Five Examples of Financial Inclusion

the M-Pesa is an example of financial inclusion

Source: Payment Magnets

Everyday, the world in which we live seems to spin faster and faster. While this increased pace is creating plenty of opportunities for success and achievement, it is also creating deep financial rifts between those “who have” and those “who live without.” This is a phenomenon occurring in developed and developing countries alike. However, in a twist from the norm, the developing world is showing the developed world how to bridge that gap and create societies with inclusive financial services that create long-term economic stability.

Here are five examples of financial inclusion that have provided citizens in various locations around the world with access to much-needed financial services.

1. With over 7,000 islands and an average daily income of less than $2 per day, the Philippines has embraced technology to bridge the geographic and economic distances within the country. Using a mobile network put in place by Smart Information Technology, Inc. (SIT), citizens are able to use their phones and bank cards for everything, including store purchases, online balance inquiries and making rent payments. If you are not a Smart telecom customer, no problem – their main competitor Globe offers a similar service.

2. Kenya’s Safaricom partnered with Vodaphone in 2007 to create the M-Pesa, a similar system to SIT’s. M-Pesa’s services are offered to customers who either by chance, geography, or choice, don’t have have bank accounts. The system allows clients to transfer funds using SMS messaging, as well as providing the unbanked a way to save, send and receive money with the push of a button. This is the most successful example of financial inclusion to date since this system has been adopted by over 20 Million people in Kenya, many who previously had no access to banking.

3. India’s history of commerce and institutional banking is long and distinguished, yet most of that money belonged to international investors and foreign governments. However, the IT revolution and changing global marketplace have begun to change that. Today, Indians are experiencing steady increases in their income and standard of living. To help encourage even more growth, the country has embraced the Aadhaar personal identification process. The system uses biometric markers, as well as a 12-digit Aadhaar number as a form of identification. This information can be used to open a bank account, linking an individual’s Aadahaar number with their bank, so they can access their money anytime and anywhere.

4. Just 10 years ago, one-half of Peru’s population was living below the poverty level and over 75 percent had no access to financial products or services. To help change this, GloboKasNet introduced an innovative system of “business correspondents” who provide low-cost financial transactions that are identical to those of a bank via local shops and businesses already established in the communities they serve.

5. Banking in South Africa has become easier than ever since Wizzit Ltd. formed a system for providing access to individual accounts via cell phones and debit cards. The combination of affordable, accessible and easily available services has made it possible for anyone with a cell phone (not necessarily a smartphone) to access their money and make purchases. Additionally, clients can go deposit funds directly into their Wizzit accounts by visiting any South African Post Office.

Together, these countries and companies have taken commendable leaps towards making financial inclusion a reality for nearly 1.5 billion people. In my view, that’s something definitely worth celebrating. I’ll be discussing this topic in greater depth in my upcoming book “Financial Inclusion at the Bottom of the Pyramid.” Like my book on Facebook for updates regarding pre-sale and release dates.

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About Carol Realini

Serial Entrepreneur, Mobile Payments and Banking Pioneer, Author, Board Member Carol Realini is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine. Carol is a huge believer in the potential of mobile banking and payments to create financial inclusion - where everyone with a mobile phone has access to affordable financial services that empower their life and work. To understand Carol's vision please watch the WEF video (click on the weforum.org link below). Carol also mentors entrepreneurs providing wisdom and lessons learned from her four successful startup experiences.
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