This study produced in partnership with the Institute of International Finance examines the underreported role of banks in driving financial inclusion. Of the 3.2 billion people in the world with financial transaction accounts, 97 percent hold an account at a financial institution. According to the World Bank’s Global Findex database, over 90 percent of the 721 million new accounts opened between 2011 and 2014 were opened at financial institutions — the vast majority banks, but also including credit unions, cooperatives, microfinance institutions, and postal banks. Banks are playing a leading role in providing and extending financial services to underserved populations. Thanks to advances in technology, banks are also increasingly designing viable business models to serve unbanked and underbanked populations, which Accenture has estimated as a $380 billion market opportunity.

To better understand the strategies enabling this growth, and to help banks, their partners, and the public sector work together to reach the next 2 billion, the Institute of International Finance (IIF) and the Center for Financial Inclusion at Accion (CFI) interviewed executives from 24 leading banks working in emerging markets to understand their business strategies, how technology and partnerships can enable inclusion, and where they see obstacles going forward.

Banks’ Top Opportunities in Financial Inclusion

  1. Build on digital payments, including: a) G2P – procurement, payroll, social transfers, pensions, etc., and b) Private sector – retailers, consumer goods companies, payroll, etc.
  2. Start with the underbanked and use data to understand their needs.
  3. Cross-sell the full range of products.
  4. Address the usage gap by building financial capability.
  5. Develop the ecosystem through bank-led partnerships, increasing customer convenience while sharing costs and risk.
  6. Enable remote account opening using digital IDs, supported by proportional, tiered KYC requirements.
  7. Align all systems to digital banking, benefiting banked, underbanked and unbanked customers.

Banks’ Top Barriers to Financial Inclusion

  1. Lack of trust – in banks, in digital, in agents – leading to lack of uptake.
  2. Lack of financial capability and digital literacy – leading to lack of usage.
  3. Agent networks – building them, equipping them, ensuring their quality.
  4. Data – privacy, security, cost, lack of capacity to analyze the data, lack of willingness for parties to share data, and regulations around these issues.
  5. Regulatory issues, especially pricing, capacity, and KYC requirements.
  6. Lack of coordination among government bodies.
  7. Lack of connectivity/infrastructure.

Susy Cheston

Independent Consultant

Susy Cheston is a consultant in financial inclusion and financial wellness. She focuses on building strategies and partnerships to advance customer-centered innovations on behalf of those who have been excluded, in the U.S. and emerging markets.

Elisabeth Rhyne

Former Managing Director

From its founding in 2008 until retiring in 2019, Elisabeth Rhyne was the Managing Director of CFI. As senior vice president of Accion since 2000, Beth led Accion’s initial entry into Africa and India, directed the organization’s research efforts to develop new financial products, and managed Accion’s publications and educational activities. Recognized as a leading thinker and writer in the field of microfinance, Beth has published numerous articles and four books on the topic, including Mainstreaming Microfinance: How Lending to the Poor Began, Grew and Came of Age in Bolivia (Kumarian Press, 2001). She was also co-editor of The New World of Microenterprise Finance (Kumarian, 1994), which provided the introduction to microfinance for many of the field’s current professionals. Beth was director of the Office of Microenterprise Development at the U.S. Agency for International Development (USAID) from 1994 to 1998, where she developed and led USAID’s Microenterprise Initiative. While there, she contributed to the founding of the Consultative Group to Assist the Poor (CGAP) and the Boulder Institute of Microfinance. Beth’s experience includes eight years of residence in Africa (Kenya and Mozambique) and independent consulting on microfinance policy and operations for governments, international organizations and microfinance institutions. She holds a master’s and Ph.D. in public policy from Harvard University. She earned a bachelor’s degree in history and humanities from Stanford University.

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