New Opportunities to Tackle the Challenge of Financial Inclusion
This paper reviews the relevance of formal financial services, particularly savings, to poor people. It examines economic factors that hinder the mass-scale delivery of such services in developing countries, and the technology-based opportunities that currently exist to make massive gains in financial inclusion.
New technologies, alternative distribution channels, and new partnerships can offer everyone a safe place to save. The paper states that:
- Technology-based models can transform the economics of financial service delivery;
- Poor people will have more tools to manage their lives and plan paths out of poverty;
- Conversion of cash into electronic value, made available close to where people live and work is the key to reducing microfinance transaction costs;
- Developing countries can leverage mobile communication networks to leapfrog into a banking system that is built into the retail fibre of every community.
The paper also highlights the benefits to government from universal financial access, as well as the key policy enablers that would need to be put in place to allow the necessary innovation and investments to take place.