Opinion / Op-Ed Contributors

Access to finance can improve the life of the poor

By Jin-yong Cai and Ajay Banga (China Daily) Updated: 2014-02-24 08:11

Nearly 2.5 billion people - half the world's adult population - lack one of the most basic amenities of modern life: a bank account. These people are among the world's poorest, struggling to obtain the money they need to feed their families or start a business and create jobs.

Their exclusion from the modern financial system represents a significant obstacle in the global effort to end extreme poverty and boost shared prosperity. That's why World Bank Group President Jim Yong Kim has called for universal access to finance by 2020 - an urgent reminder that this challenge can be overcome in this generation. Governments play a critical role in paving the way for universal access to finance, but they can't do it alone. It will also take a concentrated effort by the private sector, which now accounts for less than one-third of global spending on financial inclusion.

Recently, the World Economic Forum asked us (World Bank and MasterCard) to lead an important initiative on financial inclusion, one that includes some of the world's largest financial institutions, as well as a diverse group of companies and organizations doing cutting-edge work in this area, with McKinsey & Company as our strategic advisor. We met with our partners in January at the forum's annual meeting in Davos, Switzerland, to coordinate action.

Our energy is focused on unlocking the ingenuity of the private sector to ensure that families and businesses outside the financial mainstream gain access to the full range of financial services.

We must match our ambition to the scale of the challenge. Electronic payment systems are an important part of the solution. Without them, people cannot pay their bills over the phone or the Internet. It's harder to save for a rainy day or protect against the unforeseen.

Modern conveniences like e-money accounts, debit and prepaid cards, and low-cost accounts can go a long way to increasing financial access, reducing poverty, and empowering the poor. For example, people who rely on government benefits can use reloadable payment cards to buy necessities, withdraw cash from an ATM, or engage in a variety of other financial transactions.

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