Financial Inclusion

Dawn Of The Financial Inclusion Revolution


In discussing the Financial Inclusion Tracker – a joint project between PYMNTS and Mozido – MPD CEO Karen Webster and Michael Liberty, Founder and Leader of Global Strategic Initiatives at Mozido, examined not only the latest results but, more importantly, what can be done to address the problems that were brought to light.

Liberty firmly believes that a “financial inclusion revolution” is nigh, particularly in India – a region that often (and undeservedly) receives short shrift in comparison to China and Africa when it comes to addressing the issues of the underbanked. The elements for sweeping change are in place in that very important country. Liberty shared his thoughts on how, starting with regulatory reform, the citizens (in particular women) and economic infrastructures of villages in India can be empowered to make it a “crown jewel of achievement in financial inclusion.”


KW: We’re going to talk a little bit about the latest trends in financial inclusion – a topic that I know you personally have a lot of passion for and one that is clearly at the heart of Mozido’s mission.

There are a couple of points that I wanted to surface that came out of the report that we published earlier in the month.

First was the World Bank report that said, thanks to the initiative of companies like Mozido, about 700 million more people now have access to banking-like services. That sounds like good news, yet there are still 2 billion people living without access to financial services, traditional or otherwise.

I wanted to get your reflections on that – the good news, and of course what you think remains to be done.

ML: While there is good news in the report, I think it also highlights how deficient a lot of the world is in providing proper support for financial services where they are needed. We really see this as the beginning days of a revolution of financial inclusion.

Most everyone is focused on China and Africa, while we’re actually focused on China, Africa and India. There’s a devastatingly poor ecosystem that exists across villages that I’ve traveled to in India, equivalent to parts of Africa and China.

The good news is that the world has woken up to the fact that there exists this incredible need – and with it, an opportunity to lead a financial revolution for the financially disenfranchised people of the world, and bring them into an ecosystem of hope, opportunity and financial fairness. That has been the thesis of Mozido’s business model for many years.

I started this campaign, if you will, many years ago … and when you’re leading this sort of thing, oftentimes people dismiss it as “just another do-gooder program.” I looked at it as not just a way to do good and put together a successful business, but also to build something truly great for the world. So I’m very excited about the findings.


KW: I love your characterization of the efforts around financial fairness. I want to pick up on something you said, which is that everyone is focused on Africa and China – but India is also such an important part of the world.

Regulation has really held back a lot of the progress that we could be making in India. I know that’s in the process of changing, but what’s your perspective, as someone who’s been on the ground and all over the country, on what needs to change, and what are you doing to drive that change?

ML: I think that Africa was kind of the Wild West, with no regulation, while China is regulated extensively. India, I think, is leading a very positive regulatory revolution. Under Narendra Modi [the Prime Minister of India], the country has been very focused and proactive.

There is now a willingness to allow payments bank licenses – and that’s something that’s about to occur – to be able to bring financial services into the rural villages, where there has been none whatsoever. Having regulatory reform is a really good thing. India was slow to adopt the services, because it was trying to be very thoughtful about what would be put in place.

We’re very pleased with what they’ve done; we think that they’re going to be a crown jewel of achievement in financial inclusion over the next 24 months, even.


KW: That’s a pretty short horizon, all things considered.

ML: Remember – we’ve been at this for a long time, weeding the gardens and hoping things would grow. Finally, we’re seeing everything start to blossom.

I really do believe that India will be very fast moving, for a number of reasons. It’s got a dynamic economy; there’s a technology revolution underway; and it’s got some of the smartest people in the world: [global enterprise group] Tata is the top IT film in the world, now – they’re right up there with IBM.

India’s got this brilliant ecosystem of talent combined with a leadership that’s got a very pro-business approach, and this devastated population that needs it so badly. The right recipe is in place, and we’re very keen to play a big role in bringing it all to fruition. We’ve definitely got the right people in place to execute the plan.


KW: Speaking of devastating need…I want to highlight something else that came out of the World Bank study: it’s what they call the “gender divide.”

Women overall lack access to financial services of any kind more so than men do, by a pretty significant margin. Certainly it varies by country … but when women have access to financial services, lots of positive things happen: taking control of the household income; becoming the household CFO, in a sense; saving more; really making the family and the local economy that much stronger.

What are your observations and thoughts on that point?

ML: On a personal level, I’m very, very big on women’s rights and children’s rights. So it’s a big focal point in what we’re trying to achieve.

Indeed, the lowest default rate in the world’s financial ecosystem – including the United States’ ecosystem – is on microloans to African women. That’s a pretty telling statistic. If you really break it down into basic human terms, the mother is the heart and soul of the household. She’s the caretaker. And in fact, when women are the custodians of the financial resources – which is the case in many of these foreign countries – great things happen when you empower them.

I’m particularly excited about what we’re doing in India and Africa, where we’re focused on facilitating through Mozido microloans that charge appropriately – not the outrageous shylock prices that many of these micro-lenders use to prey upon the poor. The poor and less fortunate are the ones that indeed need the most beneficial, low-cost services, not being treated unfairly and subjected to predatory pricing.

We think that there’s another great opportunity not just to empower women in these villages, but the areas’ overall economic development. Imagine, in India, a woman who sits and makes magnificent jewelry but, today, she has no money to buy the beads and the raw material. So she has to pay outrageous fees for the microloan, and then be subjected to selling her goods as quickly as she can for tiny amounts of money, just to be able to pay back this shylock and still somehow have a little bit to feed her family.

I see the world differently. I want to provide lower cost financing to empower economic development so that woman can buy a month’s worth of beads and raw material, she can make the jewelry; she can then go into one of our merchants with the jewelry, post it on the Web, and someone in New York City can say, “that’s a magnificent gift to buy my wife because she loves Indian art and Indian jewelry,” and buy for eight bucks, which amounts to three rupees. And the transaction can occur electronically at the merchant agent location in that village, in some remote area of India.

That’s economic development; that’s empowering people, not just talking about it. And that’s what we’re doing.

We think that it’s going to be the most important economic tool, empowering women in these rural areas and impoverishing economies to build a better life for their families. Whether it’s making jewelry, or it’s growing vegetables, or it’s raising goats – they need access to capital. And they have proven to be tremendous custodians of financial resources when they have them.


KW: One of the things that you mentioned was the variability in solutions providers that are in the space, trying to serve the community of the underserved.

We track almost 60 providers, now, through this Financial Inclusion Tracker that PYMNTS and Mozido work together to publish. It was interesting, in this particular report, to learn that the average score among these providers – in terms of the ability to serve those who most need financial access – was pretty bad. It actually dropped from the month before, to a 64 (out of 100).

Why is there such a problem in serving such a vast population of people who need these services?

ML: Because it’s hard work. It takes years and years of building an ecosystem to support the infrastructure required to cover the vast majority of these people that need the services in rural areas.

That’s why I’ve been so focused on my merchant agent network, so that I have 150,000 stores in India that become the points of entry to engage with these unbanked consumers – where they can go and get a mobile wallet, and access financial services.

A lot of these big enterprises want to do good, but they have no execution capability. They have a grandiose plan, they receive some capital, and they say, “we’re going to do this in this economy.” But they can’t pull it off.

It’s about picking the right partners. My hero is Bill Gates, because he cares so deeply about people. Despite his absolutely extraordinary success, he is the biggest humanitarian alive – focused on those issues like a laser. If I could do even a fraction of what he’s done for the world, I’ll feel like I’ve done my part in life. Leaders like him give people like me a beacon and an example to follow.

That’s what we’re trying to do on the execution side. We’d like to think that we’re going to be the execution solutions provider for the companies that want to do well, and provide these services, and do good – like Bill and Melinda Gates with the Gates Foundation have done.


For more Financial Inclusion Tracker reports, click here.

To download and listen to the full version of the podcast, click here.



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