Visa and Citigroup, working with the Center for Financial Inclusion at Accion, plan to connect governments, NGOs, the private sector and others to advance global financial access by the end of this decade. Their Financial Inclusion 2020 campaign aims to do this by increasing access to credit, savings, payment tools and insurance for people all over the world.
“Technology and new tools, as well as the growing interconnectedness of global trade and commerce, make full financial inclusion an increasingly realistic goal,” says Bob Annibale, global director of microfinance and community development at Citi, in an email. “There’s been a movement for some time around various aspects of financial inclusion – from microfinance to mobile money – which has seen a range of stakeholders operate within their own silos and make great progress.”
The campaign launched a little more than a week after MasterCard's president and CEO, Ajay Banga returned from Africa as part of a separate financial inclusion initiative.
"Half the world’s adult population—2.5 billion—lack access to basic financial services … Visa’s products and services can be powerful tools for financial inclusion because they offer a more secure and convenient way to send, receive and store money in ways that integrate with the daily financial lives of the poor," Bill Gajda, Visa's global head of mobile product, said in an emailed statement provided through a representative.
The "aspirational goal" is to provide access to financial services to everyone, says Elisabeth Rhyne, managing director of the Center fof Finanicial Inclusion.
The end result may look different in developing countries than it does in developed ones. "It's much more than banking the unbanked," she says.
Banks and the card brands are also responding to an increasing number of non-banks seeing success offering services to the underbanked, says Madeline Aufseeser, senior analyst at the Aite Group.
While the Visa and Citi campaign doesn’t mention specific products and services to be offered, Bob Hughes, managing partner at Bank Solutions Group, says prepaid and payroll products are probably on the companies' radar.
Payroll cards have been a successful product in Latin America, creating “a way for small businesses and those employing day laborers to pay people and keep things documented without needing a checking account,” Hughes says. Plus these products make transferring money across borders easier, he says.
Citi already works in Latin America with mobile payments technology, says Annibale. Citi’s Banamex unit in Mexico established an alliance with América Móvil, which allows customers to use mobile devices to set up bank accounts, transfer and receive funds, make purchases in stores, withdraw from ATMs and pay bills, he adds.
Also by getting cash-reliant consumers to shift to cards, banks could get a window into to people’s payment habits. Banks could then cross sell loans by determining credit worthiness based on this transaction history.
“A branded prepaid card would allow a consumer to build a buy-and-spend track record that would allow them to join the full banking community someday,” says Hughes.
While this thought process is common among big banks, real-life experience doesn’t echo the sentiment.
“The assumption is that everybody wants to be banked,” Hughes says. “In fact very few consumers [in Latin America] actually moved up the banking chain; the move from unbanked to banked doesn’t happen near as frequently.”
But prepaid cards are no longer considered unorthodox, Aufseeser says. “In this country it’s more the case that prepaid products are replacing checking products,” she says.
Through the financial inclusion initiative, “what we’re looking for is to make sure that these newer consumers have the same kinds of choices that the current mainstream financial consumer base already has and that these choices have low transaction costs and increase transparency,” Annibale says.
The Center for Financial Inclusion at Accion launched in 2008. In 2011, the group surveyed more than 300 industry experts and published Opportunities and Obstacles to Financial Inclusion based on the results.
Within the campaign, Visa chairs the group focusing on how technology can reach new customers, increase security of diverse products and lower costs. Citi chairs the financial capability group, working towards financial education of clients to know and exercise their rights.
In October 2013, the companies will present a roadmap in London at the Financial Inclusion 2020 Global Forum to engage a wider audience that can move the initiative forward.