New routes to financial inclusion

As we look at ways the new consumer class will differ from the Western model--one question to ask is: Will they have traditional bank accounts, or rely on emerging solutions?

An article in the Economist this month points to many ways in which people are succeeding along the latter path, as mobile phone and smart card technologies make faster inroads across developing areas than large-scale banking infrastructure. In many places, governments and entrepreneurs are unbundling services traditionally provided by banks and delivering them more effectively.

In Kenya, for instance, 75% of Kenyan adults a mobile payment system called M-PESA that works phone to phone using a simple text-messaging system. According to the Economist, it is so widespread that "some reckon almost half of the country’s GDP flows through it."

As with many issues touching on the middle of the diamond, the scale of the trend is large: 2.5 billion adults—more than 50% of the global adult population—lack bank accounts. How they ultimately participate in the financial system will have a significant impact on global business.

Image Source: Economist, November 15, 2014

-- Clara Shen

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