Study: Financial Inclusion Can Generate $380 Billion Market for Banks

A recent report by professional services company Accenture and humanitarian organization CARE International UK has explored how banks can tap an additional US$380 billion market by targeting micro-enterprises and introducing unbanked and underbanked consumers into the formal financial system.

The study, “Within Reach,” highlighted financial inclusion as a viable business strategy.

According to the report, closing the small-business credit gap and adding fee-based services could generate approximately $27 billion in additional revenue for banks.

Introducing unbanked adults into the formal financial system could also generate an additional $110 billion, it added.

Banks have not seen supporting financial inclusion as a viable business as yet, with 77 percent of the 30 banks included in the study focusing on short-term profit-driven commercial opportunities, or being driven by regulatory pressures, corporate social responsibility agenda or philanthropic ambitions.

Only 23 percent had financial inclusion in their corporate strategy that results in long-term, sustainable investment plans.

The report further suggested several ways on how to make financial inclusion a viable approach. This includes simplifying existing products and using digital-enabling solutions; collaborating with alternative providers and the development sector; and using digital to drive efficiency.

Louise James of Accenture Development Partnerships, commented, “It is clear that many banks recognize the opportunity of greater financial inclusion, but are struggling to make progress. This is where cross sector collaboration can play a critical role – by bringing together a range of relevant parties who can help financial institutions build their understanding of the customer needs. These partnerships, while helping banks realize commercial benefits, also ensure that new customers are integrated in a way that underpins wider social development and long term involvement in local commerce.”