Banks Exclusion. What is the Key to Financial Inclusion?

“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor,” the American author James Baldwin wrote in 1960.

Today, half of the world’s adult population, approximately 2.5 billion around the world and more than 88 million people in the United States are either under or unbanked and do not have access to traditional bank products and services. That makes them totally invisible to the financial mainstream and most of poor households rely almost entirely on a cash economy. Many workers once they cashed their paychecks have to cover right away their basic needs like pay the rent and bills, and then, if they have any money left put whatever they have left into their pockets.

Furthermore, there is a symbiotic relationship between economic empowerment and saving.The Federal Deposit Insurance Corporation has identified that 8 % of all American households do not have savings or checking accounts—that’s roughly 19 million Americans. Because they cannot save, they have little financial cushion if they face illnesses or other unexpected expenditures. The need for financial inclusion is clear, not just in the United States, but around the world as well.

Only 41% of adults in developing countries have a formal bank account and in Africa only 20% of families have bank accounts. Main and common reasons is the lack of money, banks are too far away, banks account are too expensive to maintain and people lack the right documents to open an account or simply do not trust the banks. If we compare to China, only 35% of the population is financially excluded; this figure is 65% in India. According to Mubashar Bashir, Senior Vice-President of MCB Bank in India, “The Smartphone is the basic tool that can ensure greater financial inclusion in the country. The new technology in this device acts for its users as a music console, alarm clock, GSP navigation device and TV screen. It can provide electronic wallet to the users but this use has not really clicked.” “Without financial access, it would not be possible to eradicate poverty, he added.


The increasing popularity of transaction and payment services through cellphones has revealed the indubitable potential to expand financial inclusion through mobile technology. Mobile banking is becoming a popular alternative to moneylenders, especially in Sub-Saharan Africa. The recent growth of mobile money has allowed millions of people who are otherwise excluded from the formal financial system to transfer money cheaply securely and reliably. These money transfers through mobile phones enable them to pay bills or make deposits through a text message without traveling or setting up a formal bank account. Family who live in developed countries such as the United States can send money and pay bills for their family. To have an idea, it is reported that financial inclusion is at 80% in Kenya. If you remove mobile money it drops to 23%. This gives an idea of the impact of mobile telephony as a key factor to achieve real financial inclusion.

Mobile money and mobile financial services are the most promising technology to face and fight financial exclusion. Consumer adoption of smartphones, tablets and mobile technology has increased over the last decade. In 2013, the number of US mobile phone users who owned or used a smartphone has reached 74%, up from 58% the previous year. The tablet ownership rate among this group saw an even more dramatic increase, reaching above half of mobile phone users in 2013, up from 33% in 2012.


The mobile wallet is a great opportunity to increase the financial inclusion mostly in the countries where the development is slow but mobile phone availability is high. Mobile money is a key and has attracted more interest from the developing countries than from the already developed countries.  According to the GSMA’s annual report, Mobile Money for the Unbanked 2012, there were 140 live mobile money transfer systems in place in low- and middle-income countries targeting the unbanked in 2015. And according to the World Bank’s Migration Development Brief, money remittance flows to developing countries is expected to reach USD 467 billion by 2014.

Remittances and remote payments are the most common uses of mobile money in developing countries. When electronic programs are designed properly, they can advance financial inclusion, help people build savings and give them access to other financial services.

The main services offered by mobile money service providers in emerging economies are:

  • Money transfers (domestic and international)
  • Bill payments
  • Purchasing airtime

All of these services can be done individually without having a bank account. And even better, some mobile wallet companies offer the possibility for direct deposit to the payment of bills and even cash withdrawal at an ATM, enabling easy financial management.

As it has been shown, the interest in mobile money is evident and standardization efforts are ongoing. In the developing world, mobile money has a strong potential to become an enabler for financial inclusion. According to Startupbootcamp FinTech, the next wave of financial technology should focus on extending financial services to low-income and disadvantage customers and not by serving customers already well served by companies.


Besides the fact than mobile wallet is cheaper than other alternatives to cash, it is also safer. Moreover, the mobile wallet is not only aimed at the unbanked and underserved, but its the impact and varied of uses, make it useful and cost efficient for every customer.

Mobile payment and mobile wallet can also help consumers better manage their money and avoid unreasonable banking fees. Banks are no longer necessary for one to be able to manage money, pay bills and use one’s own money.

By Deborah Accos, PR & Communications, (954) 414-9623 / 


Using Mobile Technology to expand financial inclusion, World Council of Credit Unions.


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