Barclays calls for greater collaboration with NGOs to improve global access to financial services

17 June 2010

‘Banking for Billions’ examines the current global landscape of financial inclusion, studies recent trends, the impact of the economic downturn and assesses the potential role of new technologies and delivery models. It concludes that although there is a strong groundswell behind efforts to improve financial inclusion, there are also numerous barriers preventing further progress, including a lack of education, outdated regulation and policy, and other cultural factors.

As the report shows, financial inclusion is not an issue that can be solved by one sector in isolation: collaboration is vital. This year Barclays joined with NGOs CARE International and Plan International to launch ‘Banking on Change,’ a three-year £10 million microfinance initiative. This partnership is aimed at improving the lives of 500,000 people in eleven countries across Africa, Asia and South America by promoting savings led community managed microfinance in disadvantaged communities.

The report is the second publication in the Barclays Social Intelligence series which tackles global social and environmental issues and the role of the financial services sector in delivering solutions.

Key findings from the ‘Banking for Billions’ report include:

• Despite considerable progress, a large part of the global population still lacks access to financial services. Two and a half billion of the world’s adults remain “unbanked” and do not use formal or semi-formal financial services

• New technologies, such as mobile banking, combined with innovative business models can deliver a step change in effectively servicing low income customers. A billion people with mobile phones don’t currently have a bank account, representing an attractive opportunity for delivering banking services on a mobile platform

• The global economic downturn has had a considerable impact, despite previous surveys of microfinance institutions which had raised hopes that they would be insulated from the “real economy”

• Tightened credit conditions have led to an increased emphasis on savings, rather than credit products. Access to capital has become more difficult for microfinance institutions, who are now looking for ways to mobilise deposits

• Institutional, policy and regulatory frameworks need to evolve to provide a robust platform for further innovation

Deanna Oppenheimer, chief executive of Barclays UK retail bank and member of the UK Financial Inclusion Taskforce says: “Access to financial services lifts people from poverty and fosters economic growth, but what this research shows is that there is still a long way to go with efforts to extend financial inclusion. The solutions lie in innovative products and access points, new technology, change to outdated policy and increased financial literacy. But none of these can solve the problem in isolation.”

“The report also shows there is a growing consensus among experts that the most critical issue now is how to extend financial inclusion to more of the world’s population, and that the only way of ensuring progress is for financial institutions to work with NGOs and policymakers to create innovative solutions and a sustainable policy platform.”

On getting the balance right between technological advances and effective regulation, Deanna says: “Mobile telephony, smart cards and electronic transfers have revolutionised mainstream banking and offer great potential to further improve financial inclusion. However, the regulatory framework which governs their fair and legal operation must be carefully designed to ensure legislation does not hamper future innovation.”

“The report also recognises these are not solely problems for the developing world. The repercussions of financial exclusion are just as evident in developed countries. Life is harder and more expensive. In the UK, the annual cost of not having a bank account is estimated at around £1,000.”  

ENDS

For more information contact Kathryn Richards: +44 (0)207 934 9347, richards@careinternational.org