Aug
4
“Get ready,” Forbes advises China, Egypt, and Mexico. Contributor Madhvi Mavadiya writes that it won’t be long before “… access to financial services will be simplified and made more available to the unbanked and underbanked in these three regions.”
This important development is thanks largely to the efforts of the World Bank Group, the Bill and Melinda Gates Foundation, the International Telecommunication Union (ITU), and the Committee on Payments and Market Infrastructures (CPMI).
In a press release issued a few days ago, the World Bank announced:
A new global program to advance research in digital finance and accelerate digital financial inclusion in developing countries, the Financial Inclusion Global Initiative, has been launched … The three-year program focuses on three different “model” developing countries—China, Egypt and Mexico—and consists of two complementary operational and knowledge work streams.
This raises two questions. The first question is, Why bring digital banking services to developing countries? The Gates Foundation provides a compelling answer:
A growing body of evidence suggests that access to the right financial tools … can determine whether a poor household is able to capture an opportunity to move out of poverty … In fact, research has shown that the most effective way to significantly expand poor people’s access to formal financial services is through digital means.
The World Bank agrees. According to its website,
Around 2 billion people don’t use formal financial services and more than 50% of adults in the poorest households are unbanked. Financial inclusion is a key enabler to reducing poverty and boosting prosperity.
The second question is, Why China, Egypt, and Mexico? In the above-referenced press release, the World Bank reports that
… Egypt has the potential to bring a large number of people into the formal financial sector (more than 44 million adults). These analyses found that Egypt has adequate laws, regulations and financial and ICT infrastructure, but a lack of funding to cover related reforms.
… China has an increasingly well-developed legal and regulatory environment and financial infrastructure, as well as a supportive ICT infrastructure …
… Mexico has shown a strong commitment to financial inclusion with its new National Financial Inclusion Strategy … as well as a draft fintech law … [and] has the potential to become a regional and global model … despite relatively low levels of financial inclusion.
In large measure, it is thanks to the advent and subsequent ubiquity of mobile technology that has made this altruistically motivated effort possible. In a speech at the Asia-Pacific Digital Societies Policy Forum 2017, ITU Deputy Secretary-General Malcolm Johnson said that an estimated two billion adults worldwide have no in-person bank account access, yet of those a surprising 75 percent have access to a mobile phone.
The World Bank, which spearheads the Initiative, began life in 1944 as the International Bank for Reconstruction and Development. Its original goal was to help war-torn countries get back on their feet in the wake of World War II. Over time, that mission expanded to that of providing funding and knowledge for developing countries in general. Today, the World Bank has two stated goals, both to be achieved by 2030: To end extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3 percent; and to promote shared prosperity by fostering the income growth of the bottom 40 percent for every country.