs to support innovation within the merchant coalitions.

Reaching the unbanked is a fantastic opportunity for financial services – both for growth, and to do some good. How international and local institutions tackle this over the next few years will prove fascinating.