How Financial Inclusion Via Technology is Boosting Global Prosperity

By Dan Kadlec

November 2, 2017

Financial access key to boosting micro businesses

When underbanked people first get access to modern financial tools through their mobile phone they save more and pay bills in a timelier way, research shows. This is part of the broad benefit of digital financial tools.

“The world is getting better at understanding the mechanics of financial inclusion,” Mark Suzman at the Bill & Melinda Gates Foundation, writes in Eco-Business, which is focused on sustainability issues in Asia. “This is great news for the unbanked.”

Access to modern financial tools makes it easier to focus on work or a small business, which leads to greater income, Suzman says. Promoting financial inclusion is one way to grow local economies and boost global prosperity.

About 2.5 billion people globally live without basic financial services. With a mobile phone, they would have access to the larger financial world even if they live in a remote part of the world. A McKinsey study found that broad access to digital financial tools could increase developing countries’ GDP by $3.7 trillion by 2025. That’s larger than all the economies of Africa combined and would create up to 95 million jobs.

Developing nations are making a big bet on mobile wallets as part of their financial literacy strategies. In Kenya, “mobile money” allows users to transfer funds by text message and has helped 194,000 households escape extreme poverty as they saved more and made different choices. In Mexico, people now open bank accounts with only a phone number. That has led to nine million new bank accounts in two years.

More on Technology and Financial Literacy:

How Venmo is Changing the Rules of Financial Education

‘Hardcore Pawn’ Shop Offers Financial Education

Lifting the Vast Population of Unbanked

With ‘Chatbots’ Will We Need Financial Education?

How Venmo is Changing Personal Finance

Cardless Cash Part of Financial Literacy Landscape

Saving Through Apps Isn’t Enough

Fintech Conference Changes Financial Education

Posted in Adults on November, 2017