Together, the mobile industry and the financial services community have the power, and the opportunity, to put billions of people on the path to financial inclusion. Steve Polsky of Juvo talks here about getting the the how, the why and the when in place.
> Posted by Steve Polsky, Founder and CEO, Juvo
Thanks to World Bank, we all know the numbers: two billion unbanked people around the world, excluded from formal financial services. Thanks to the United Nations, we have a global rallying cry with the Sustainable Development Goal and that financial inclusion is the enabler for seven of the 17 Sustainable Development Goals. And thanks to the Center for Financial Inclusion at Accion’s initiative Financial Inclusion Week, we also know that dozens of companies are committed to improving the lives of billions of people around the world.
But in the same way that no man (or company) is an island, no single industry can financially include billions of people. Financial institutions have the technology and services to change the way people borrow, save, insure, send and lend money in emerging markets; however, even an industry of the scale of the financial system doesn’t have the reach to change the world as quickly as the UN Sustainable Development Goals demand.
The only industry with that reach is the mobile industry. And as mobile operators around the world begin to embrace the maxim “doing good is good for business,” likewise they’re becoming cognizant that while they may have the reach, they may not have the technology and services to drive sustainable financial inclusion.
In September, Juvo, redoubled its efforts to bring mobile and fintech together for good. We held our inaugural event: Be Bold for A Change focused on How Fintech and Mobile Can Deliver Financial Inclusion for All. I joined Ron Suber, the “Mayor of Fintech”, James McElvanna, VP of Product at Cable & Wireless and Chris Berry, co-author of McKinsey’s Digital finance for all: Powering inclusive growth in emerging economies to discuss how, why and when telcos and financial services companies should work together. Three things shone through:
1) The How: Meeting Customers Where They Are
Around 80 percent of all mobile users globally use prepaid services. At the same time, only one in 10 unbanked people with a mobile phone are using mobile money services.
One of the biggest obstacles to financial inclusion is building trust with the customer. Some individuals don’t understand or trust financial products. They need education that puts mobile services into context and explain how they work. This is best achieved with a stepping stone approach, something we are doing with Cable & Wireless in the Caribbean.
James McElvanna explained that a few years ago, Cable & Wireless decided it wanted to build a better picture of these customers. James and his colleagues started by “meeting customers where they are” with tangible benefits, like helping when they’ve run out of airtime. In that moment, extending a small airtime credit loan, with zero fees and interest, helps the customer fix an immediate problem. It lays the foundation for a trusting relationship, which is deepened as more loans are taken and repaid.
And it’s the start of a new story, the creation of a credit history. In a short time, Cable & Wireless and Juvo can build financial identities for financially excluded customers. Starting with simple credit extensions, we can understand which customers will make reliable clients for more sophisticated financial services offered by financial institutions. And, critically, it can take them on that journey leveraging the trust they’ve built together.
2) The Why: Enabling Financial Resilience
Financial resilience helps people meet unexpected financial demands and mitigate financial shocks. It’s one important difference between the haves and the have nots. With access to more sophisticated financial services, the unbanked can build this resilience — securely saving, with the ability to move money and have access to credit when it’s needed.
Mobile operators provide the channel to reach these individuals when more traditional communication channels are unavailable. For example, during Hurricane Irma, Cable & Wireless provided access to airtime loans via mobile to allow their customers to stay connected when catastrophe struck. Getting service — for up to a month of data and voice usage — was frictionless. Users didn’t have to visit a retailer or an agent, which would have been difficult or impossible at the time. As a result, borrowing spiked significantly and customers experienced resilience.
This is just the start. With a financial identity and a convenient channel that works in even the most dire circumstances, the opportunity to support financial resilience is a giant leap towards financial inclusion.
3) The When: The Time Is Right Now
Ron Suber pointed to the 50-year innovation cycle, an interesting concept that has been observed for TV, cars, radio and now mobile devices. Fintech started in 1998 with PayPal. A decade ago, companies like Lending Club and Prosper gave people reasons to borrow and lend online. We’re now 17 years into the fintech innovation cycle, and we’re heading into the “golden years.” Banks, fintechs and telcos are all figuring out how to more effectively engage with customers–for growth, retention, higher customer lifetime value and social good. The major opportunity, Ron believes, is that fintech can provide access to sophisticated banking services for the underbanked with convenience, and at a far lower cost.
Incumbents are now partnering with tech companies in this new era because of global needs. Ron predicts that a whole new group of companies passionately focused on financial inclusion will emerge in the near future, some with the capability to bridge industries and make them more than the sum of their parts. This, he argues, could not have happened three, five or 10 years ago. It’s a unique moment in time — a moment when industries can come together like never before.
The mobile industry has demonstrated the reach to change the lives of billions of people around the world. But it’s only by working with the financial services community that the industry can contribute to achievement of UN’s Sustainable Development Goals through financial inclusion. Our two industries have the power, and the opportunity, to put billions of people on the path to financial inclusion. With the how, the why and the when in place, it’s time to be bold for change.
Juvo is a San Francisco-based fintech company working to enable hundreds of millions of consumers around the world to build financial identities, starting with their everyday use of their prepaid mobile phone. Republished with permission.