Technology can bridge the gap between rich and poor

Countries such as Kenya and India have made considerable progress in expanding financial services

In simple terms there are two kinds of people in the world of finance — the ‘included’ and the ‘excluded’. The former, a relatively ubiquitous bunch whom banks and financial institutions cash upon, and the latter, the pariahs and untouchables with no creditworthiness.

This economic divide is almost racial — a financial apartheid which, in a sense, is the rich-poor divide the world has been wanting to bridge for ages.

Recently, I was having a conversation with a friend on racism, in its classical connotation of the White versus Black. His contention was that colour is an opportunistic façade and the real racism has always been about the haves and the have-nots. The haves were the Joneses and the have-nots were the Pariahs, in which case, the banks and financial services entities can be construed as the Peddlers.

Having been closely associated with the financial services industry all through my career, I am almost tempted to agree with his view, albeit in a financial sense. There are two sides to the divide — the banked and the unbanked. The banked are those who have access to financial services, and the unbanked are those who are castaways in a financial world.

The world over, there are two billion adults with no access to financial services. Data says that 59 per cent of households are still unbanked globally, which presents a very grim picture.

The goal of financial inclusion is to bring them within the ambit of formal financial services — so that they can transact and leverage the benefits of financial instruments.

There is no doubt that the unbanked are getting migrated to the other side of the fence. India, for instance, catalysed the opening of bank accounts for ordinary public on a mass scale, wherein, under the government’s financial inclusion mission — one of the most ambitious and trailblazing in the developing world — over 240 million Jan Dhan bank accounts were opened as of February 1, 2017.

Fintech disruption is opening new access channels to the unbanked. Their success is buoyed by the inroads that telecom and the internet have already made in the world. A smartphone now doubles as your de facto bank account and wallet combined. The success of the mobile payment innovation in Kenya — MPesa, which processed payments to the tune of 31 per cent or more of the GDP as early as in 2012 — is testimony to the confluence of financial services and technology paving the way for widespread financial inclusion.

So, financial inclusion is indeed a hectic work-in-progress. However, on-boarding the unbanked is the first challenge. The second is to address their oblivion and confusion through financial literacy initiatives. A one-size-fits-all approach would not work here. We need to speak to them in their language, with relevance and sensitivity to their context. What works in Sub-Saharan Africa may not suit in the Philippines. This differentiated approach will go a long way in helping people access and utilise financial services in line with their specific economic needs, technology capabilities and socio-political environment.

With regard to global remittance, I think the money transfer industry should take the driving seat in rolling out contextually segregated literacy initiatives. We touch the lives of millions of people, as we offer a formal financial transaction conduit between migrant breadwinners and their kin back home. We work at the grassroots. Our knowledge of the needs of the communities and the diaspora we cater to are deep and profound.

Perhaps it’s time that the GCC remittance players take a lead by offering a new leaf of inspiration to the opportunity posed by financial literacy, considering they have a significant share of the $456 billion annual remittance to developing countries, where financial literacy and inclusion is closely tied to development.

The success of the mobile payment innovation in Kenya is testimony to the confluence of financial services and technology paving the way for widespread financial inclusion.