Financial Inclusion - Why Collaboration and Diversity are Key

By : Colin Gordon

July 14, 2017 02:00 PM


There have been improvements in financial inclusion across the globe over the past few years, but there is still a lot of work to be done. According to the latest data from the World Bank, approximately two billion adults worldwide don’t have a basic bank account. That’s despite the fact that, between 2011 and 2014, the proportion of adults that hold an account increased from 42 percent to 75 percent.

Financial exclusion isn’t just a problem for consumers. It’s estimated that more than 200 million formal and informal micro, small and medium-sized enterprises in emerging economies are unable to access the financing they need to thrive and grow.

Under its Universal Financial Access 2020 initiative, the World Bank hopes to ensure that all people around the world – regardless of their location, financial background or gender – have access to basic financial services.

But what is the best way to go about making this a reality? One of the most encouraging recent trends across the industry as a whole has been the expansion in the range of services available. Consumers in developed economies now have unprecedented choice in how they make payments and manage their money.

Extending this level of diversity and choice to emerging economies and hard-to-reach areas could be instrumental in improving financial inclusion. Giving the entire global population access to banking services will require a collaborative effort spanning various channels and financial systems, from the most familiar to the most innovative.


Cash has been at the heart of how the global financial system and economies operate for hundreds of years, and it will continue to play an extremely important role for the foreseeable future. Any talk of an entirely cash-free society is premature, partly because consumers and businesses will continue to demand choice and freedom in how they manage their finances and conduct transactions.

One significant trend that ensures cash will remain part of the debate around financial inclusion is innovation in the self-service channel. The ever-growing functionality and potential of ATMs means they can now function as mini-branches, allowing users to not only withdraw cash but also make deposits, complete money transfers and connect to remote tellers for financial advice.

Mike Lee, chief executive officer of the ATM Industry Association, recently stressed that cash is “embedded in cultures and monetary systems around the world”. He added: “People trust cash as a store of value and it remains a means of payment that can be used by absolutely anyone at any time.”

Mr Lee was commenting to mark the launch of a report titled ‘Access to Cash: The First Step toward Financial Inclusion’. Study author Guillaume Lepecq said: “A transition away from cash would only serve to isolate the unbanked and the underserved from the rest of the population.”

Mobile banking

Cash is a universally recognized and accepted form of payment, but when it comes to people viewing and managing their finances on a day-to-day basis, one of the most powerful tools for inclusion is mobile technology.

In a February 2016 report, Pew Research Center revealed that, while there is an ongoing “digital divide” between wealthier and poorer nations, there has been a “vast increase” in smartphone ownership in emerging economies in recent years.

The International Organization for Standardization recently published new standards designed to provide the necessary structure for mobile banking to continue growing and extending financial services to more people. The ISO 12812 standards define common requirements for greater mobile interoperability across different platforms and financial institutions.

Patrice Hertzog, Chair of ISO/TC 68/SC 7, the technical subcommittee that developed the series, said: “Financial access has many benefits, allowing people and businesses to plan their lives and also invest in things like education and health, and access insurance. The World Bank has a goal of universal financial access by 2020, and these standards will help contribute to that.”

Emerging technologies

Technological innovation has been the driving force behind some of the most exciting recent developments in the global banking industry, and it could play a crucial role in the drive to improve financial inclusion across the globe.

One area where there is anticipated growth in the years to come is cryptocurrency. The growth taking place in this sector was recently emphasized by the increase in the price of Bitcoin, which passed the $2,100 mark for the first time ever. Bitcoin is based on the blockchain system – a distributed database that serves as the public ledger for all transactions.

The potential of virtual currencies to promote financial inclusion and boost payment speed and efficiency was highlighted in a report from the International Monetary Fund. A recent Forbes article offered the real-world example of Coins, a blockchain-based platform that lets users complete transactions such as remittances and bill payments.

Whether these cryptocurrencies really do gain in popularity remains to be seen, as it could be argued that with financial inclusion, basic access to cash and an ATM remain more important to people than digital money.

Government and industry collaboration

It’s clear that the mission to improve financial inclusion and extend banking services to all will require a lot of determination, ambitious thinking and, perhaps most importantly of all, collaboration. There must be close cooperation between governments, executive bodies, regulators and private businesses, but also within the industry – between established banks and emerging firms in the fintech space, for example.

Margaret Miller, a lead financial sector economist at the World Bank, recently discussed some of the key takeaways from the fifth annual Lendit USA fintech conference, revealing that one of the main themes of the event was partnership between fintechs and banks, including those that are in competition with each other.

“The conference emphasized opportunities for partnerships with banks to advance the online finance industry,” Ms Miller revealed. “For the first time, all major US banks attended Lendit, with mandates to figure out this segment and how to respond/leverage fintech.”

Of course, there are always independent actions and measures banks can introduce in an attempt to extend the reach of their services and improve financial inclusion. Abu Dhabi Islamic Bank-Egypt, for example, recently participated in Financial Inclusion Week by offering the opportunity for people to open accounts with no admin fees and no required minimum balance. The bank provided this option through its regular branches and also via microfinance units set up in locations across Egypt, including underserved areas.

Initiatives like these are to be welcomed, of course. But the key to solving the problem of financial exclusion will come from concerted, collaborative action across the industry, which opens up the breadth of choice and diversity required to meet the needs of many different demographics. The ATM and its ability to offer access to cash will play a significant role with this for years to come.

Colin Gordon

Financial Services SelfServ, Marketing Manager

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Colin Gordon is a Global ATM Marketing Manager based at NCR’s R&D Center in Dundee, Scotland. Colin is responsible for the marketing of NCR’s financial hardware portfolio with a specific focus on activities such as demand generation, sales enablement, market analysis and customer engagements for the ATM business.