Financial Inclusion reaps huge opportunity, says study

currency--621x414Banks can address an additional $380 billion market in annual revenues by targeting micro-enterprises and bringing unbanked and underbanked adults into the formal financial system, highlighted a report produced jointly by Accenture and CARE International UK.

The report also notes that closing the small-business credit gap at average lending spreads and adding fee-based services could generate about $270 billion in additional revenue for banks, while including unbanked adults into the formal financial system could generate another $110 billion, according to Accenture research.

Of the 30 banks surveyed, 77 per cent of these were focused on short-term profit-driven commercial opportunities in a piecemeal manner, or were driven by philanthropic ambitions, the corporate social responsibility agenda or regulatory pressures. Only 23 per cent of banks surveyed had financial inclusion as part of a coherent corporate strategy.

Simon Whitehouse, Senior Managing Director in Accenture’s Financial Services Operating Group, said, “The traditional view has been that banking the unbanked and underbanked tended to be low-end, unprofitable and philanthropic. However, new business models, enabled by digital technologies, are helping banks write a new rule book for what is possible.”

The report also points out various ways that can be adopted by banks to make financial inclusion viable. It involves simplifying existing products and using digital-enabling solutions, partnering with alternative providers, joining forces with the development sector, among others.

The co-author of the report, Gerry Boyle, who is also a senior policy adviser at CARE International UK, said, “It may not seem like an obvious poverty fighting tool but providing access to basic formal bank accounts has been proven to have a transformative effect for those living in poverty, especially women. Decades of working in this area has proven that even the poorest, those living on less than $2 can save and make for viable customers.”

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