The delivery of financial services over digital platforms is one of the most promising tools for achieving a cost-effective pathway to financial inclusion at scale. Globally, mobile phone use has grown at an explosive pace, and the ubiquitous use of mobile phones makes them an effective, cost-efficient, and scalable service delivery platform. But transferring money from one point to another is only part of the cost of providing the types of products and services that help those living in poverty build resilience. Organizing client groups, providing financial capability training, and connecting clients to social networks that provide support in times of trouble often requires a level of human connection that cannot easily be replaced with digital communication. The challenge for widespread adoption of a broader range of products will be in finding efficient methods to combine human and virtual connections that generate the scale needed to cover costs and the client-level results that lead to greater resilience.
Banks, MFIs, and MNOs are still working to develop the types of products and services that will drive a rate of adoption similar to that of payment services. In an interview with the Microcredit Summit , Rodger Voorhies, director of financial services for the poor at the Bill & Melinda Gates Foundation, explained how payments could be used as a starting point to introduce a wider range of financial instruments to those who had previously been excluded from the formal financial system.
An interview with Rodger Voorhies, Director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. Download a transcript of the video [PDF].
Another key to making the economics of mobile savings work for both clients and providers is to have aggregators who can build a large enough pool of clients in an area to make it cost effective for the MNO and/or bank to work with them. CARE has tested this by working with its clients to find ways to link village savings and loan groups with Equity Bank in Kenya via Orange Money, a mobile payment service of Orange Kenya.
Lauren Hendricks, executive director of CARE’s Access Africa program, explained how this works. “A savings group or their representatives can go to any Orange agent, sign up for a ‘Pamoja’ account, and that automatically opens a banking account for the group at Equity Bank. The accounts were designed by Equity especially for savings groups. They have no minimum balance, minimal withdrawal fees, and no deposit or ledger fees. Once the account has been created, it can be accessed using any mobile network, such as Vodacom or Airtel.”
Photo Credit: © 2001 CARE/ Josh Estey
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Table of Contents
- Executive Summary
- Taking Steps to Target the Poorest
- A Global Context for Extreme Poverty
- Microfinance & Health Providers Can Partner for Greater Results
- Commercial & Social Businesses Can Expand Value Chains to Include Those in Poverty
- Mobile Network Operators Can Build Systems that Reach the Poorest and Most Remote
- Regulators & Policymakers Can Build a National Ecosystem for Inclusion
- Social Support Payments Can Become a Bridge to Financial Inclusion
- Being Accountable for Results
- A Commitment to End Extreme Poverty by 2030
- Read the Full Report
- Get Your Copy
– Lauren Hendricks, CARE