How Financial Inclusion Via Technology is Boosting Global Prosperity
By Dan Kadlec
November 2, 2017
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.