Including the Excluded

Published : 2 years ago, on 02/06/2022

By Ron Benegbi, Founder and CEO of Uplinq Financial Technologies

From sports, to politics, it often feels like there’s little people agree on these days. It’s safe to say we live in divisive times, but thankfully there are still areas of consensus, which unify people from across the spectrum together. One such area is the topic of financial inclusion. Whether it’s legacy institutions, like the World Bank, major industry players, such as Deloitte, or charitable organizations, like Oxfam, there’s clear agreement around this issue and a growing sense of urgency in how quickly it needs to be addressed.

BUILDING A MORE INCLUSIVE WORLD

So, what exactly do we mean by financial inclusion? Admittedly, the term is quite broad, but generally refers to how easily individuals and businesses can access affordable financial products and services, such as bank accounts and credit products, which meet their needs. Unfortunately, a significant number of people around the world currently find themselves on the wrong side of this challenge. In turn, the problem is affecting growth across emerging national economies. What’s more, financial exclusion is now commonly referred to as an enabler of poverty within several developing regions by organizations such as the World Bank.

WHY IS FINANCIAL EXCLUSION SO PROBLEMATIC?

It might sound implausible, but almost 1.7 billion people in the world currently do not have access to a bank account. This staggering figure is mostly made up of the poorest people of the world. In fact, the World Bank estimates that 75% of individuals living on less than $2 a day are currently unbanked. Without this access, individuals are deprived of the essential financial opportunities that many of us consider to be standard. In turn, this problem can essentially trap an individual within poverty, making it very difficult for them to ascend the financial ladder into a more secure position.

For example, without access to bank accounts individuals struggle to receive dependable wages and can fall victim to unscrupulous business owners engaging in informal payment methods, which can be irregular and illegal. In turn, individuals in these circumstances are often underpaid, and at the very least find themselves unprotected from official labor protection measures sanctioned under law. Alongside the world’s poorest people, the growing problem of financial exclusion seems to be disproportionately affecting other marginalized groups, including women and immigrants.

HOW DO WE FIX IT?

There is no single ‘fix’ to the issue of financial exclusion, but different sectors can enact new measures that partially address the challenge. For example, businesses in the banking and credit lending sector must begin to prioritize modern underwriting models, which go beyond the existing legacy solutions that increasingly look antiquated within a modern context. To this end, it’s worth noting that many of the screening processes used within these sectors remain largely unchanged after nearly four decades of use, despite new and more effective systems now being available.

Ultimately, sectors like banking and credit lending must find ways to leapfrog 40 years of technological and data advancements. To do so, it’s essential for the current ‘one size fits all’ models of credit assessment be abandoned, with more nuanced, tailored solutions coming to the fore instead. The moment for change is now; this is not a case of ‘not fixing what isn’t broken’. The global economy is being held back by its current reliance on dated systems, and as mentioned, it’s having real-world consequences that adversely affect the quality of life of some of the world’s most vulnerable people.

THE DAWN OF A NEW ERA

The good news is that there’s now a real drive across the financial community to end this problem. In recent times, we’ve seen financial exclusion identified as an issue by businesses and organizations across the industry. This attention has helped to put the issue on the radar of almost everyone in the sector, as well as those outside of it. Alongside this growing pressure for change, there’s an increased appreciation that the issue of financial exclusion is holding back the world’s economy from achieving maximum growth, which benefits nobody.

Additionally, there are new solutions that go beyond existing credit assessment methods to factor in more relevant tenets of business success, such as work ethic, peer to peer relationships and community connectedness. Rather than being optimized for the established, included and conventional customer, these new systems enable financial institutions to serve a wider array of individuals. It’s a long overdue change, but now needs buy-in from those companies most closely connected to the process. Should this happen, the global community may soon see a welcome increase in levels of financial inclusion.

UPLINQ: A TOOL FOR CHANGE

At Uplinq Financial Technologies, we’re committed to being at the forefront of this change and want to help create a more financially inclusive world for all. As a business, we’re leading the fight to place new, modern credit assessment methods into the hands of financial institutions, non-bank lenders and any organization that deploys capital to a small business. With solutions like ours, these organizations can leverage billions of alternative data points to generate scientifically validated and regulatory compliant lending decisions. Accordingly, both our system as well as a handful of others are helping better serve those currently excluded from traditional financial services and thus improving levels of financial inclusion globally.

For more information about Uplinq, please visit: www.uplinq.co