2 Billion Lack Modern Financial Services. Business Can Help.

November 2, 2015

Takeaways

In CCC's latest report, we feature best practices from companies making financial inclusion a reality.

An alarming 2 billion people around the world still lack access to modern financial services. While the finance gap is most acute in the developing world, communities and businesses across the United States also lack adequate access to finance or have limited financial literacy skills. This report identifies several private sector and nonprofit organizations that are making important strides to address this critical finance gap worldwide.

Financial inclusion is a critical element for social and economic progress. It helps poor individuals and small businesses generate income, accumulate assets, smooth consumption, and withstand risks. On a broader level, financial inclusion spurs economic growth and reduces inequality. 

Although governments and nongovernmental organizations traditionally led the charge on development challenges, the private sector is at the forefront of accelerating the inclusion of underserved populations in the financial system. The private sector recognizes that investments in financial inclusion can also improve market prospects in the future. 

At the U.S. Chamber of Commerce Foundation Corporate Citizenship Center (CCC), we believe that universal access to financial services is an essential enabler for job creation and equitable growth. This report focuses on best practices in financial inclusion domestically and globally, and is designed to help both the private sector and other practitioners in this field learn from each another.

The report is divided into three chapters:

  • Financial Literacy
  • Access to Finance
  • Innovative Delivery

Companies such as Capital One, MetLife, and Dermalogica, which are featured in the first chapter, are taking important steps in partnership with others to enable greater financial literacy among those who are underserved in the status quo, including women, youths, and low- and moderate-income individuals. Many studies have shown that greater investments in knowledge about financial matters including budgeting, saving, and credit can help empower people and enhance their financial well-being in the long term.

In the second chapter, which addresses access to finance, Goldman Sachs, SABMiller, and Sam’s Club share examples of initiatives to help small business owners, especially women, scale up through better access to finance and business training, to help grow their confidence, reach, and capacity. These companies recognize that small businesses are key drivers of drive economic growth and prosperity, and that women-owned small and medium enterprises have long been overlooked by local financial institutions as well as global investors. Western Union has decided to address one of the fundamental reasons why people are excluded from financial services: lack of access to education.   

The chapter also features examples of inclusion work by nonprofit organizations. Women’s World Banking shares the story of how the organization has worked in partnership with a local bank to create accounts designed for women’s needs as well as short-term loans, savings, and credit for women-run enterprises. BRAC, the world’s largest development organization, shares a unique example from the field showcasing how health loans can be provided to poor microfinance clients to enable access to quality health services.

In the final chapter, which spotlights innovative delivery, we focus on strategies at the nexus of technology and finance that have opened up new paths for underserved household and businesses throughout the developing world. The Vodafone and Qualcomm examples show how mobile technology has been a fundamental part of the financial inclusion story. Vodafone’s M-Pesa has led the mobile finance revolution and Qualcomm is providing women microentrepreneurs in the Philippines with wraparound business services along with mobile finance. MasterCard provides an example of how debit cards are enhancing convenience for the underprivileged, disabled, and retired in South Africa.

There is no question that to usher in an era of universal financial inclusion, underlying market dynamics need to change, driven by broad financial sector reform. But in the meantime, the private sector, in partnership with other stakeholders, is already is taking innovative approaches to improve delivery of financial services and expand access to opportunity.

Notably, this report highlights innovative programs that can be replicated and scaled while benefiting communities and strengthening the bottom line. At the CCC we plan to continue to promote the sharing of best practices and the enabling of more dialogue between stakeholders working in this area.

[Editor's Note: This article originally appeared in Private Sector Leadership in Financial Inclusion.]