Globally, 1.7 billion adults are unbanked, and there are wide-ranging implications for individuals and businesses who lack of access to financial services. However, efforts to achieve financial inclusion can help improve livelihoods, reduce poverty, and advance equality. In this Q&A, Henrietta Bankole-Olusina, Rockefeller Philanthropy Advisors’ program director in Nigeria, explains the growth of financial inclusion, how it advances women’s economic empowerment, and the role of technological innovation.

What are the implications of exclusion from financial services? What is the scale of the issue?

Henrietta Bankole-Olusina: Around the world, many of those who struggle with poverty and vulnerability are unbanked—1.7 billion adults, according to the latest Global Findex Report. More than 50 percent of these people are from just 7 countries: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan.

Many of these people do not have access to financial services that can help them escape poverty by facilitating investments in their health, education, or micro, small, or medium-scale enterprises. Basic and functional financial services like bank accounts and digital payments are unavailable for them for various reasons. As a result, many are unable to climb out and stay out of poverty because they’re unable to access finance to grow their businesses or even to access markets. They’re unable to finance basic assets that can improve their lives and livelihoods, such as power, healthcare, and education. Financial inclusion is one response to address that poverty trap.

How have efforts to achieve and advance financial inclusion evolved and expanded in the past decade?

Over the last decade or so, we’ve seen new technologies contribute to progress for financial inclusion, including the growth of digital payments and a lot of innovation that has created new ways of accessing formal and informal financial services. We’ve also seen many countries be very deliberate about driving financial inclusion through enabling government policies as well as a new generation of financial services that is accessible through mobile phones and the Internet.

Africa provides a clear case study for the power of financial technology to expand access to and use of mobile accounts. The continent has seen a sharp growth in registered mobile money accounts. A 2020 GSMA report found that there are more than 1 billion registered mobile money accounts worldwide, with nearly 50 percent of those being in Africa. In Sub-Saharan Africa alone, about 21 percent of adults have mobile money accounts, almost double the number from 2014, and it is the world region with the highest use of mobile money.

Research by McKinsey has also found that the adoption and use of digital financial services can increase the GDP of emerging markets by 6 percent or $3.7 trillion by 2025 and could create up to 95 million new jobs, raise overall productivity and investment levels, and reduce leakage in government spending.

In short, with the rapid evolution of technology, we’re seeing digital financial services emerge as a powerful driver for financial inclusion, gender equality, and inclusive economic growth. Ultimately, technology is a game-changer. It is here to stay, and it is one of the reasons that we have seen so much progress.

How does financial inclusion advance women’s economic empowerment?

The question could also be asked the other way around: “How does women’s economic empowerment advance financial or economic inclusion?” There is a considerable body of work focused on gender-intentional program design to promote women’s empowerment and reduce household risks and gender bias.

The benefits of financial inclusion for women can be wide-ranging. The idea is to ensure that women have more agency and financial inclusion and independence. For example, studies have shown that mobile money services, which allow users to store and transfer forms through a mobile phone, can help individuals increase their incomes and earning potential and thus reduce poverty.

A study in Kenya found that access to mobile money services delivered big benefits specifically for women. It allowed women-headed households to increase their savings by more than one-fifth. It allowed 185,000 women to leave farming and develop business or retail activities, and it helped reduce extreme poverty among women-headed households by more than 22 percent. We see clearly that efforts focused on women’s economic empowerment are lifting women and their households out of poverty and helping to drive financial and economic inclusion.

What role has philanthropy played in advancing financial inclusion?

In partnership with the private sector, governments, and multilateral development agencies, philanthropy has over time invested in the advancement of financial inclusion. These efforts have focused on addressing various aspects of the challenge: the onboarding and acquisition of financial accounts, the issues around unique identity management, and the costs of transactions and service delivery as well as regulatory reform and enabling policies for financial inclusion.

There’s a need to sharpen the focus on the acquisition and use of accounts. Oftentimes, when people open these accounts, they become dormant very quickly. We need people to actively use those accounts signifying economic inclusion, or the impact of the work may be lost.

Increasingly, we’re seeing a pivot to economic inclusion and a drive for private sector involvement to unlock opportunities. More companies and governments are digitizing payments—for example, for social safety net programs where the citizens can collect their benefits through digital money. We’re seeing a lot of the work shifting from cash-based payments to digital payments and trying to entrench as much as possible the use of those accounts.

What advancements and innovations in the field are you hoping to see in 2022 and beyond?

I’m looking to see much more technology-driven innovation to drive financial inclusion and economic inclusion, especially from the fintech sector, that can address the challenges we see today. These issues include digital identity management, reducing the cost of transactions and service delivery, and enabling access to touchpoints, especially at the last mile.

I’m looking for innovation in other areas: for example, mobile-driven innovation; credit products that have a social impact angle; and products and offerings that are gender-focused. I’d like to see more women’s economic empowerment programs. As I mentioned earlier, there’s a lot of work going on in this space now, with major programs, initiatives, and investments designed to end the gender gap, increase access to resources, transform gender power relations, and address gender biases. Finally, I’d like to see effective social safety net programs as well as programs that provide employment opportunities for youth.

Photo by Benjamin Dada on Unsplash

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