Financial inclusion: How to attract the unbanked to a bank.

According to the World Bank’s Global Findex latest report, 1.7 billion adults are left unbanked

Financial inclusion is when everyone, especially people who don’t have a lot of money, has access to financial services. It is a growing concern for central banks and policymakers because it bestows financial stability and economic growth. The World Bank has established a connection between financial integration and economic development, showing a connection between financial exclusion and poverty. This means that if people can’t access financial services, they are more likely to be poor.

Technology has become an important tool for achieving financial inclusion because it can reduce and simplify financial transactions and give millions of people access to financial services. Technology allows financial intermediaries to provide products and services to people who would otherwise not have access to them previously because of a lack of money, identification, or opportunities. According to the World Bank Global Findex database, approximately 3.8 billion people access mobile money providers and fintechs. This is a significant increase from 2011 when only 1.6 billion people had access to these types of applications.

The demand for mobile access to financial services is growing among small and medium-sized businesses, not just individuals. Although more and more mobile banks and money providers are being adopted, there is still room for improvement. For example, around 95 million unbanked adults in the Sub-Saharan region still receive cash payments for agricultural products.

Financial inclusion is also relevant in developed countries

Despite the common belief that financial inclusion is only necessary in developing countries, the World Bank reports that the United States has the highest number of excluded people. In other words, according to a 2019 report from the Federal Deposit Insurance Corporation (FDIC), 5.4 percent of U.S. households (approximately 7.1 million households) did not have a bank account.

Around $89 billion a year goes to fees and interest for using alternative financial services in the U.S, such as pawnshops, check cashing services, and using payday loans to meet basic financial needs. This means that many people are unable to access traditional banking services, and are forced to use more expensive alternatives which can trap them in a cycle of debt. For example, people who rely on alternative financial services may have to spend lots of time and money on tasks such as driving to pay utility bills in person. This can make it very difficult to get ahead financially.

The poorer you are, the higher the costs of cash.

Cost of Cash Study, 2017, commissioned by Mastercard and conducted by Genesis Analytics

According to the Department of Work & Pensions’ latest report, there are nearly two million unbanked adults in the UK alone. The less advantaged sectors of society are vulnerable to being denied financial services and products. However, even when vsome people manage to open a bank account, many continue to use the informal sector for most of their transactions. In fact, one in five account holders worldwide has stopped using their bank account. Therefore, the goal for financial inclusion is framed under how bona fide actors and regulated providers can better compete with the informal sector.

There are several factors that may hinder individuals from participating in the formal economy, including a lack of trust in formal institutions, lack of access to formal financial services, and a lack of education or awareness about how the formal economy works. There are also five success factors that can help individuals to outperform the informal sector, including having a positive attitude towards formal institutions, being able to access formal financial services, being educated about the formal economy, having a strong network of formal and informal contacts, and having a willingness to take risks.

Transactional accountsthere are few obvious reasons for someone on low income to open an account, especially in a predominantly cash-based economy
Payments75 % of the world’s population live in countries where cash accounts for more than 95% of payments
Remittanceinformal transfers account for 30 to 70 % of the total market
SavingsAccording to the World Bank, about one-third of adults save without a bank. Even if you have a formal banking relationship, many consumers in developing countries will still go into the informal sector to make savings
BorrowingIn developing countries, people are most likely to turn to the informal sector for their credit needs, whether or not they have a bank account with significant fluctuations worldwide.
CostThe cost structures of traditional banks often prevent them from reaching or serving low-income people and small businesses
Complexitytwo-thirds of the unbanked adults have a mobile phone but the capacity and capability of networks can be very low and not enough available bandwidth
ConveniencePeople without a bank account travel far expensive distances to pay bills. Financial institutions are too far away, mobile solutions have to be created
Cultural relevanceAccording to the World Bank’s Global Findex Database 2017, 6% (equivalent to 102 million consumers) of unbanked adults worldwide say it is contrary to their religious principles

Success factors to tackle the informal sector

Technology can make banking more inclusive, but there are regulatory barriers. This is why regulators and the fintech ecosystem should collaborate in reaching common goals for the good of the overall population, especially the underbanked and the unbanked.
  • Design, design, design: Make products that are better.
  • Re-write the rules: Create more flexible regulatory frameworks.
  • Find new roads: Identify new ways to enable access that drive usage.
  • Create win-win scenarios: Pursue shared goals, and seek collective gains.

ARYZE Digital Cash – Making dumb money smart

ARYZE will tackle the issues mentioned above in two important ways. First, we are making money fully digital (Digital Cash) so that it can operate on open-source blockchains and protocols. This will ensure that managing fiat is a ‘permissionless’ task, and anyone with a smartphone can access a trusted version of money without having to become a client of a bank or fintech. The second part of our mission is to present client tools (MAMA & MAMA Business) to enable most people to create a MAMA account and, from there, access basic financial services. Through MAMA, SMEs can facilitate the shift from in-store cash payments to digital payments, driving a lower carbon footprint of transactions and solving the information asymmetry gaps that make lending to SMEs difficult ($5 trillion financing gap a year today).

“Our solution can help anyone who needs it, whether they’re a Filipino sailor working for a large shipping company or the person delivering masks to a Red Cross refugee camp. We work with global organizations and companies to reach as many people as possible.”

Jack Nikogosian, CEO ARYZE

According to UNESCO, 773 million adults worldwide are illiterate. This means that they cannot read or write. However, there is another type of illiteracy, when someone lacks knowledge in a particular subject. For example, someone may be financially illiterate. Financial illiteracy has a direct impact on the advancement of financial inclusion. ARYZE is aware of the importance of overall literacy. Thus, it contributes to enhancing business and technological literacy through the ARYZE Academy with relevant programming, Entrepreneurship, and management courses.

Physical access to banking services is a barrier to financial inclusion for 22% of adults globally who live in rural areas. This lack of access poses challenges for international money transfers, which can be costly and difficult to manage. ARYZE will provide a border-free solution that will be accessible via mobile devices and will reduce the costs of international money transfers to near-zero. This will boost local economies in low-income regions around the world, diminish global income inequality, and help to achieve the UN SDG goal #9.

Tokenization is the process of converting something into a token. This can be done with physical assets, like property, or with digital assets, like money, stocks or digital art. Tokenization allows for programmable characteristics to be built into assets. Essentially, the process allows for terms and conditions to be ingrained into money and actions — this is commonly referred to as a smart contract.

ARYZE Digital Cash is stablecoins that are backed by government-issued assets and are free from credit, bank, and counterparty risks. They are similar to CBDCs (central bank digital currencies), as they are not subject to wild swings in value and can always be redeemed to traditional fiat. With these new stablecoins, ARYZE is providing a much-needed solution for those who want to avoid the volatility of cryptocurrencies but still want to get the advantages of using digital currencies. ARYZE Digital Cash will help to tackle money laundering, financial exclusion, and high costs in international remittances, promoting inclusion and economic growth worldwide.


This article was partially based on the facts of the Mastercard paper “Unravelling the web of inclusion” 2019. For more informative articles, have a look at our other blog posts and website.

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