MICROFINANCE PAPER WRAP-UP: “The Road to Inclusion: A Look at the Financially Excluded and Underserved;” Published by MasterCard

“The Road to Inclusion: A Look at the Financially Excluded and Underserved;” Published by MasterCard; May 2014; 18 pages; available at http://newsroom.mastercard.com/asia-pacific/documents/the-road-to-inclusion-a-look-at-the-financially-excluded-and-underserved

This report, published by US-based financial services corporation MasterCard, seeks to shed light on how people manage with limited financial services in Egypt, India, Indonesia, Nigeria, the Philippines and Vietnam. The study surveys 604 people across the six markets to gain insight into the financially excluded – those without any access to formal banking services – and the financially underserved – those who may have a bank account, but lack access to electronic transactions or debit cards.

The average age range of respondents in each country ranges from 28 years old (Nigeria) to 41 years old (Philippines). A minimum of two-thirds of each group has received a secondary education. The groups reported employment rates above 50 percent, excluding India and the Philippines. With average monthly incomes ranging from USD 200 (in India, Indonesia and Nigeria) to USD 500 (in Vietnam), those surveyed cited a lack of money as one of the most significant reasons for not having a bank account. Hence, the study identifies low incomes as one of the primary reasons explaining why these groups are financially underserved/excluded, but it singles out Vietnam with its relatively high monthly income of USD 500 having the greatest market potential.

The authors also seek to understand the attitudes of the financially underserved/excluded towards banking, credit cards and financial transactions. Trust levels in local banks is relatively high – ranging from above 80 percent in Egypt and Nigeria to above 60 percent in India and Vietnam. Trust levels in multinational financial vendors, however, is mixed. While large majorities of those surveyed are aware of and understand the function of prepaid credit cards, there is widespread concern across markets of the possibility of losing the card, lack of transparency and high fees. The report indicates that the three markets most receptive to prepaid cards are India, Egypt and Nigeria each of which report majority support.

Significant portions of the financially underserved/excluded report owning a smart phone or computer. However, the standard mobile phone is still the dominant method used by respondents to access technology and the authors deem usage of mobile banking across the six markets “low.”

The report also includes a special segment on women, whose primary barrier to financial inclusion is identified as a low rate of regular income flow relative to men.

By Meraj Husain, Research Associate

Sources and Additional Information

[1] MasterCard: The Road to Inclusion: A Look at the Financially Excluded and Underserved

MicroCapital, August 11, 2014, Econet’s EcoCash, MasterCard to Provide Debit Cards to Mobile Money Users in Zimbabwe

MicroCapital, June 23, 2014, Bank of Punjab, MasterCard Launch Electronic Government-To-Person Social Security Payment System in Pakistan

MicroCapital, June 17, 2014, International Finance Corporation (IFC), MasterCard Foundation, Tigo to Expand Mobile Financial Services in Ghana

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