2019 FINANCIAL INCLUSION SUMMIT
Interview with Drew Propson, World Economic Forum
Drew Propson is Project Lead for Financial Services Initiatives at the World Economic Forum, based in New York. We caught up with her ahead of the summit to discuss the definition of financial exclusion, the role technology can play in building prosperity, and more.
Q. The definition of “financial exclusion” can be a challenge in itself – and data surrounding financial exclusion is often hard to come by owing to the nature of some underserved populations. Can you provide us with a working definition?
A. I’d like to frame the issue differently, and propose that we should be thinking about financial inclusion as much as “exclusion”. By ‘financial inclusion’ we could understand both access to financial products, and the use of those services and products. I think this distinction matters because ‘access’ in itself is not always a problem – we have the technology to provide many people with financial services, after all. The greater challenge is to coordinate relationships between different players, such as government, the private sector and civil society, to deliver economic empowerment through financial services. So I’d see ‘financial inclusion’ as a better working model.
Q. What role do you believe technology can play in ending financial exclusion?
A. I think our biggest focus should be on the people component – how people connect to technology. The concept that “if you build it, they will come” doesn’t really apply when it comes to enabling underserved populations. I think we need to work together to improve the design aspect of financial technologies so that these technologies take into account human needs – and the business case. There are areas in which the private sector maybe doesn’t move quickly because it can’t see a business case. That’s where multi-stakeholder partnerships can help, by building the infrastructure to reduce costs for private sector players to engage, for instance.
Q. We’ve seen explosive growth in mobile technologies in some emerging markets. Is that one pathway you’d see as fruitful for financial inclusion in the future?
A. Yes – we’ve seen a lot of growth in markets, particularly in East African countries. Though there’s still room for a lot more development in the mobile systems of many emerging economies. And we could envisage the effective bundling of services over the mobile channel – with micro-insurance and other players delivering positive outcomes for end users based on their payments history. Partnerships between private sector players, and between the private and public sectors, are again important in this context.
Q. Would you see the successful inclusion strategies used in Southeast Asia as models that can be used elsewhere?
A. Absolutely – certain lessons learned in Southeast Asia can be applied globally. We could look at Indonesia, where we’ve seen the largest improvements in financial inclusion over the last few years, and ask ourselves which aspects of that experience might be replicated effectively elsewhere. We also see that Indonesia still has room for improvement, and perhaps lessons learned elsewhere, such as enabling digital utility payments, could be implemented to drive inclusion further. There are also positive data one can draw from Southeast Asia in terms of systemic improvements in the economy as a result of improvements in financial inclusion. I would caution, though, that it is difficult to extract which factors have contributed most to this improvement.
Q. How do you think the Nordic countries – and this summit – can have a positive effect on financial inclusion?
A. It’s possible to look at the gap between mature markets and emerging economies and not see too many connections, especially when you look at markets like Sweden with a highly digital economic model. However, I think it’s about adapting what these countries have done, rather than replicating it: every market has its idiosyncrasies. If you look at mature markets like Germany and Japan, they still have a heavy reliance on cash, despite having developed digital infrastructures. These idiosyncrasies are one reason why my wish for the summit is that we’ll consider financial inclusion issues in developed as well as emerging markets. These issues take on more importance when you consider nearly one in five US households consider themselves underbanked at a time when bank branches are closing across the country.
The Financial Inclusion Summit takes place in Oslo, Norway, on 28 March 2019. To find out more or request an invitation, visit: https://financial-inclusion.com/#register
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