Last week, the World Bank announced a massive drop in the number of unbanked. Between 2011 and 2014, 700 million adults became account holders. This is an astonishing number but must not lead to complacency. Two billion people still don’t have access to the basic financial services. The many advantages of having a bank account, which are taken for granted in the developed world, are out of reach for the poorest among us.
As business, government and NGOs gather in Jakarta for the World Economic Forum on East Asia, financial inclusion is at the top of the agenda for many.
An overwhelming body of evidence shows that providing people with the ability to save and borrow efficiently and securely improves well-being and encourages enterprise, ultimately reducing global poverty and increasing economic growth. Through a combination of effective public policy, public-private partnerships and the thoughtful application of the latest technology, financial services can and must be offered to all.
At WEF, MasterCard is releasing the Indonesian research from The Connectors Project, which looks at the importance of connections and networks to helping people move to greater economic inclusion. For example, mentors might provide inspiration and advice while migrants may link people to remittances, which are a common entry point to joining the formal financial system. By mapping the journeys as they exist on the ground, the Project allows governments, NGOs and business to address the actual challenges people feel they face.
The Indonesian government has itself made financial inclusion a priority. Its National Financial Inclusion Strategy is focused on providing access to the poor, migrant workers, women and remote communities. Financial inclusion is also a key concern for the central bank, Bank Indonesia, as well as the Financial Services Authority, the OJK. New branchless banking regulations and the establishment of a basic savings account are focused on enabling inclusion.
Meanwhile, the widespread adoption of mobile phones – as of 2012, there were over 143 million mobile subscribers in Indonesia, more than double the number of bank accounts – presents the most exciting opportunity to enable mass adoption of financial services and facilitate financial inclusion.
The combination of top-down government efforts and innovative business-driven solutions could transform Indonesia from one of the most underbanked populations in the world to a financially inclusive society. The potential is there to transform the lives of the most disadvantaged, and that would be truly priceless.
This first appeared in World Economic Forum Blog on 20 April 2015.