The problem & the opportunity
The World Bank[1] estimates that about 1.7 billion adults remain unbanked globally – without an account at a financial institution or through a mobile money provider. Virtually all these unbanked adults live in the developing world. Indeed, nearly half live in just seven developing economies: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan. About 56% of all unbanked adults are women.
The World Bank also found that poorer people account for a disproportionate share of the unbanked – globally, half of the unbanked adults come from the poorest 40% of households within their economy, the other half from the richest 60%. But the pattern varies among economies.
On the bright side, the number of unbanked around the world has been steadily declining. The 2017 Global Findex database[2] shows that 1.2 billion adults have obtained an account since 2011, including 515 million since 2014. Between 2014 and 2017, the share of adults who have an account with a financial institution or through a mobile money service rose globally from 62% to 69%.
One of the problems with extending financial access is the lens through which the formal financial system assesses previously “invisible” groups of the global population. Lenses vary in different countries, but one is constant – existing frameworks have not been able to effectively expand the addressable market. Financial technologies, however, have a role to play in changing the very framework.
The progress in extending access to the formal financial system to previously “invisible” groups of the global population is largely attributed to digital financial technologies. Experts believe[3] that smartphones can dramatically reduce the cost of lending because the apps they
