How Non-banks are Boosting Financial Inclusion and Remittance
This chapter explores financial inclusion and economic empowerment through non-bank alternatives to traditional financial services providers such as retail banks. Specifically, we will explore two technology-based solutions for money transfer and payments
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Abstract This chapter explores financial inclusion and economic empowerment through non-bank alternatives to traditional financial services providers such as retail banks. Specifically, we will explore two technology-based solutions for money transfer and payments: 1) mobile money: the provision of financial services via mobile phone; and 2) applications of blockchain technology and digital currency in the remittance industry. The author notes that these technologies hold the potential to significantly reduce barriers to access to financial services for under-or unbanked populations given the right conditions: consumer adoption; availability of mobile and internet connectivity; and a favorable regulatory environment. Keywords Bitcoin financial inclusion
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blockchain mobile mobile money inclusive finance unbanked
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remittance
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1 The Opportunity for Non-banks in Financial Inclusion and Remittance According to the World Bank Global Findex (2014 data), two billion people— equating to 38 % of the world’s adult population—do not use formal financial services (The World Bank Group 2015). For the most part, these are poor populations who are excluded from even the most basic financial services offerings, specifically the ability to spend, the ability to store, and the ability to invest. The World Bank research estimates that 73 % of poor people are unbanked because of costs, travel distances and the often burdensome requirements involved in opening a financial account (The World Bank Group 2015). Financial inclusion, or inclusive financing, is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society (Wikipedia 2015). It is generally accepted that financial access is the gateway to eduD.C. Biggs (✉) Centre for Blockchain Technologies, University College London, London, UK e-mail: [email protected] © Springer International Publishing Switzerland 2016 P. Tasca et al. (eds.), Banking Beyond Banks and Money, New Economic Windows, DOI 10.1007/978-3-319-42448-4_10
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cation, health, housing and other necessities to growth and development. In addition, access to financial services is critical for access to economic opportunity, increases productive investment and consumption, and contributes to women’s empowerment. Financial inclusion has today become a particular area of focus for non-bank financial services providers, given the under-servicing of those populations to date from traditional banks. These non-bank offerings include nonprofits and NGOs, community-based institutions and cooperatives, telecommunications providers, microfinance institutions, post offices and, in recent years, some financial technology (fintech) start-ups. Remittances, the transfer of money by migrant workers to their home countries, exceed both official development assistance and foreign direct investment (excluding China) as a source of funds for developing countries (Cook and McKay 2015). With this scope, their benefits to the recipient economies are well recognized, inc
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