Poverty hurts everyone. If we can create pathways for people to escape poverty, once and for all, everyone else will benefit as well.
For some time now at the Bill & Melinda Gates Foundation, we’ve believed that digital financial services are the most effective way to provide that pathway. And a new report recently released by the McKinsey Global Institute illustrates just how great the benefits can be.
In Digital Finance for All: Powering Inclusive Growth in Emerging Economies, McKinsey Global Institute reports that digital financial services can add 1.6 billion unbanked people to the formal economy. As a result, this would create 95 million jobs and increase the GDP of developing countries by $3.7 trillion—the equivalent of Germany’s GDP—by 2025.
For anyone with a stake in helping economies grow and thrive—which includes every business, government and NGO in the world—this is huge news.
Mobile money and other forms of digital finance used to be seen as a strategic way of reaching people who couldn’t previously afford or access financial services. That’s absolutely accurate, but it doesn’t tell the whole story. Now we know that digital finance can be a strategy for a much more universal goal: economic growth.
How exactly will digital banking translate into trillions of dollars in GDP? Some of that growth will come from the additional investments in the economy that billions of new financial customers bring with them. But most of it will come from the increases in productivity and efficiency that digital financial services make possible.
Across developing countries, more than 90% of all transactions are conducted in cash. This is extremely time-consuming and labor-intensive for financial providers. Governments could gain $110 billion per year from reduced leakage in public spending and tax collection.
With digital financial services, payments are direct, secure and recorded. They take virtually no time at all and require very little overhead compared to brick-and-mortar banks and hands-on transactions.
Digital financial services help citizens be more productive as well. They can accept wages, pay bills, share money with family and perform numerous other transactions at will, using their mobile phones or computers. Without this convenience, people have to use cash—which can mean missing work to travel half a day and then wait in line for hours at a government or vendor office. From saving time and energy to securely saving money for the first time in their lives, the benefits of digital financial services are profound for the unbanked.
The mandate, then, is pretty obvious: let’s make digital financial services ubiquitous, especially in countries where the unbanked are concentrated. Let’s follow the examples set in Tanzania, India, Mexico and several other nations around the world that are embracing digital financial services across the public and private sectors.
And let’s work together. Collaboration across sectors and industries is the only way to marshal the resources and expertise necessary to make “digital finance for all” a reality.
The bedrock of this reality will be the digital infrastructure that facilitates billions of daily transactions. The roots are in place in many countries. We must continue improving and expanding mobile and internet connections around the world.
We need a vibrant and diverse market of financial services providers, with banks, startups, mobile network operators and other non-banks competing for customers. This requires a regulatory environment that both protects customers and encourages providers to dive in and innovate.
Finally, we need products that serve the needs of this untapped customer base. Despite its shortcomings, cash is useful—it’s accepted almost everywhere—and familiar. To rival and eventually supplant it, we need to design low-fee, user-friendly products that are as widely accepted as cash.
It’s no small task. But we have the technology. We have pioneers on every continent to inspire us. And whether we measure it in GDP, jobs or the number of families no longer trapped by poverty, we have more than enough incentive to build the digital, inclusive economy we all deserve.
Read More - http://time.com/4508166/digital-finance-and-economic-development/
For some time now at the Bill & Melinda Gates Foundation, we’ve believed that digital financial services are the most effective way to provide that pathway. And a new report recently released by the McKinsey Global Institute illustrates just how great the benefits can be.
In Digital Finance for All: Powering Inclusive Growth in Emerging Economies, McKinsey Global Institute reports that digital financial services can add 1.6 billion unbanked people to the formal economy. As a result, this would create 95 million jobs and increase the GDP of developing countries by $3.7 trillion—the equivalent of Germany’s GDP—by 2025.
For anyone with a stake in helping economies grow and thrive—which includes every business, government and NGO in the world—this is huge news.
Mobile money and other forms of digital finance used to be seen as a strategic way of reaching people who couldn’t previously afford or access financial services. That’s absolutely accurate, but it doesn’t tell the whole story. Now we know that digital finance can be a strategy for a much more universal goal: economic growth.
How exactly will digital banking translate into trillions of dollars in GDP? Some of that growth will come from the additional investments in the economy that billions of new financial customers bring with them. But most of it will come from the increases in productivity and efficiency that digital financial services make possible.
Across developing countries, more than 90% of all transactions are conducted in cash. This is extremely time-consuming and labor-intensive for financial providers. Governments could gain $110 billion per year from reduced leakage in public spending and tax collection.
With digital financial services, payments are direct, secure and recorded. They take virtually no time at all and require very little overhead compared to brick-and-mortar banks and hands-on transactions.
Digital financial services help citizens be more productive as well. They can accept wages, pay bills, share money with family and perform numerous other transactions at will, using their mobile phones or computers. Without this convenience, people have to use cash—which can mean missing work to travel half a day and then wait in line for hours at a government or vendor office. From saving time and energy to securely saving money for the first time in their lives, the benefits of digital financial services are profound for the unbanked.
The mandate, then, is pretty obvious: let’s make digital financial services ubiquitous, especially in countries where the unbanked are concentrated. Let’s follow the examples set in Tanzania, India, Mexico and several other nations around the world that are embracing digital financial services across the public and private sectors.
And let’s work together. Collaboration across sectors and industries is the only way to marshal the resources and expertise necessary to make “digital finance for all” a reality.
The bedrock of this reality will be the digital infrastructure that facilitates billions of daily transactions. The roots are in place in many countries. We must continue improving and expanding mobile and internet connections around the world.
We need a vibrant and diverse market of financial services providers, with banks, startups, mobile network operators and other non-banks competing for customers. This requires a regulatory environment that both protects customers and encourages providers to dive in and innovate.
Finally, we need products that serve the needs of this untapped customer base. Despite its shortcomings, cash is useful—it’s accepted almost everywhere—and familiar. To rival and eventually supplant it, we need to design low-fee, user-friendly products that are as widely accepted as cash.
It’s no small task. But we have the technology. We have pioneers on every continent to inspire us. And whether we measure it in GDP, jobs or the number of families no longer trapped by poverty, we have more than enough incentive to build the digital, inclusive economy we all deserve.
Read More - http://time.com/4508166/digital-finance-and-economic-development/
1. Are we still having productive discussions?
Like the executives who ran Ford Motor Company in the 1950s, top teams produce mixed results. One reason is the tendency top teams have to cascade toward a decision without adequately assessing alternatives, as was the case with the Edsel. Given this tendency toward group-think, it pays to assess the strength of your agreement or disagreement by responding to a few simple statements regarding your top team’s interactions. To make this easy, we suggest your team take a brief check-in survey adapted from management scholar Anneloes Raes. If your answers fall more to the right side of the scales, then you should ask whether your team is really just a group of lone wolfs or even one that sends results-impeding ripples across your organization.
2. Do we need to realign our priorities?
Studies show that high-level agreements about goals can mask deeper misalignments that affect top team performance. When these differences go unaddressed, teams are slower to make decisions and implement them or implement them in the wrong way. A key difference in how the Ford executives handled the V-8 and Edsel decisions, is that in the first case, they were willing to readjust their priorities, while in the latter, goals were never up for discussion. Once you begin having more productive discussions, make a point of checking in on your strategic priorities to ensure they are in alignment with your organization’s capabilities and your customers’ needs.
3. Have we become too isolated?
Just as members of a top team need to make sure they are aligned behind shared priorities, the whole top team should ask whether it is aligned and connected enough with the rest of the organization and the broader environment. In this sense, every member of the team should make organizational relationship-building a priority. Studies reveal why these relationship networks are essential: 90 percent of the information a top team uses to make decisions comes through informal channels rather than formal reports. Bringing fresh perspectives to strategic planning meetings whether through new data, or new voices such as Morsey’s, can help you avoid the blind spots that plague all teams.
