The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
The Financial Inclusion 2020 campaign begins with an audacious premise: that it is possible, if all the stars align, to achieve full financial inclusion for all with quality financial services by the year 2020. Yes, that would take quite a few stars to line up perfectly, but here are my top seven reasons for optimism as we work to advance inclusion.
1. There are more mobile phones than toothbrushes in the world today.
Bad news for dental health, but good news for billions of previously excluded clients who have access to a device that can include them in financial services if the mobile money folks play their cards right. With mobile subscriptions exceeding 86 percent of the global population, there is great promise if providers can figure out the business models.
2. Big private sector players are making big plays in the market.
Visa’s new focus is to be the best way to pay and be paid for everyone, everywhere. For Visa, financial inclusion is a business strategy, not a social mission—and for a publicly held company, that means serious business. MasterCard has followed suit, and Western Union is promoting a vision of financial inclusion and financial dignity. Fast Moving Consumer Goods companies (FMCGs) buy from and sell to the customers who make up the “invisible market” that is excluded from financial services. Wal-Mart launched Banco Wal-Mart in Mexico in 2001, but FMCGs can have an impact on this market in other ways, too.
The ILO reports that microinsurance has increased by a factor of 6.5 in the last five years, now reaching half a billion people. Thirty-three out of 50 of the largest insurance companies in the world offer microinsurance today, up from only seven in 2005. The potential market for microinsurance, according to Lloyds, is between 1.5 billion and 3 billion policies. (See here for a good summary article from which I drew these facts.)
4. The Maya Declaration is building momentum.
Countries from Armenia to Vanuatu have made specific commitments to implement the Maya Declaration, a signature initiative launched last year by the Alliance for Financial Inclusion. The declaration commits countries to create and implement regulatory frameworks that balance inclusion, stability and integrity, and is one of a number of promising signs of regulatory breakthroughs. With AFI facilitating peer exchanges and knowledge-sharing to ensure that more countries can build on the examples of the Philippines, Kenya, Peru, and others, an enabling space will be opened up to allow providers to enter new markets.
5. The G20 embraces financial inclusion as a “main pillar of the development agenda.”
The G20’s focus on financial inclusion data and SME Finance could be helpful, but I’m especially interested in their work on integrating financial inclusion into existing standard setting bodies such as the Basel Committee on Banking Supervision (BCBS) and the Financial Action Task Force (FATF).
6. The power of…data!
I have a dream that simply having good information about who is included and excluded in financial services will inspire policymakers and providers to reach these invisible markets. At the very least, I hope market researchers are having a field day with the rich data in the new Global Findex. And “big data” is changing credit reporting. Technology companies are creating algorithms that capture alternative data on people who are currently excluded, such as call log data, utilities payment histories, and patterns of topping up prepaid phone cards. Will they provide a big opportunity to create credit histories for millions who have been excluded?
7. The Better Than Cash Alliance is spurring the move toward electronic payment systems.
If governments, the private sector, and the development community can distribute more of their billions in payments through electronic means, recipients of direct deposit payrolls, social benefits, pensions, and humanitarian aid will have an entrée to formal financial institutions. The trick will be making sure this is truly an on-ramp to other financial services. With heavy-hitters such as the Bill and Melinda Gates Foundation focused on just this kind of issue, I’d count this as a reason for optimism.
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Image Credit: USAID
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