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Beyond the Transaction: Every Transaction Has a Story

Collaboration driven by innovation is the key to ensuring financial inclusion

With an estimated 2 billion people worldwide still lacking access to financial services, more meaningful partnerships between public and private sectors are needed to accelerate inclusive growth, says Raghu Malhotra, President, Middle East and Africa, Mastercard

RaghuIn many ways, modern payment solutions narrate the story of an economic landscape that has been shaped and transformed by innovation. From cash to debit and credit cards and smart apps on smartphones, the so-called ‘new’ ways to pay have become an effortless extension of our lifestyles, especially for those of us residing in bigger cities such as Dubai. At the same time, and primarily in remote pockets of rural societies, we cannot overlook the large group of financially excluded people who still lack access to even the most basic financial services and bear the brunt of operating in a ‘Shadow Economy’. According to the World Bank 2014 Findex report, about two billion people worldwide still don’t have access to financial services. What does it mean then for this segment of the society to not be able to take advantage of services that we take for granted? For a farmer, for instance, having no access to a bank account means grim possibilities of raising capital to invest in a farm or exploring new avenues of income generation.

When you work with a technology company committed to inclusive growth for all, you know that innovative solutions are slowly but surely outpacing some of these challenges, and that help is literally at hand for the average unbanked worker in the region. At Mastercard, we have been engaging with people, observing emerging trends and collaborating with stakeholders for over thirty years in the region. And, we know today that technology can have a life-altering impact for unbanked people, and even facilitate their journey into the financial mainstream.

However, what’s needed is a stronger network of cooperation where both the public and private sector entities play an active and decisive role towards making a real difference in the lives of underserved communities. In other words, tapping into technology is not enough; partnerships and collective efforts that help scale these solutions are important to reach unchartered territories within the economy.

So, why do collaborations between the public and private sectors take center stage while addressing some of the most pressing needs of people, and what is it that they bring together that they fall short of providing when working in silos? The answer lies in the convergence of the two – while the modus operandi of both entities varies, it is the synergy of their individual expertise that unlocks doors to new untapped possibilities.

Public organizations establish relevant regulations and infrastructure, and private entities – from technology companies and NGOs to merchants and startups – bring in creative talent, open up new opportunities and boost financial inclusion with scalable projects. A seamless marriage between the two, in that shared space where philosophies intersect, brings numerous benefits to communities and economies as a whole.

Collaborations that breed innovation can also inspire communities to leapfrog traditional entry points for financial inclusion. One Mastercard initiative, titled ‘2KUZE’ (“let’s grow together” in Swahili), is a digital agriculture marketplace in Kenya that links small-scale farmers with buyers and financial service providers on a single platform without a bank account. Here is a solution that is digitizing transactions and uplifting the socio-economic profile of over 2,000 farmers; made possible largely through partnerships with the Kenyan government and Bill & Melinda Gates Foundation.

Some countries in Middle East and Africa have emerged as a beacon of inspiration in leveraging partnerships to bolster the payments sector. In the United Arab Emirates, innovation forms the crux of the government’s vision for the future, and the recently unveiled ‘Dubai Pulse’ portal is another highlight in UAE’s journey towards becoming a smart city. The digitally-driven platform aims to empower internet users in the country to transact with both public and private service providers online and enter a 100% paperless era by 2021.

When governments commit themselves to providing a solid technological infrastructure, innovation flourishes, economy grows and quality of living improves.

Amongst all the lessons I have learnt from Mastercard’s journey in the UAE, there is one that resonates with my team and me the most. It is that financial inclusion is a journey that begins with changing a simple mindset. Creating change is challenging, indeed, but not impossible and definitely does not happen in isolation. In terms of financial inclusion, change translates into all of us – industry players – making steady progress towards one shared goal. The World Bank Findex 2014 report I referenced earlier also reveals that from 2011 to 2014, the number of unbanked people worldwide dropped from 2.5 billion to 2 billion – indicating a 20 percent decrease. That’s a remarkable feat but we cannot stop there, which is why we recently brought together industry experts at the ‘Mastercard Prepaid & Government Conference’ in Dubai to pledge greater commitment towards inclusive growth for all. The shared goal is to increase that number even further – to expand the access to financial services through bridges of collaboration that are built on the foundation of innovation.