Knowing Clients to Improve Their Financial Lives
Worldwide, two billion adults do not have an account at a financial institution, according to the World Bank’s Global Findex report. Only 41 percent of adults in developing economies have an account—and that number drops to just over 20 percent among adults living in extreme poverty. Women, in particular, are largely excluded from the formal financial system. In less-developed countries, only 37 percent of women have accounts, compared to 46 percent of men.
Most poor households operate almost entirely in the cash economy, particularly in the developing world. This means they have access almost exclusively to cash only, and possibly other items like farm products or animals for trade and barter. It also means that paying large sums for items such as land or school fees is very difficult and causes wide fluctuations in monthly household incomes.
Yet the financial solutions for these households have to be tailored and meet their specific needs. One bank account, or a “one size fits all” loan program, is not going to solve this problem. The financial services industry needs ambition and innovation in product design and delivery to respond to the sometimes complex financial lives of poor people. To do that, it has to know intimately what those people need and expect from a bank or other financial service provider.
This is one of the reasons that The MasterCard Foundation is awarding its Clients at the Centre Prize this week.
The Prize recognizes a financial service organization that best exemplifies client-centric practices with poor people in developing countries. This year, the first year of the Prize, more than 125 financial service providers from 40 countries submitted applications. An international panel of judges, supported by staff at The MasterCard Foundation, examined all submissions against five key criteria. Three finalist organizations emerged; their representatives are in Cape Town to make a final presentation to the audience at The MasterCard Foundation Symposium on Financial Inclusion which will determine the company that will be awarded the Prize.
We are delighted that we have this opportunity to highlight these innovative companies and look forward to promoting their great work together.