Ellen Richey and Alfred Hannig

Working together, policy makers and the private sector can create sustainable financial inclusion policies for those still excluded from the global financial system. Pictured: Ellen Richey, Vice Chairman at Visa Inc., and Alfred Hannig, Executive Director at the Alliance for Financial Inclusion.

One of the greatest challenges currently facing the global financial sector is providing some 2.5 billion people with access to formal financial services. Armed with great ideas and strong work ethics, these people are potential innovators, visionaries and business owners who currently lack the tools required to transform their ideas. Giving them that access and opportunity could be a transformative global achievement.

This January, the Alliance for Financial Inclusion (AFI) invited Visa to join a small group of policy makers and private sector leaders in Davos, Switzerland, to discuss how financial inclusion could be achieved more collaboratively. The result became part of AFI’s Public-Private Dialogue platform, encouraging top public officials to cooperate with the private sector’s global leaders to translate financial inclusion policy into effective solutions.

Today, within the AFI network, there are many examples of public and private sector working together. Yet policy and regulation stewards alone cannot achieve full financial inclusion, nor can the private sector find safe and sustainable ways to reach the unbanked without policy makers’ help. The meeting in Davos was an important step in overcoming these challenges and figuring out ways to best work together for the greater good.

Dominican Republic: a case study

One successful effort between Visa and policymakers was in the Dominican Republic. In 2004, the newly elected government sought to deliver social benefits to its most disadvantaged citizens more efficiently. At the time, citizens receiving government aid were frustrated by long waits and no guarantee the support would even reach them. Visa worked with local regulators to implement a prepaid program ensuring beneficiaries could buy basic needs like food, fuel and medicine safely and conveniently with no waiting around for a check via mail, and no risk of theft of cash. We equipped local merchants distributing the subsidies with terminals allowing them to accept the prepaid cards. Thanks to this program, one million users are now saving on costs and helping renew the nation’s entrepreneurial spirit.

The bigger global picture: digital payments

Imagine a world in which everyone’s day-to-day financial needs and transactions could be served without ever having to visit a bank, carry a wallet, cash or forms of identification. Instead, proof of identification is managed digitally through biometrics and other forms of authentication. Purchases, ranging from a morning coffee to a bag of rice, are fulfilled via a mobile phone or watch; loans and credit are available to those that qualify, instantly and safely, even in highly remote areas of the world. This has become reality in some parts of the world.

In 2011, Bangladesh Bank introduced new regulations to support branchless banking. Working closely with the private sector, the central bank helped commercial banks gain access to the USSD channels of Mobile Network Operators, thereby opening up a large and growing mobile subscriber base.

Nonprofit Consultative Group to Assist the Poor reports that Bangladesh’s fastest growing provider, bKash, reached 11 million accounts by late 2013, 30 months after launching. In a separate article, bKash’s chief financial officer says as of February, the company has around 110,000 registered mobile service agents and 16 million registered customers in just four years.

Providing forums for regulators and the private sector to work respectfully and collaboratively has fueled this kind of success. When both sides partner with one another instead of competing, financial inclusion becomes more hopeful and limitless.