The moral obligation to promote financial inclusion
This blog is part of a series published on WEFLIVE from young leaders in the One Young World community who are addressing issues across the world relating to the World Economic Forum 2017 theme of 'Responsive and Responsible Leadership'.
Based on estimates from the World Bank, globally there are about 2 billion people without access to any form of finance. Simply, this means that every third person on the planet is excluded from the financial ecosystem and is not afforded the opportunities that come with saving money and accessing credit. Figures in developed countries don’t paint a good picture either; recent research by MasterCard found that 138 million people in Europe lack any form of access to formal banking.
Financial exclusion is the greatest hindrance to universal economic development, as total exclusion from the benefits of global wealth causes the equality gap to grow dramatically. Providing meaningful access to a functional financial account means that disenfranchised individuals are given the means to invest in their children’s education, absorb economic shocks, and establish flourishing businesses. With regard to social and gender equality, having financial access is an empowering tool which offers the basics of ownership and decision-making.
Globally, regulatory bodies are aware of how vital financial inclusion is; significant progress has largely been made possible with the availability of new technology. The development of technologies has enabled millions of people, across continents, to redefine their social and economic status to become participating members of their societies.
Regulations are meant to keep the financial ecosystem and its users (companies and individuals) secure. However, as with every major sector nowadays, regulations are not on par with the speed of development. This is especially true of the banking sector as it is by far the most regulated industry. Most of these restricting classifications are related to personal identity and compliancy with local regulations; this ends up hindering access to services for millions of people.
This brings into question the crucial matter of what is the lowest level of proof of identity and its relationship with the financial ecosystem. With the major influx of refugees in Western Europe, the matter of identification triggers a major social and administrative issue. People are arriving without any form of ‘legitimate’ identification; how are they supposed to access any traditional services, like opening a bank account?
As people are prevented from starting their lives anew, the gap between those of varied economic status will only grow wider. These disadvantages have been highlighted by the refugee crisis; over a billion people globally have to endure these same financial hardships.
Imagine the scale of impact if reliable identification systems could be set up to address this inequality; billions would benefit. Imagine a digital identity that is not restricted to traditional government documentation (for example, ID cards, passports and birth certificates) which is hard to obtain and keep track of in many regions. Digital ID would follow the user and their digital footprint and make validation a more simple affair. Imagine a solution that is open to anyone regardless of their background or residency status, or a tool that allows access to the most important services, free of charge; a solution that sees no borders.
At Taqanu, we are working on a regulated identity solution that would allow anyone to access the global financial ecosystem with the use of a smartphone. If you are interested, please follow us on Facebook or Twitter or visit our website: www.taqanu.com
Balazs Nemethi is a One Young World Ambassador from Hungary, and the Founder & CEO of Taqanu Bank, which seeks to make banking available to those without a fixed address and grant them access to Europe’s financial system.