MasterCard Center Takes Aim At Financial Inclusion Barriers
By Peter Rizzo (@pete_rizzo_)
It's a sobering reality: Despite all the advances that eliminate friction in commerce, banks still struggle to serve poor and often remote populations. Barriers exist due to the limitations of existing electronic payments networks, a lack of awareness, and perhaps most importantly, a gap in education and research that can eliminate these obstacles.
MasterCard took its latest step toward addressing this issue and including the more than 2.5 billion global consumers who live without access to financial services on November 4 with the launch of its MasterCard Center for Inclusive Growth.
The new research center will promote financial inclusion worldwide by working with governments, academic institutions and nonprofits to create and curate knowledge that supports financial inclusion.
"Through the center, we will engage academic thought leaders and institutions from around the world to advance the research, publishing the results in an open-source environment for academia, governments, nonprofits and other private companies to access," Shamina Singh, Executive Director of the MasterCard Center for Inclusive Growth, told PYMNTS.com.
To discuss the center's goals and initiatives, and as well as the challenges MasterCard expects along the way, PYMNTS.com spoke with Singh in an exclusive interview to learn more.
PYMNTS.com: You recently announced the launch of the MasterCard Center for Inclusive Growth. We understand that this is going to focus MasterCard’s research and philanthropic investments on financial inclusion and economic development. What made MasterCard decide to do this?
Shamina Singh This wasn’t a decision that was made lightly or quickly. At MasterCard, we see a world that is very connected for some, but not for all. For example, while technology is doing many good things, 85 percent of retail transactions are still in cash and 2.5 billion adults have no access to formal financial services – a situation often linked to poverty.
We believe that everyone has the right to safe, affordable ways to save, invest or transfer funds and electronic payments can be a driver of financial inclusion and economic empowerment. Inclusive growth generates economic growth, the benefits of which are widely shared.
Our research tells us that increased GDP alone is not enough. Economies need inclusive growth that fosters sustainability and equitability to flourish evenly over time. The opportunity to combine both our commitment to research and financial investments in this space made sense and we are excited at the prospects to make a real difference. Success to us is a global economy that’s actually closer to being truly global; where more people from more places are participating in it, contributing to it and helping it grow.
You mention the 2.5 billion adults who lack access to financial services. Could you describe what some of the challenges are in advancing financial inclusion and how you see the Center playing a role in addressing these concerns?
MasterCard’s CEO, Ajay Banga, recently returned from the FI 2020 Global Forum in London, a great meeting organized by the Center for Financial Inclusion at Accion. There he spoke about some of the barriers to financial inclusion including lack of identity, the challenge facing banks to serve poor and often remote populations, the need for greater education and the positive impact of creating an electronic payments network for the money coming into them.
Many of these barriers can, and will, best be addressed through public-private partnerships, and we are seeing greater interest in these as governments, nonprofits and the private sector embrace the concept of shared value.
But, financial inclusion is not an end in itself, but a means toward economic development and poverty alleviation. And a big challenge to achieving these goals is a lack of high-quality and relevant information critical to sound decision-making. Through the Center, we will engage academic thought leaders and institutions from around the world to advance the research, publishing the results in an open-source environment for academia, governments, nonprofits and other private companies to access.
The Center will also help focus our global philanthropic investments on entrepreneurship, which we see as an onramp to financial inclusion, and economic development. With women and youth comprising a disproportionate share of the world’s poor and financially excluded, there will be a focus on investing in programs that help reach and empower them to take greater control of their financial future.
In the release you talk about equitable and sustainable economic growth. What does that mean and how will the Academic Advisory Council be used by the Center to advance research in this area?
We are living in an increasingly “flat” world where more people from more countries are participating in the global economy than ever before. There is an unprecedented rebalancing where countries long on the periphery are gaining an economic foothold. Many are even seeing accelerated economic growth that enables them to begin closing the gap with developed countries.
However, while growth rates are higher than ever in many emerging markets, income distribution within them has deteriorated, stressing social stability and threatening to undermine economic development altogether. Long-term success requires inclusive growth that’s both sustainable and equitable.
We are very excited to have recruited an initial group of Senior Fellows to serve on the Academic Advisory Council of the Center. In a few weeks, they will be convening in New York to discuss the global economy and being to lay out a research agenda for the Center.
What else is MasterCard doing to advance financial inclusion and economic development around the world?
Beyond forming the Center for Inclusive Growth, MasterCard has been committed to advancing financial inclusion efforts around the planet. This year alone, MasterCard launched more than 10 programs designed to bring financial access to more than 350 million people. And we were excited to see a recent FinScope South Africa 2013 study that found the program we’ve been working on with the South African Social Security Administration (SASSA) and Net1 is responsible for 1.9 million people being added to the banked population in 2013.
And our efforts are not just commercial in nature. We have also been involved in industry-wide efforts to expand financial inclusion through a contribution of research and thought leadership such as with the Better than Cash Alliance, FI 2020, and the World Economic Forum.
Shamina Singh Executive Director, MasterCard Center for Inclusive Growth; Global Director, Government Social Program Solutions MasterCard
Shamina Singh is the Global Director for Government Social Programs and Solutions at MasterCard. In this position, she works with governments and public sector stakeholders to leverage MasterCard technology to transition public programs from paper to electronic and addresses global issues such as financial inclusion and transparency. Prior to joining MasterCard, she headed Government and Public Affairs for Nike and spent five years with Citigroup's Global Community Development Group. Over the course of 15 years in the public sector, she held senior positions within the Clinton Administration, the US House of Representatives, electoral campaigns and NGO's. Singh is a Young Global Leader with the World Economic Forum and a former Member of their Global Agenda Council on the US. She is a Henry Crown Fellow with the Aspen Institute and served on US President Barack Obama's Advisory Commission on Military Leadership Diversity.