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20 May 2013

The Path From Financial Empowerment To Inclusion

The road to bringing the next 500 million consumers into the financial services mainstream is indeed paved with good intentions.

It’s a path that many are discussing at the “Extreme Inclusion: Development, Dignity and Financial Services” event, taking place May 2 and 3 at the Fletcher School at Tufts University in Medford, Mass. Supported by MasterCard and the Bill & Melinda Gates Foundation, Extreme Inclusion purports to ask a tough question: is the supposed progress we’re making towards increase financial inclusivity real?

To learn what MasterCard is doing to support financial inclusivity, PYMNTS.com spoke with Ron Hynes, group executive, global prepaid solutions at the network to discuss his views on the road to assisting the underbanked and underserved.

According to Hynes, MasterCard’s goal is to lead the underserved on a path from “financial empowerment to financial inclusion,” and to improve the lives of those who lack access to financial services in both developed and developing economies.

“I don’t think you can get to the next 500 million consumers without going into new markets that we have not served, both geographically and demographically,” Hynes explained.

Hynes said that in order to better provide the undeserved with access to financial tools, companies like MasterCard and local governments have to work together in their mission to deliver the same objective. Describing financial inclusivity as a “private sector and public sector initiative,” Hynes points out that in many countries – and especially in those with developing economies – a large percentage of wealth is held and distributed by governments, but it often reaches citizens inefficiently.

“This comes in the form of government payroll or social benefits; governments around the world are one of the major sources of employments. And so there is a tremendous amount of money that flows from government to consumer,” Hynes said.

“But if government benefits are delivered to me in the form of cash, there is an opportunity from the time that cash leaves the government’s coffers and ends up in my hands, that what was supposed to be $100 could end up as $50 or $60,” he noted.

This, according to Hynes, is where MasterCard and other financial institutions have an obligation to serve the underbanked, too. By helping to facilitate electronic disbursement of government funds – through payroll cards, for example – FIs and governments can team up to bring added safety, security and convenience to the lives of thousands through fairly basic financial tools.

“For security, it’s a safe way to keep my money, and I don’t have to walk around with my entire net worth in my front pocket. It’s also gives me convenient access to my money when I need it, but not when I don’t,” he said.

In addition to more tangible benefits, Hynes also cites an increase in “self-esteem and dignity” from many underserved who gain first-time access to financial tools, helping the underserved along the path from empowerment to inclusion.

“There’s a sense that, I’m like everyone else now, I can pay, I do have a MasterCard, I do have a bank account, and I have the ability to pay bills more conveniently,” Hynes said.

So what does Hynes believe are the most important takeaways people should get form the Extreme Inclusion event? According to the MasterCard exec, it’s difficult to narrow down, but that the needs for patience, equality and adjustment are key.

“At the end of the day, inclusion is not easy. It doesn’t happen over night, and it looks different everywhere you go,” Hynes said. “For any economy to grow and prosper, you have to bring affordable financial services and capabilities at all levels of the country: not just for the rich, but for the folks that are actually building the economy day in and day out.

That’s what MasterCard is doing, but we have to rethink the way we do business, because the business models that allow us to serve the banks of the world need to be adjusted and adopted to serve the underbanked and underserved. “ 


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