World Bank President: ‘Universal Access To Financial Services Is Within Reach – Thanks To New Technologies’by Fintech News Singapore November 27, 2015
At the 2015 World Bank Group-IMF Spring Meetings in April, the World Bank Group and its partners have discussed ways of helping promote financial inclusion and achieve universal financial access by 2020.
Commenting on the latest developments of the Universal Financial Access 2020 (UFA2020) initiative, World Bank Group President Jim Yong Kim, said that “new technologies, transformative business models and ambitious reforms” will most likely help accelerate financial access in the world’s most financially excluded regions.
In fact, many fintech startups have pledged their support for universal financial inclusion. Some believe that bitcoin and its underlying technology the blockchain offer many opportunities for underbanked populations, including the ability to have a digital instrument to store, send and receive funds.
Startups such as Hong Kong-based BitSpark or Singaporean Toast, are leveraging blockchain technology to enable faster and cheaper remittances to Southeast Asia where families are largely relying on funds sent home from relatives working overseas.
According to a report from Research and Markets, the three largest remittance recipient countries are from Asia-Pacific, with the Philippines and Vietnam contributing to more than half of Southeast Asia’s total remittances.
The report also highlighted that the top largest remittance corridors for Southeast Asian countries in 2014 were the US to the Philippines, the US to Vietnam, and the United Arab Emirates to the Philippines.
Launched in late-2013, the UFA2020 program is an initiative aimed at reaching universal financial inclusion and enable two billion adults to gain access to basic financial services such as owning a bank account or having a digital wallet to store money, send payments and receive deposits, by 2020.
Focused on 25 countries representing 73% of the world’s financial excluded, including Mexico, Brazil, Nigeria, China, Vietnam and Indonesia, the program gathers a wide range of partners including multilateral agencies, banks, credit unions, card companies, microfinance institution networks and telcos.
According to the Bank Group, its role has been so far to encourage investment and innovation led by the private sector. The group has also been helping countries setting up evidence-based regulatory reforms and help drive expanded access to financial services.
Most particularly, its approach has been focused on sensitizing both the public and private sector by introducing transaction accounts, expanding access points and driving scale and viability through government programs.
“By focusing the very best resources on financial inclusion from all around the Bank Group, we are providing our clients with a tailored package of financial, knowledge, advisory, and convening services,” Gloria Grandolini, senior director of Finance and Markets GP at the World Bank Group said.
Additionally, the World Bank Group has been working with countries to strengthen “key building blocks,” including political and stakeholder commitment, enabling legal and regulatory environment, and bolstering payment systems and ICT infrastructure.
Partners and their commitments for the UFA2020 program include:
- Bandhan: Commits to more than 20 million savings accounts and 10 million credit customers
- Bank Mandiri: Supports the Indonesian Government’s initiative to distribute conditional cash transfers to millions of families; Aspires that the program evolves into utilization of branchless banking and savings opportunities for more than 50 million Indonesians
- Equity Bank: Commits to reach 50 million clients in Africa
- Global Banking Alliance for Women: Commits to provide financial access to 1.8 million women in Latin America and Africa
- MasterCard: Commits to reach 500 million people currently considered to be excluded from the financial mainstream
- Microfinance CEO Working Group: Commits to 70 million new accounts around the world
- Microcredit Summit Campaign: Commits to expand its outreach to at least 53 million of the world’s poorest families
- ooredoo: Commits to 17 million mobile financial services customers
- State Bank of India: Sees a huge opportunity in our 70 million customers. All these customers can be sold pension and insurance products. Based on transaction history, they can be credit linked and become part of the global financial system.
- telenor: Commits to enable 50% of its customers to use their mobile phones for financial services
- Visa: Commits to provide electronic payment accounts to another 500 million underserved people
- World Council of Credit Unions: Commits to reach a further 50 million people through credit union services
- WSBI: WSBI members pledge to add 400 million accounts, reach 1.7 billion customers by 2020
While the World Bank’s Global Findex suggests that significant progress has been made between 2011 and 2014 with 700 million people gaining access to formal financial services during that time period, there is still place for improvement.
Notably, women in developing countries are still 20% less likely to have a bank account than men, according to the organization.
Hence, the Global Banking Alliance for Women (GBA) and its members Banco Pichincha of Ecuador and Diamond Bank Plc of Nigeria, pledged its support in April to help fill the gender gap in financial inclusion.
“Women who lack access to financial services face a number of related obstacles, including lower income and business growth, lower asset ownership – making it harder to borrow – and lower levels of financial capability,” said GBA. “Commercial banks can and must play a vital role in closing the financial access gender gap.”
Image credit: the World Bank Group, Flickr.