Addressing Financial Inclusion in Emerging Markets

Financial inclusion, broadly speaking aims at connecting every adult to the banking system, through having access to a transactional account of his or her own and enabling the ability to access when necessary appropriate to affordable credit from responsible lenders. This is an essential requirement for everyone if they are to participate fully in everyday life and the inability to do so is shown to have far reaching affects,   negatively impacting on many other areas of an individual’s life – including employment status, housing, education and their overall well-being.

Whilst in developed markets, governments have set up organisations to push forward the inclusion agenda such as the Financial Inclusion Commission (FIC) in the UK, there are many barriers to establishing such a body within emerging markets. This is due primarily to the fact that most emerging economies do not have a definite stance or overarching policy on financial inclusion already in place, making it extremely difficult to set the direction and roll out a policy that could impact the population on a national scale. This, combined with a lack of public and private sector partnerships scaled at a national level means that there are no real stakeholders advocating and supporting the need for change and therefore the financial inclusion agenda is not being pushed forward in those markets.

That said there are many areas of technology that are currently being used to try and disrupt traditional banking models and enable financial inclusion within certain emerging markets. The penetration of mobile platforms such as m-pesa for example delivered significant success, allowing money to reach the bottom of the pyramid in a number of markets. Yet there are however still fundamental gaps in enabling credit to reach vast parts of the population leaving them vulnerable to economic shocks and depriving them and their families of a fairer livelihood.

At Aire we believe that by using our unique credit scoring technology we will be able to address this issue by working with those currently excluded from society in this way. We will work with them to ensure they gain fair access to financial products by assessing their credit worthiness for products using our virtual online interview process. By doing so, this traditionally marginalised population will be able to become mainstream in consumer finance and we can assist the respective governments in fulfilling their microeconomic policy goals.

In emerging markets, we are actively speaking to various lending partners and organisations whose mission aligns with our vision in enabling fair access to financial products. We assist the lenders to overcome the hurdles of performing credit assessment in the absence of data about individual applicants by directly working with customers using our virtual interview process.

About the Author:

Dr. Srini Sundaram is a technology entrepreneur based in London with experience in financial technology, risk and engineering. He has Co-founded Aire, a FinTech startup based in London with a new credit score to help people to qualify for essential financial products. At Aire he is responsible for credit research, risk and algorithms. Prior to these ventures, he has worked in leading digital finance brands such as Wonga and leading digital lender in Europe. Srini is deeply passionate about microfinance, rural economy, its empowerment and driven by his desire to help community in need using technology.  https://twitter.com/airescore