10 Things I learnt from Ajay Banga about Financial Inclusion 6

Over the weekend I spent a bit of time reading about the recent Mobile World Congress 2015 event in Barcelona. There were some pretty high profile figures there from Mark Zuckerburg to John Cleese! But it was an ‘Innovating for Inclusion‘ keynote speech from Ajay Banga – MasterCard Chief Exec – on financial inclusion that particularly caught my eye. Financial inclusion is something I am really interested and as I highlighted in the post 3 Reasons Why Banks Need to Read The Gates Letter 2015, financial inclusion is not just a developing world issue, it is a global concern.

During the speech Ajay tackled 3 key areas:

  1. Why we should all be concerned about financial inclusion
  2. What is MasterCard doing about financial inclusion – I wont delve into this too much, read the speech notes if you’re interested
  3. What has been learnt so far

1. Financial Inclusion is a global problem affecting half of the world’s adult population

  • 2.5 billion adults do not have a bank account
  • Millions more do not use their bank account on a regular basis

2. Financial Inclusion isn’t confined to developing countries:

  • Almost 70 million Americans are financially excluded
  • Approximately 100 million people in Western Europe are unbanked / under banked

3. Financial Inclusion Impacts ALL walks of life:

Half of the worlds adult population are considered to be financially excluded, approximately:

  • 40% are young people
  • 50% are women
  • 50% are urban
  • 50% have jobs

4. Cash is still King

Despite the enormous growth of mobile payments, 85% of all retail transactions are handled using cash. With this in mind, financial inclusion, cash and electronic forms of payment are all inextricably linked

5. MasterCard is a Connector

Connecting banks, telephone companies, merchants, governments and consumers. Ajay describes some phenomenal stats, connecting 2 billion cardholders to 40 million merchants via 25,000 banks  in over 200 countries. Ajay reiterates that MasterCard do not issue the cards, that happens via the banks / financial institutions in each country

6. Financial Inclusion requires Public-Private partnerships

Put simply financial inclusion is too big a problem for one person or provider to fix it alone. A solution must involve public/private partnerships that work together to address the issue of financial inclusion.

7. Financial Inclusion requires the Public sector

Ajay states the importance of the public sector due to the role they play in:

  • Providing various benefits / social security payments to the financially excluded
  • Enabling a healthy regulatory environment
  • Citizen identification to enable KYC (Know Your Customer) compliance
  • Fostering a productive business environment

8. Financial Inclusion requires the Private sector

To enable: “distribution, innovation, efficiencies and execution”

9. Financial Inclusion requires Interoperability

Today Ajay argues mobile money initiatives operate in competition with each other and “aim to own the entire end to end solution”. Operating as silos is the problem according to Ajay. Where and when public and private sectors cooperate, the most efficient climate for financial inclusion is enabled.

For me its kind of saying the obvious — but we need leaders in industry to recognise and say this. Only then will things change…

10. “The Opportunity to drive Financial Inclusion is unique to us and our time” – Ajay Banga

Ajay declared that generations before us had eradicated disease, been responsible for various inventions and here today we are the generation who have an opportunity to enable financial inclusion, and the benefits it would bring, across the globe.

Ajay end by sharing the African proverb: “if you want to go quickly, go alone. If you want to go far, go together”

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Pretty Inspiring Stuff…

I must say, from what I have read, I think Ajay’s speech is pretty inspiring. To resolve the issue of financial inclusion will need leaders from within the financial industry to challenge the existing state and create a culture that encourages the kind of collaboration that Ajay spoke about in this keynote. As Ajay puts it the internet of things (IoT) will enable the “Internet of Everything, but not the Inclusion of Everyone”. He goes on to call for financial inclusion to happen in our lifetime. In the words of TED, now that is a idea worth spreading!

6 thoughts on “10 Things I learnt from Ajay Banga about Financial Inclusion

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