GLOBAL SOLUTION NETWORKS

Financial Inclusion

Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st Century

Financial Services Solutions for the Unbanked Poor

Don Tapscott, Executive Director,

Global Solution Networks

Amit Kapoor, Honorary Chairman, Institute for Competitiveness, India

and

Jill Rundle, Contributing Writer, Global Solution Networks

Financial  Inclusion  Barter  to  Bitcoins,  Bricks  and  Mortar  to  Mobile—Developing  21st  Century  Financial  Services  Solu?ons  for  the  Unbanked  Poor  

People, particularly in developing nations, have limited access to financial services due to a factors that include geographic isolation, lack of education, financial inexperience or “illiteracy” and low financial and social status. Bringing poor populations into the economic mainstream will allow leverage and protection for even the most modest wealth.

Modest savings, multiplied by the billions of workers, represent a potential injection into the world economies of many billions of dollars Flexible business models will accommodate the developing world economies, and work within the dual challenge of managing bottom line risk while developing products that will enhance the potential of new markets.  

Executive Summary

“The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.”

Kofi Annan former UN Secretary-General

Financial services solutions for the unbanked poor

Financial  Inclusion  Barter  to  Bitcoins,  Bricks  and  Mortar  to  Mobile—Developing  21st  Century  Financial  Services  Solu?ons  for  the  Unbanked  Poor  

Problem: Billions at the Bottom

Conventional Financial Paradigms have Critical Limitations:

•  Safety—security, identity theft, fraud

•  Cost—fees, minimum balance requirements

•  Location—no brick-and-mortar and unreliable Internet

•  Inappropriate business models—traditional models don’t work for the unbanked poor

 

Financial inclusion was the term coined in the 90s when discussing patterns of bank branch closures. The elimination of traditional brick and mortar banking locations limited access to financial services in poor and rural communities, threatening opportunities for continued inclusion in financial markets.

The term also describes large numbers of people, who have limited access to financial services due to a combination of factors including geographic isolation, lack of education, financial inexperience or “illiteracy” and low financial and social status. By the early 2000’s research revealed a direct correlation between financial exclusion and poverty.

Lost economies: A fortune in small increments represents an unexploited opportunity in the billions of dollars.

Financial  Inclusion  Barter  to  Bitcoins,  Bricks  and  Mortar  to  Mobile—Developing  21st  Century  Financial  Services  Solu?ons  for  the  Unbanked  Poor  

The unbanked do not have access to the Internet, but they can access financial services using mobile technology. Cellphones connect to the banking industry and also elevate incomes by enabling transactions and data sharing. Cell towers and a power grid replace brick and mortar, and also replace cash. Prepaid cards, though expensive, are easy to use and have predictable costs.

Identification solutions provide access to subsidies creating a pool of community wealth. Multi-stakeholder governance from a variety of GSNs can provide the checks and balances that will increase participation and prevent exploitation.

How to Solve the Problem

Many business sectors could participate:

•  Banks and financial services entities including personal and enterprise credit

•  Digital security providers

•  Payment processing, transaction and clearance providers

•  Alternative operators and microfinance lenders such as Kiva and Kickstarter

•  Exploitative agents such as check-cashing stores, loan sharks, and cash kiosk operators

Financial  Inclusion  Barter  to  Bitcoins,  Bricks  and  Mortar  to  Mobile—Developing  21st  Century  Financial  Services  Solu?ons  for  the  Unbanked  Poor  

A role for all global solution network types Diaspora networks aid transition to mainstream services. Watchdog networks ensure that commercial interests do not trump consumer protection. Operational and deliver networks support financial literacy and trouble shoot new product adoption. Global standards networks streamline integration and maintain open channels for competitors to utilize. Networked institutions monitor efforts and effects of each approach, ID best practices and adjust on the fly.

Knowledge networks observe strengths, opportunities, opportunities and weaknesses and develop ideas and markets. Platforms for compatible systems among competing offerings and support fraud prevention. Advocacy networks open access to neglected markets. Governance networks provide regulatory oversight and systems. Policy networks establish code of practice and data security.

Financial  Inclusion  Barter  to  Bitcoins,  Bricks  and  Mortar  to  Mobile—Developing  21st  Century  Financial  Services  Solu?ons  for  the  Unbanked  Poor  

Global Solution Networks provide fundamental changes in approaches to financial inclusion. Unexploited opportunities reach into the billions of dollars

Traditional financial paradigms must be adapted to the needs and realities of bottom of the pyramid consumers.

Mobile technology is the quickest route to service the unbanked at scale.

Services for the poor should be bundled with education.

Effective governance is rooted in multi-stakeholder networks.

Partner with leading innovators to foster public good applications

Implications for Network Leaders

Financial Inclusion

Barter to Bitcoins, Bricks and Mortar to Mobile—Developing 21st

Century Financial Services Solutions for the Unbanked Poor

By Don Tapscott, Amit Kapoor

and Jill Rundle Read the complete paper at gsnetworks.org

Global Solution Networks:

Don Tapscott, Founder and Chairman Dr. Joan Bigham, Executive Director For information on Global Solution Networks projects contact us at info@gsnetworks.org

Review all research results on our web site: gsnetworks.org