Traditional financial services aren’t working for the poor. The problem? Paper.
At a World Economic Forum roundtable discussion Thursday hosted by the Better Than Cash Alliance and moderated by The Economist, Mercy Corps CEO Neal Keny-Guyer shared three reasons ditching paper will spur financial inclusion among the poor.
Technology expands access to financial services. Innovations like mobile money and branchless banking mean that a “bank” can profitably serve people anywhere, not just in rich or urban areas. People who have never had a brick and mortar bank within reach can transact with ease via their phone.
Technology means better financial products. New business models and lower costs make it attractive for financial institutions to create more relevant products for the poor. For example, farmers in rural areas can use their phone for banking as well as accessing useful, real-time information, making partnerships between disparate groups–like banks and agriculture research institutions–plausible and meaningful.
Technology saves poor people time and money. Digital financial services are more immediate and convenient than cash or bank alternatives. This means less time is spent in transit or away from work getting to a bank, and more money is in the pockets of the poor.
Keny-Guyer described Mercy Corps’ prioritization of financial inclusion in its work across the globe, particularly in rural areas.
Last year we launched a program, called Agri-Fin Mobile, to create unique partnerships that bundle mobile financial services with mobile information and crop management tools for small-holder farmers.
Mercy Corps’ Agri-Fin Mobile partnership is now live in three countries: Indonesia, Uganda, and Zimbabwe. It will expand to an additional five in two years.
With 2.5 billion “unbanked” people around the globe, quick, purposeful action by governments, nonprofits and the private sector toward digitizing social service payments will help the poor move their money from the proverbial mattress to secure bank accounts.