Financial Inclusion at the Bottom of the Pyramid

A detailed account of how new technologies are helping people excluded from traditional financial services, resulting in large-scale industry disruption. 

About 2.5 billion people—half the world’s adult population—are effectively excluded from financial institutions and instruments largely taken for granted by the other half. For the poorest population, this means that even the simplest tasks—cashing a paycheck, sending a remittance to a family member, applying for a small loan, etc.—are either impossible or prohibitively expensive. Oftentimes, merely opening a bank account is daunting due to the onerous deposit requirements or demands for multiple identification documents. The modern banking world is built like a pyramid: cheap and effective for those who comfortably reside at the top and predatory for those stuck at the bottom. Debut authors Mehta and Realini, both veteran entrepreneurs with backgrounds in financial-services innovation, depict the plight of these “financial nomads” addled with practical burdens, not to mention their regular indignities. The good news is that sophisticated alternatives—especially ones built on easily accessible mobile platforms—now offer much needed relief. The authors discuss several specific programs that have already become widely adopted in places like Kenya, the Philippines, and Bangladesh. Not only are these systems achieving great success, they are also compelling a sea change within the all-too-exclusionary banking sector. The book includes a discussion of practical ways to improve financial inclusiveness, like revising an antiquated system for formulating credit scores worldwide. The more sweeping argument the authors make is that these looming changes will not only benefit the poorest, but will generally stimulate economic growth and encourage increased governmental transparency. This is an impressively lucid work that necessarily engages highly technical issues in accessible prose. Underlying every analytical insight is refreshing optimism regarding the future of international financial services. While readers might not agree with the sentiment expressed in the foreword, written by Jeffrey D. Sachs, that the “end of poverty is coming our way,” it’s hard to disagree that welcome changes are here, with more on the horizon.

A provocative and heartening look at a revolution in financial services.