How Non-Banks are Boosting Financial Inclusion & Remittance

Book chapter summary for my chapter within the Springer textbook:

Banking Beyond Banks and Money
A Guide to Banking Services in the Twenty-First Century
Editors: Tasca, P., Aste, T., Pelizzon, L., Perony, N. (Eds.)

More details here:
https://www.springer.com/gp/book/9783319424460

Transcript

1. Book Title: Banking Beyond Banks and Money A Guide to Banking Services in the Twenty-First Century Springer International Publishing, Copyright 2016 Chapter summary: How Non-banks are Boosting Financial Inclusion and Remittance Print ISBN: 978-3-319-42446-0 Online ISBN: 978-3-319-42448-4 Series Title: New Economic Windows Author: Diana Biggs
2. Background • Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society • Financial access is the gateway to education, health, housing and other necessities to growth and development, and critical for access to economic opportunity • Two billion people do not have access to formal financial services • There is therefore the opportunity for non-banks to provide such services to these markets Chapter 10 Summary: How Non-Banks are Boosting Financial Inclusion and Remittance Author: Diana C. Biggs Technologies discussed in the chapter Mobile banking • The provision of financial services via mobile phone, which are increasingly ubiquitous globally • Mobile money is already a fairly mature industry, with established offerings in the majority of emerging economies • As of 2014, the number of mobile money accounts outnumbered bank accounts in 16 countries globally Blockchain-based remittances • Global remittances estimated to be $586BN in 2015 • The global average cost of sending $200 was 7.7 % in the first quarter of 2015, • The bitcoin blockchain offers near real-time peer-to-peer transaction processing 24/7 bringing potential benefits across the value chain in remittance 2
3. • Need for connectivity (mobile or internet) • Regulatory, legal & policy challenges: need to ensure regulation and policy does not hinder innovation • Early-stage technology: requires coordination and mass adoption • Consumer adoption / trust • Scalability and interoperability between systems • Relevant off-ramps and usability of digital money systems in order to reduce the need for agents and potential issues with local liquidity • Given the costs related to logistics, geographical challenges, technology (or lack thereof) and regulation and compliance, potential cost savings for the customer still require smart management on the provider side 3 Chapter 10 Summary: How Non-Banks are Boosting Financial Inclusion and Remittance Author: Diana C. Biggs Opportunities include: Challenges include: • Improved efficiencies: increased speed of payments and lower costs to send and receive over traditional methods • Enhanced security, monitoring, and transparency • Allows for broader geographical coverage, removing physical barriers and reducing travel times & costs • Serves as a convenient initial entry point into the formal financial system • Reduces the need for middlemen, reducing corruption and cutting costs • Enables servicing of populations currently excluded (e.g. for social or other reasons) • Elimination / reduction of physical cash has positive implications for safety, health, logistics