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The Carol Realini blog moved to a new updated website at  Follow my journey and updates about my forthcoming book on financial inclusion.

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How Mobile Banking can Benefit the Unbanked

The “unbanked and underbanked” are terms that are being batted about in the boardrooms of financial institutions around the world. Gradually, executives have woken up to the fact that there are billions of potential customers who are not using their services. In America alone, there are nearly 90 million Americans who are unbanked or underbanked. This represents an enormous growth opportunity not only for financial institutions, but more importantly, for individuals that use mobile banking solutions.

chart Why are people unbanked and underbanked? Generally speaking, those who are unbanked and underbanked tend to be living on a limited budget, working class and financially less knowledgable. Some have been blacklisted by financial institutions due to past mistakes, while others have been denied accounts because of their age or income levels. Others opt out of the traditional banking system in order to avoid excessive fees. Still others feel the bank’s products and pricing don’t meet their needs. There are a myriad of reasons that people don’t have bank accounts, and not all of them are by choice.

Mobile banking can make banking services more convenient and lower cost.  Makes sense since people can do things directly from their phones and the cost is lower for the bank to provide these services.  Javelin Strategy and Research  reports the cost to a bank for in-branch deposit is $4.25, but only 10 cents if the deposit is made via mobile check capture. The average bank annual cost sayings per customer can be $50. This is a huge savings and can contribute to lower fees for the customer (of course, the bank needs to pass on the savings with different pricing).

In fact, by the end of this year, it’s estimated that nearly 45 million Americans will be using mobile banking services to complete transactions ranging from check depositing to bill payments.

So, how can we continue to increase this number to include the unbanked and underbanked? First, financial institutions need to extend their outreach efforts within lower income communities to make potential clients aware of the mobile banking services available. Second, people within communities across the country need to be educated in how to access and utilize mobile banking services to their advantage.

In the end, there are a vast number of people who could benefit from incorporating mobile banking services into their lives as they reach for their specific goals and dreams. Thus, it’s well worth the efforts being put forth by Walmart, American Express, Mastercard and others who are currently leading the way in this regard.

Like myself, they recognize that mobile banking has the potential to improve the U.S. economy and give it a more solid, stable and inclusive foundation. That’s something we all benefit from, and it’s something we should all be working to facilitate.

Image Source: Javelin Strategy and Research 

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FINX Challenge Reveals “It’s expensive to be poor…”


Along with food insecurity, life in poverty comes with a variety of financial stresses.

Not long ago, the Center for Financial Services Innovation organized a group of people from the financial industry and took them on a field trip of sorts. The objective was to determine just how expensive and difficult it can be to be poor and living outside of the traditional banking system as a financial nomad. What they discovered was shocking.

The following are interesting things that were realized as they explored the world of the 70 million financial nomads in America:

  • It’s time-consuming to be poor. Instead of spending their time being productive, many financial nomads spend a considerable amount of time searching for the best rates for check cashing or the lowest fees from payday lenders.
  • Fees add up quickly if you’re not a bank customer. Underserved in the US spent $89 billion on fees and interest last year — an 8% increase from 2012. Americans with $20,000 in income spend around $1,200 a year on check cashing and money orders, and most of the families spend as much on money services as they do on food.
  • It involves a lot of paperwork. Filling out the forms for payday and title loans is very time-consuming, which takes precious time away from work and family. This impacts 25% of all children in America who are living in homes underserved by banking.

As addressed in the movie, “Spent: Looking for Change,” none of these services act as a ladder towards financial stability. Not one of them helps the financial nomad build a credit score, repair damaged credit, or establish a long-term relationship that fosters economic security and stability.

Furthermore, some of these services are downright predatory. The costs, fees, and hassles involved with being a financial nomad and relying on these services add up quickly. As these expenses grow, it makes it even more difficult for people to climb out of debt, save, and build financial foundations to stand upon.

It’s a vicious cycle that’s difficult to break — and it’s a cycle that the financial industry should be keen to solve. There are 70 million potential clients just waiting to be served their slice of the American dream.

Image Source: freedigitalphotos

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Design and Financial Inclusion: A Designers Approach to a Tough Issue

Most people don’t think about design principles when they’re wrapping their heads around the problem of financial inclusion. This is why I was so intrigued by a recent article written by Anke Schwittay and Paul Braund. Together, they analyzed the principles of good design and how it can make financial inclusion achievable in Latin America.

women of peru

Source: Wikimedia Commons

Applying the following humanitarian designs advocated by the IMTFI can eradicate poverty by making it easier and more appealing for people to access and utilize formal financial services:

  • Earmarked Income Outside of Rank – Savings systems should be designed to make it possible for individuals to meet their financial commitments regardless of their position in society.
  • Design for Rank – Rank (class) distinctions can be leveled via products that make it possible to break free of societal barriers. However, this may not be advisable in cultures where rank provides a sense of security and order.
  • Flexibility with Sanctions – Those living outside the formal financial system often rely on informal methods of ensuring payments and financial obligations are honored. Thus, new systems replacing the informal ones must take this into consideration.
  • Structured Illiquidity – Savings accounts should be structured so that individuals can more easily meet their obligations towards cultural and religious institutions.
  • Change in Iconography and Local Values – Including recognized and accepted symbols of wealth and stability is strongly advised. Doing so helps attract those who may cast a wary eye towards formal financial services.
  • Design for Convertibility – Cash isn’t king in every culture, and while Western economists consider money to be a method of payment, a tool for exchanging goods/service and a store of value, that’s not the case in all cultures.
  • Calculate Convertibility – Standardized exchange rates make it possible to intermingle currencies and standards of value.
  • Design for Volume – Systems should take into account various scales of value and utilize them, so customers can quickly understand their savings and financial picture.
  • Lucky Numbers – Numerology is paramount in multiple cultures and these “lucky” numbers should be included as frequently as possible.
  • Trenches and Tiers – Ritual, harvest and religious cycles should be accounted for, and financial systems should be structured around them.
  • Design for Cycles – Reward people who meet their savings goals at each cycle.

This is definitely interesting research. I started working on financial inclusion in 2005, with lots of technical background but little design experience. I learned quickly how the user design was key to success. Now, new innovative financial services companies like Juntos Finanzas, are being started by CEOs who are well trained in design. Ben Knelman, CEO of Juntos got his Masters in Engineering at Stanford which included courses from Stanford’s prestigious Design Institute ( Juntos’ product success is part technology and part design. This is especially important for financial inclusion because the traditional banking products just “don’t fit”.

I’d love to know what you think about these recommendations by posting a note on my Facebook page and sharing your thoughts.

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International Telecommunication Union Steps Forward to Promote Financial Inclusion

The International Telecommunication Union (ITU) has recently created a focus group whose purpose is to develop different methods of affordable financial services, in hopes of making financial inclusion a reality for the nearly 2.5 billion adults around the world who don’t currently have a bank account.

piggy bank


The open focus group has been organized by ITU Secretary-General Hamadoun Toure in response to a request put forth by the Bill & Melinda Gates Foundation. The aim of the focus group is to develop a standardized mobile money platform that can be rolled out using existing Information and Communication Technology (ICT), and then adopted in short order everywhere from Calcutta to Cartagena.

There are, of course, a number of benefits to standardizing the platforms and delivery. First, the costs of implementation will be considerably less and easier to absorb by service providers. Secondly, developing an international standard will make it easier for different operators to manage the system as it goes live. Lastly, because everything will be aligned to the same standards, implementation can happen quickly, regardless of where on the map the system is put in place. This means that within a short period of time, billions of people could gain access to basic financial services that can help transform their lives and put their financial futures on solid ground.

The ITU focus group is open to participation by anyone who is interested and has the ability to contribute ideas and solutions that will make international standardization and interoperable digital financial services a reality. Furthermore, the group is in need of individuals who can help develop regulatory tool kits and create informational primers that can be reviewed by policymakers and regulatory agencies. Combined, these skills and the individuals who provide them will make implementation of these recommendations possible.

I’ve said it before, and I’ll keep saying it — access to affordable financial services is the key to empowering people and improving economies around the world. This is something we should all strive for, because in the end, it means a brighter future for everyone. The smart money solution is to use existing technologies and standardized systems to make that happen as soon as we can.

Image Source: freedigitalphotos

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How Entrepreneurs Turn Great Ideas Into Successful Businesses

For many Americans, the dream of owning a business is in our blood. It’s part of who we are and it’s what motivates us in the morning. I can say from experience that being an entrepreneur is one of the most rewarding things you’ll ever do, but it’s also one of the most challenging.


As you might expect, all forms of entrepreneurship begin with an idea. Whether it’s a new product or a new service, this idea is designed to fill a need. Oftentimes, these ideas come forward while you’re working on something else. You might say to yourself, “Hey, I could make this better if I: A) had this type of service to use, or B) if I had a tool that would make the job easier.”

Still, it’s a long way from idea to implementation. Creating the idea is the easy part; it’s the drive, determination and dedication that turn an idea into a successful entrepreneurial pursuit.

Here’s how entrepreneurs take ideas from the drawing board and into the boardroom:

Consider the idea from every angle. Work out the kinks as you see them, and begin developing a plan. What niche will your product/service fulfill? How will you create the product/service? How will you market it? If you’re thinking this sounds a lot like creating a business plan, you’re absolutely right.

Pick your plan apart. This is one of the most challenging aspects of entrepreneurship because it forces the entrepreneur to look past the rosy visions of their success and instead, to their weaknesses and flaws.

Let “Domain Experts” pick the plan apart. Once you’ve picked your own plan apart, get input from “domain experts” – people with experience and a successful track record. If your success depends on great distribution, find a distribution expert and get their advice. If product design is key, a design expert. Get multiple experts, especially in areas where your experience is light. It’s worth getting their opinion now and if possible, their advice along the way.

Show me the money! Once your idea is solid, you’ll most likely need to secure financing before you can get to work. This means taking your idea and putting it in front of stage- appropriate investors. Good news is right now is a perfect time to raise early stage funding, especially for technology ideas.  Here is a link to top 10 tips for fundraising

Recruit the right core team. Ideas come and go, but ideas that go from the drawing board to the boardroom do so because the team works tirelessly to transform the idea into a successful endeavor. Companies are not solo acts. Figure out the core skills and experience you need and recruit a great team.

Starting a business comes with tremendous risks and rewards. Entrepreneurship is not easy, and it’s not for everyone. However, if you have the drive, dedication and determination to turn your ideas into a viable business, I assure you, it will be the most rewarding thing you will ever do.

Image Source: freedigitalphotos 

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How Deep is the Financial Inclusion Problem in the US?

meet-the-working-poorMany people assume that financial inclusion is a reality for everyone in the United States, and that access to financial services isn’t an issue for most people. As pointed out in the recently released movie Spent, the truth is quite different from that rosy picture. The everyday reality is that roughly 10 million American households do not have even a basic checking or savings account. If that’s not concerning enough, another 21 million households have savings accounts, but are heavily dependent on alternative and costly financial services such as payday loans and check-cashing services. Last year in the US the underbanked spent $89 Billion on bank fees and interest according to the CFSI. Sadly many of these American households spend as much on financial services as they do on food for their family.

While these numbers paint a grim picture on the financial health of many American households, there are some solutions that can be implemented to alleviate the problem and help strengthen the American economy. One worth noting is from the Ford Foundation. At present, the foundation is working with financial institutions around the world to develop what they have deemed Social Performance Management systems. These are designed to help identify ways to reach poorer households, and develop systems that make access to savings easier and cost-effective.

Two solutions that are gaining traction and growing by leaps and bounds are mobile and online banking. There are a couple of important reasons for this. First, many banks are decreasing the number of branches they operate to reduce costs, and some banks such as Ally maintain only an online presence. This makes it easy for customers to access their money around the clock, and since many underbanked customers work odd hours, this makes it easier for them to bank on their own schedule.

Additionally, the increasing usage of Smartphones and the prevalence of WiFi has made it possible for anyone with a phone in their pocket to access their accounts from virtually anywhere. However, it doesn’t solve all the problems, namely the need for sending/receiving cash, depositing checks, etc. This is something that the ATM Industry Association is taking note of and is why they have recently created the US Underbanked Forum with the goal of coupling the convenience of mobile solutions with the already widely accepted use of ATMs. The theory they’re banking on? That ATMs can become ad hoc banking institutions that are easier to use, more affordable, and easily accepted by those who are currently underserved. This could be a solid theory that will increase financial inclusion for people throughout America.

No one should be without access to basic banking and financial services and in my upcoming book, Financial Inclusion at the Bottom of the Pyramid, I’ll take a look at some of the solutions that have given people around the world access to the financial service they need. Like my book on Facebook to receive information about pre-sale and release dates.

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