Although most news stories today, unfortunately, tend to be negative, every once and a while there is positive news so compelling that it is worth highlighting in a blog. This post describes the recent World Bank report on the massive drop in the number
of unbanked people in the world and looks at what is needed to make further progress in the future.
Financial inclusion: Great strides made from 2011-2014
First, the excellent news: between 2011 and 2014, 700 million people became account holders and the number of unbanked people around the world dropped by 20 percent! World Bank Group President Jim Yong Kim said:
“Access to financial services can serve as a bridge out of poverty. We have set a hugely ambitious goal—universal financial access by 2020—and now we have evidence that we’re making major progress. This effort will require many partners—credit card
companies, banks, microcredit institutions, the United Nations, foundations and community leaders. But we can do it, and the payoff will be millions of people lifted out of poverty.”
The recent World Bank press release highlights the findings from the latest edition of the Global Findex, the
world’s most comprehensive gauge of progress on financial inclusion. Financial inclusion, which is defined as having an account that allows adults to store money and make and receive electronic payments, is critical to ending global poverty.
Studies have shown that broader access to, and participation in, the financial system can boost job creation, increase investments in education, and directly help poor people manage risk and absorb financial shocks.
Regional highlights of this global progress include:
- In East Asia and Pacific, adult account ownership rose to 69%, up from 55% three years earlier
- In China, 79% of adults owned an account in 2014, up from 64% in 2011
- In Europe and Central Asia, account ownership among adults increased from 43% in 2011 to 51% in 2014
- In Latin America and the Caribbean, 51% of adults now have an account, up from 39% in 2011
- In the Middle East, account ownership expanded to 14% of adults, up from 11% in 2011
- In South Asia, 46% now own an account, up from 32% three years ago
- In sub-Saharan Africa, 34% of adults now have an account, an increase from 24% in 2011.
Innovation required: More work to be done for remaining two billion
When a goal is achieved, successful people know it becomes time to “raise the bar” higher… especially since there are still two billion people without access to financial services which so many of us take for granted.
The Gates Foundation recognizes the importance of financial inclusion and has set a strategy for getting financial services
to the poor. The importance of leveraging digital technologies, developing private—public partnerships, and creating new and innovative business models are paramount.
Private companies also must recognize the importance of this effort. MasterCard's C.E.O., Ajay Banga, focused
his 2015 Mobile World Congress speech on financial inclusion. He framed the opportunity this way:
“because of technology – because of the roles we in this room play, we can help shape the arc of history to bend it towards financial inclusion and greater human progress.”
In closing, innovative FinTech solutions are needed to enable the remaining two billion people to save, invest and work toward a better tomorrow. This is indeed a worthy FinTech industry goal. Let us know what you think.