Blueprint for Financial Inclusion

November 5, 2010

With political momentum swirling around issues related to financial inclusion, the World Savings Bank Institute (WBSI) has put together a blueprint for policymakers and service providers, in the form of a research report, Financial Inclusion: How Do We Make it Happen?

The upshot: for financial inclusion programs to work, the organizers must embrace innovation, not just in terms of how services are delivered, but in the design of products, supporting business partnerships, and regulatory framework.

As anyone reading this knows, "financial inclusion" has become a catch p0hrase for expanding access to financial services across the economic spectrum. The United Nations has embraced financial inclusion as a means of alleviating poverty. The Group of 20 finance ministers and central bankers have pointed specifically to the need for financial inclusion initiatives as part of any broad global economic recovery plan. And the Basel Committee on Banking Supervision has developed a set of core principles for effectively regulating microfinance institutions.

The WBSI report, published last month, offers views and proposals on how to help bring financial inclusion to reality, particularly in developing economies.

"WSBI strongly believes that financial inclusion should no longer be the exclusive responsibility of social cohesion bodies, development agencies and poverty alleviation organizations," the report explains.

Here's a quick synopsis of recommendations contained in the report. To be successful, financial inclusion initiatives:

• cannot just be domestically oriented, but must cross geographic and politcal boundaries
• should offer a wide array of financial services, not just credit
• must include a financial literacy component
• need to provide economical ways to support small-dollar savings
• should look to remittances as an important gateway to financial services
• must feature innovative products and services that can be delivered outside traditional banking channels
• need to include a diversity of financial services providers (banks, postal offices, retailers and mobile telephone operators, to name a few)

The WBSI is one of the largest international banking associations and the only one representing savings and retail banks globally. Taken together, its members offer banking services through 160,000 outlets in 90 countries.

Copies of Financial Inclusion: How Do We Make it Happen are available on the WBSI Web site.

Worldwide, 3.5 billion people lack access to financial services. By 2012, 1.7 billion of these unbanked individuals are expected to have access to mobile phones.

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