Global financial inclusion is rapidly growing in developed and emerging markets. But as much as we would like to think technology will propel our antiquated financial services system into an all-encompassing solution for the 2.5 billion at the bottom of the pyramid, there are other factors to consider. Every country, every culture, and every economy is different.
New technologies surely offer helpful solutions, but mobile payment providers in India need to function differently than those in Peru. This is what makes global financial inclusion a daunting challenge. As financial inclusion spreads worldwide, we need to remember it’s a marathon—not a sprint. Adoption and culture-specific integration of new technologies that help the under-served, supported by national and international organizations, will slowly create a better world.
Nine Essential Global Financial Inclusion Trends
- The New Paradigm. The financial pyramid—unbanked to full inclusion—continues to become more level. Mobile phones and technology allow people in foreign lands to acquire affordable and accessible financial services.
- Remittance—Most Costly Money Transfer. The World Bank estimates that, on a global basis, sending remittance costs an average of 8.96% of the amount transferred. If this cost were reduced by only five percent, based on value sent, recipients in developing countries would receive over 16 billion dollars more each year than they do now. Think about how many lives would change.
- Banking is About Trust. Money is a serious business. We no longer function in a barter system, and for much of the population, our livelihood is dependent on money. Without it, we cannot purchase goods and services to sustain ourselves. Our income is the source of our survival. We need banking services to funnel our money. And we choose banks based on familiarity and trust.
- Continuous Innovation is Essential. Imagine if Apple mandated that all iPhone applications would be created only by Apple. This would limit innovation, similar to one organization controlling all global financial inclusion technology. Sharing the wealth enhances innovation.
- Global Financial Inclusion is not a Solo Act. Greater numbers of participants in the movement realize the broad potential of financial services. Creating additional utility for both consumers and merchants increases successful outcomes.
- Telcos Provide the Blueprint. Technology, specifically mobile, digitally connects people to new banking systems. Even without the high bandwidth and fancy smartphone applications, cellular phones empower the under-served through understandable, simple transactions.
- Simple Better than Complex. Current successes in Kenya (M-Pesa) can be credited in part to their simplicity. Lowering the barriers to entry for consumers to use these new financial tools will cause exponential growth.
- Empathy–Key to Success. Some people live 8 hours from a bank. Many spend horrendous percentages of income on bank fees, cash advances, and remittance. Bottom of the pyramid consumers want trustworthy, inexpensive, and reliable financial services. Innovative providers should tailor their products and services to meet the customer’s unique needs.
- Familiarity Results in Scale. Mobile phones exceed population on the planet. New ideas, combined with mobile phones, will scale quickly, improving global financial inclusion.