Barriers to financial inclusion

Financial inclusion efforts are building globally as new technology and a swathe of regulatory reforms are helping some of the world’s poorest people to make use of banking and payment services. Figures from the World Bank show that from 2011 and 2014, the number of “unbanked” individuals dropped 20 per cent as 700 million people became bank account holders or joined mobile money services. The arguments in favour of opening up financial services to more people are powerful. There is the economic case – the more people can save, invest and make payments as and when they choose, the more growth we get.

Payments alone can make a difference – Visa says that electronic payments added 0.8 per cent to the GDP of developing economies between 2008 and 2012. By spurring economic activity through easier payments we can reduce poverty in the developing world, which has a multitude of benefits, from better disease control to improving women’s rights.

Cultural barriers to inclusion

But financial inclusion – having access to a product like a bank account – throws up some interesting challenges for the industry. Ismail Douiri, director general at Attijariwafa bank in Morocco, notes that there have been some unexpectedly negative attitudes to the bank’s efforts to help low-income families open bank accounts.

“What we didn’t expect was for our prospective new customers to say what they valued most was privacy and confidentiality,” he wrote for Visa as part of a series on financial inclusion in the Guardian newspaper.

“Wives wanted to hide their savings away from their husbands, otherwise they might be tempted to spend them unwisely. Households did not want their neighbours to know that they had a bank account, otherwise they may try to borrow money from them.”

In other words, it’s not just a matter of rolling out the same products and services in the exact same way as one might in the US or Europe. Cultural sensitivities are important, as evidenced by the rising popularity of Islamic banking. In Morocco, for instance, outward displays of wealth are frowned upon. And according to Douiri, the apparently innocuous bank statement became the biggest barrier to helping low income families sign up for accounts. Bank statements can easily get lost and end up being seen by a friend, relative or neighbour.

Reinventing the wheel

But such attitudes should not get in the way of progress. The importance of financial inclusion cannot be understated, as professor Moorad Choudhry of Brunel University pointed out recently.

“The money transmission account, which handles operational payments for the customer in and out, in any size, and which can also go overdrawn when said customer suffers cash flow problems, ranks up there with the wheel as one of the great inventions of humankind,” he explained on CNBC.

We don’t need to completely reinvent the wheel for developing nations where financial inclusion is low, but we do need to pay close attention to what works and what doesn’t. For Attijariwafa bank it was a simple case of allowing customers to opt out of a statement being sent in the post and instead be able to print them for free at an ATM.

There may be some unexpected barriers in the path of financial inclusion, but the industry should be well equipped to find the solutions. And with the number of unbanked still numbering two billion adults, there is still a long way to travel.


Written by Andy Brown

Andy Brown

Andy is marketing director for payments at NCR. He has nearly 30 years' experience in e-payment systems from the delivery and support of systems in the Far East and Europe, from both the product management and marketing perspectives. Based in the UK, Andy is responsible for marketing NCR payment solutions.

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