Two and a half billion people live in poverty and lack access to the financial tools that can improve their lives significantly. The global financial system – as impressive as it is – fails them. Yet, for the first time in history, three major developments make it realistic to imagine a world where we can change that: technology (especially digital and mobile communications), big data (with its capacity to better understand individual behavior), and microfinance (which brings affordable financial tools to the poor) make a vision of a financially inclusive world a real possibility.
In the past, the poor have simply been excluded from the mainstream financial system. Their transactions were too small, the distances were too long, and, generally, it was just too costly to reach them. In the last few years, however, the digital revolution has changed the cost calculation radically, to the point where we are starting to rethink all our presumptions. Mobile phones have become ubiquitous, even among those living on less than $2 a day – today, 85% of the world’s population has access to one. For the first time, transaction costs are being cut dramatically, and distances are no longer insurmountable. We can envision providing for the financial needs of the poor in a scalable, sustainable, and even profitable way.
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