Financial Inclusion
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Transcript of Financial Inclusion
GLOBAL SOLUTION NETWORKS
Financial Inclusion
Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century
Financial Services Solutions for the Unbanked Poor
Don Tapscott, Executive Director,
Global Solution Networks
Amit Kapoor, Honorary Chairman, Institute for Competitiveness, India
and
Jill Rundle, Contributing Writer, Global Solution Networks
Financial Inclusion Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century Financial Services Solu?ons for the Unbanked Poor
People, particularly in developing nations, have limited access to financial services due to a factors that include geographic isolation, lack of education, financial inexperience or “illiteracy” and low financial and social status. Bringing poor populations into the economic mainstream will allow leverage and protection for even the most modest wealth.
Modest savings, multiplied by the billions of workers, represent a potential injection into the world economies of many billions of dollars Flexible business models will accommodate the developing world economies, and work within the dual challenge of managing bottom line risk while developing products that will enhance the potential of new markets.
Executive Summary
“The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.”
Kofi Annan former UN Secretary-General
Financial services solutions for the unbanked poor
Financial Inclusion Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century Financial Services Solu?ons for the Unbanked Poor
Problem: Billions at the Bottom
Conventional Financial Paradigms have Critical Limitations:
• Safety—security, identity theft, fraud
• Cost—fees, minimum balance requirements
• Location—no brick-and-mortar and unreliable Internet
• Inappropriate business models—traditional models don’t work for the unbanked poor
Financial inclusion was the term coined in the 90s when discussing patterns of bank branch closures. The elimination of traditional brick and mortar banking locations limited access to financial services in poor and rural communities, threatening opportunities for continued inclusion in financial markets.
The term also describes large numbers of people, who have limited access to financial services due to a combination of factors including geographic isolation, lack of education, financial inexperience or “illiteracy” and low financial and social status. By the early 2000’s research revealed a direct correlation between financial exclusion and poverty.
Lost economies: A fortune in small increments represents an unexploited opportunity in the billions of dollars.
Financial Inclusion Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century Financial Services Solu?ons for the Unbanked Poor
The unbanked do not have access to the Internet, but they can access financial services using mobile technology. Cellphones connect to the banking industry and also elevate incomes by enabling transactions and data sharing. Cell towers and a power grid replace brick and mortar, and also replace cash. Prepaid cards, though expensive, are easy to use and have predictable costs.
Identification solutions provide access to subsidies creating a pool of community wealth. Multi-stakeholder governance from a variety of GSNs can provide the checks and balances that will increase participation and prevent exploitation.
How to Solve the Problem
Many business sectors could participate:
• Banks and financial services entities including personal and enterprise credit
• Digital security providers
• Payment processing, transaction and clearance providers
• Alternative operators and microfinance lenders such as Kiva and Kickstarter
• Exploitative agents such as check-cashing stores, loan sharks, and cash kiosk operators
Financial Inclusion Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century Financial Services Solu?ons for the Unbanked Poor
A role for all global solution network types Diaspora networks aid transition to mainstream services. Watchdog networks ensure that commercial interests do not trump consumer protection. Operational and deliver networks support financial literacy and trouble shoot new product adoption. Global standards networks streamline integration and maintain open channels for competitors to utilize. Networked institutions monitor efforts and effects of each approach, ID best practices and adjust on the fly.
Knowledge networks observe strengths, opportunities, opportunities and weaknesses and develop ideas and markets. Platforms for compatible systems among competing offerings and support fraud prevention. Advocacy networks open access to neglected markets. Governance networks provide regulatory oversight and systems. Policy networks establish code of practice and data security.
Financial Inclusion Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century Financial Services Solu?ons for the Unbanked Poor
Global Solution Networks provide fundamental changes in approaches to financial inclusion. Unexploited opportunities reach into the billions of dollars
Traditional financial paradigms must be adapted to the needs and realities of bottom of the pyramid consumers.
Mobile technology is the quickest route to service the unbanked at scale.
Services for the poor should be bundled with education.
Effective governance is rooted in multi-stakeholder networks.
Partner with leading innovators to foster public good applications
Implications for Network Leaders
Financial Inclusion
Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st
Century Financial Services Solutions for the Unbanked Poor
By Don Tapscott, Amit Kapoor
and Jill Rundle Read the complete paper at gsnetworks.org
Global Solution Networks:
Don Tapscott, Founder and Chairman Dr. Joan Bigham, Executive Director For information on Global Solution Networks projects contact us at [email protected]
Review all research results on our web site: gsnetworks.org