Financial Inclusion

The Multilateral Concept of Inclusion: Going Beyond the Formal Financial System

MEDICIGlobal Head of Content

The concept of inclusion has traditionally been associated with financial access, giving way to a multitude of companies and initiatives aiming to extend access to the formal financial system. Technology and science, no doubt, play a critical role in facilitating financial access for vulnerable, but technology companies play a far greater role in the big picture than expanding banks’ customer base.

Inclusion is not limited to financial potential, it goes far beyond – access to knowledge, resources, technology, education, affordable housing and healthcare, employment options, etc. Moreover, inclusion is not always about the poor and ‘invisible’, it's about equal opportunities to access various kinds of products and services, to knowledge, innovation and the ability to make an educated choice. Further, we will look at some of the important and often overlooked sides of inclusion that address the implications most industry professionals nowadays address as standalone problems (such as financial inclusion).

Inclusion starts with the ability to connect with the global community

To solve a problem of financial inclusion, businesses need to solve a problem of internet connectivity and access to knowledge. In this day and age, there are over 4 billion people, mostly in developing countries, that still don’t have access to the internet. This means that over half of the world’s population is missing out on the life-changing benefits of connectivity, from financial services to health and education. Meanwhile, internet connectivity has far-reaching economic and social benefits, among which are enhanced productivity of labor and capital, reduced transactions costs due to enhanced speed and quality of information flows, greater innovation and adoption of new organizational models and business processes, enhanced access to financial capital with services such as mobile banking, facilitation of entrepreneurship and business expansion, access to new markets and improved human resource qualification and specialization.

Internet connectivity is critically important for developing countries on their way to smart, innovative nations. As emphasized by specialists from Deloitte, in developing countries, the Internet connectivity enables creative solutions to overcome the limitations arising from economic constraints and limited infrastructure. Extending internet access can give developing regions an opportunity to leapfrog developed world with the adoption of cutting-edge technologies, as professionals have observed with mobile banking.

It is up to international cross-industry innovators like Facebook, Google, and many more, to at least lay ground for further development of opportunities in particular markets and particular groups. Facebook, for one, started its work on tackling the digital connectivity and access problem two and a half years ago, when an ambitious Internet.org project was launched to connect everyone in the world to the web. As shared by Wired, by his calculations, nearly two-thirds of the global population—4.9 billion people—are not connected, most of whom do have internet access available to them, but can’t afford to pay for it or don’t know why they’d want to. Roughly 10–15% of the unconnected live in hard-to-reach places and don’t have access at all. The project is reported to have brought more than 25 million people online who otherwise would not be and introduced them to the incredible value of the internet. They have been reported to be doing better in school, building new businesses, and learning how to stay healthy.

Financial freedom starts with professional opportunities

Access to employment opportunities in the knowledge-based economy is another part of the inclusion concept. Employment has a direct effect on financial and other opportunities, which ensures that everyone has access to training, knowledge and expertise a far-reaching endeavor. Just a few weeks ago, for example, IBM launched ‘IBM Digital – Nation Africa’, education and skills initiative that are designed to reach up to 25 million people across Africa to support the development of skills required for career success in a knowledge-based economy. The initiative will provide access to thousands of resources, in English, free of charge, including:

  • Ready-to-use mobile apps
  • Guides – web guides, demonstrations, interactive simulations, video series, and articles
  • Online Assessments – A range of self-assessment tests to track the progress of individuals, together with industry recognized ‘Open Badges’ aligned to digital competencies. The badges can then be shared with prospective employers
  • Volunteers – Creation of a volunteer program to support and promote digital literacy within their communities
  • App Marketplace – Provision of a platform on which new applications can either be made freely available or sold.

“IBM sees effective, high quality IT education as a key driver of economic vitality in Africa. Through access to open standards, best practices, IBM tools, and course materials, the broad scope of this initiative will enable vital skills development”, said Hamilton Ratshefola, Country General Manager for IBM South Africa. “In order to find solutions to Africa’s challenges, industries across the spectrum need to enable the existing and future workforce to perform at the forefront of technologies such as cognitive and cloud computing. This will be the key to spurring economic growth.”

Inclusion for businesses is as valuable as individual inclusion

Borderless business opportunities for entrepreneurs – or inclusion for businesses – is equally important to the general prosperity of inclusive nations and transfer of knowledge. WEF emphasizes that technology acts to integrate markets by reducing communication costs and increasing matching efficiency, which in turn increases competitive pressures. Modern, digital businesses have shed the barriers to international markets, reducing friction to the necessity to register the company and obtain a license in the worst case.

State support is another vital element for borderless business opportunities, which has recently been widely practiced by progressive governments through sandboxes. The UK, Singapore, Hong Kong, Canada, France, Australia have taken an open and supportive approach to creating a welcoming and inclusive environment for international entrepreneurs in one form or another. US local and federal authorities have specific to small businesses support programs, including SMB financing options and grants, or small business counseling and assistance. The mission of such programs is to foster job creation and support the growth of new and existing businesses by providing capacity building information, tools and resources. With such programs, authorities aim to develop and empower small businesses in order to strengthen their business capability and survivability.

Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.