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Globally, around 50 per cent of the population do not have a bank account. Whether that is perceived as a surprisingly large or surprisingly small ratio is questionable; what is certain is that there is a potentially significant opportunity to provide those financial services, writes Kurt Parry. This financial inclusion is also, of course, much more than a means to market. According to Rodger Voorhies, director offinancial services for the poor at the Bill and Melinda Gates Foundation, financial inclusion is a very real prospect for alleviating poverty.

“Financial services act as a great buffer,” he said during the financial inclusion session at Sibos yesterday. “When there is a drain on finances, whether in good times such as a wedding or in bad times such as an accident, the poor can pay a huge price if they are not prepared. We have to roll out new innovations and initiatives, we need new models and new partners. It is just like administering health and formal education, the paradigm shifts are critical for the poor.”

While there is certainly the option to widen the geographical reach of financial services, Ann Cairns, president of international markets at MasterCard, sees spreading the word as more of a mission.

“Financial inclusion is a basic human right,” she told Sibos delegates. “Two and a half billion adults do not have access to financial services. To create the infrastructure where this can be done in its simplest terms is the first rung on the ladder. To introduce some sort of payment structure can lead to credit histories, for example, and service technologybecomes a part of financial life.”

Eighty five per cent of the United Arab Emirates’ working population are expatriates made up of 200 nationalities, which posed a major problem for employers and employees, many of whom do not have a bank account in their home countries.

In 2009, the UAE’s Ministry of Labour introduced the Wage Protection System, which guarantees the electronic delivery of salaries to all registered workers.

“The technology is extremely advanced and it is an excellent example of e-payment and receipt,” said Osama Al Rahma, chief executive, Al Fardan Exchange, UAE. “The change in thinking is that traditionally, products have been taken to market to sell and now we have to think of engineering products towards the end-users’ needs.”

The principle of including more of the global population into a financial services environment may seem commendable but the viability and sustainability is a different matter.

“The steps we have taken towards financial inclusion in many of the poorer African countries have been extremely positive, but this isn’t an act of charity,” said MasterCard’s Cairns. “It has to be a sustainable commercial activity. And as far as the infrastructure costs are concerned, we have to ask ourselves what the costs are if you don’t make these changes. Payment without financial services is an expensive business.”

KR Kamath, chairman and managing director of Punjab National Bank agreed and said initial costs were the biggest single barrier to financial inclusion. “You have to pay up front and then it pays for itself. But we need to always make sure we produce what the customer prefers and not what the bank prefers.”