Economics & Finance

Financial Empowerment
A. Description of the issue
More than 4 billion people around the world lack access to basic financial services. These individuals live in predominantly cash and barter economies, which are considerably more costly and insecure, and offer little to no opportunity to leverage income or assets for growth. Microfinance has opened the door to credit and savings for millions worldwide and demonstrated the power of extending financial services for the economic advancement of individuals and nations. At the same time, micro-lending is only one part of a fundamental financial services bundle that must be expanded to include basic non-cash payment systems, affordable person-toperson transfers, effective savings schemes, accessible credit, investment and asset-building opportunities, insurance and financial education programmes. Todays opportunity for expanding the reach of financial markets has never been greater, and the goal of creating inclusive financial markets never more attainable. The incredible penetration of mobile phone technology has created a far-reaching distribution channel unmatched by any preceding technology, setting off a rush of innovation in mobile payment solutions. At the same time, the challenges ahead are numerous.

1.13 | Summit on the Global Agenda

Financial Empowerment

B. Dimensions
Creating a global strategy: Effective promotion of financial inclusion will be facilitated by a global strategy, including social and political awareness of the possibilities and obstacles of financial empowerment. Likewise, the identification of key stakeholders, including the highly contextual group of underserved, will be critical for the development of a broad-based movement capable of harnessing technological and policy innovations to accelerate global change. Fostering innovative business approaches: The creation of financially self-sustaining solutions is critical to achieving the scale necessary to reach billions of financially underserved individuals and small businesses. In order to expand the reach of markets, a widening flow of entrepreneurs must identify and promote new business approaches that meet customers needs while ensuring their own financial sustainability. Unlocking new technologies: Technological innovation will significantly reduce the transaction costs that have been a major barrier to entry for the competitive provision of effective and meaningful financial services. New technologies, such as mobile phones and reloadable payment networks, have begun to reduce transaction costs in some areas; however, more innovation is needed. Promoting favourable regulation: Government regulation of the financial services sector has a tremendous impact on the success of financial service markets since it can affect transactions costs and ultimately consumer fees. Many current policies have been designed without awareness of their deleterious effects on financial empowerment. By contrast, more favourable policies can help lower transaction costs and promote beneficial long-term behaviours, like savings and investment. Localizing the solutions: Although financial empowerment is a global issue, countries will have to harness available technologies and learn from the varied international experience in order to develop localized solutions that reflect their specific cultural, political and market conditions. Beginning with the detailed identification of different underserved populations within the country, business, government and NGO leaders should organize efforts to understand their needs, so as to facilitate entrepreneurship and improved regulation. In addition, longterm financial empowerment depends on strong, locally adapted financial education, which will enable consumers to select the best tools and use them to successfully create wealth and financial stability.
1.14 | Summit on the Global Agenda

Financial Empowerment

List of Members
Co-Chairs
*Ricardo Hausmann, Director, Center for International Development, John F. Kennedy School of Government, Harvard University, USA *Roy Sosa, Co-Founder, NetSpend Corporation, USA

Members
*Vikram K. Akula, Chief Executive Officer and Founder, SKS Microfinance, India *Robert Annibale, Director, Citi Office of Microfinance, Citi, USA *John Bryant, Founder, Chairman and Chief Executive Officer, Operation HOPE, USA Hernando de Soto, President, Instituto Libertad y Democracia, Peru Lawrence Elliott, Economics Editor, The Guardian, United Kingdom Kurt Hoffman, Director, Shell Foundation, United Kingdom *Mary Houghton, President, ShoreBank Corporation, USA *Elizabeth Littlefield, Chief Executive Officer, Consultative Group to Assist the Poor (CGAP), USA Harish Manwani, President, Asia, Africa, Central and Eastern Europe, Unilever, United Kingdom *Gill Marcus, Chairperson, Absa Group, South Africa *Jonathan J. Morduch, Professor of Public Policy and Economics, New York University, USA *Alvaro Rodriguez Arregui, Chair, Board of Directors, ACCION International, USA *Janmejaya K. Sinha, Managing Director, The Boston Consulting Group (India), India *Roshaneh Zafar, President, Kashf Foundation, Pakistan * Confirmed participation in the Summit on the Global Agenda

Council Manager: Matthias Catn Forum Lead: Martina Gmur

Senior Director: Fiona Paua

1.15 | Summit on the Global Agenda