[Annotated] Financial inclusion is making great strides

Nearly a quarter of the world's population remains unbanked^[각주:1]. But mobile phones are helping to change that, writes Simon Long

As the Ebola virus was devastating parts of^[각주:2] west Africa in 2014, Sierra Leone's difficulties were compounded by^[각주:3] its emergency-response workers^[각주:4] going on strike^[각주:5]. They were risking their lives, but were often paid erratically^[각주:6] and not in full^[각주:7]. Sometimes they traveled long distances to collect the money, in cash, to find that it had been disbursed to^[각주:8] an impostor^[각주:9], or that the official paying it out would take a cut^[각주:10]. So the government switched to making^[각주:11] the payments digitally, to the workers' mobile-phone accounts. That way they were paid in a week in full, rather than after a month with deductions^[각주:12]. Thanks to lower costs and reduced fraud^[각주:13], the new system was millions of dollars cheaper. The strikes ended; lives were saved. 

According to a report by the Better than Cash Alliance, a partnership based at the UN of governments, companies and organizations promoting digital payment, Sierra Leone was well placed to make this change in two respects^[각주:14]: about 95% of the country was covered by^[각주:15] a mobile-phone signal; and 90% of the emergency workers had mobile phones. Even so, the obstacles were^[각주:16] formidable^[각주:17]. Only 15% of the workers had mobile-money accounts. Opening one could be hampered by^[각주:18] a lack of documentation, made worse by the country's severe shortage of surnames^[각주:19] (most people share just ten of them). Biometric identification^[각주:20], such as fingerprints, raised fears of infection from^[각주:21] the Ebola virus (a problem that was solved by facial-recognition technology). But they got there in the end. 

The episode offers a graphic example of how technology can deal with "financial exclusion^[각주:22]" by greatly reducing the number of those without access to financial services. Almost inadvertently^[각주:23], the spread of mobile telephony^[각주:24] and mobile-internet services has brought hundreds of millions of people into the formal financial system. Take bKash, of Bangladesh, one of the world's biggest mobile-money services. Started in 2011, it now reaches 30m registered customers. Kamal Quadir, a founder, says people used to keep their money under the mattress; now they can store it on their phones. The service "has become the collective^[각주:25] mattress for all the common people of Bangladesh. Now the money is in digital form and they are in the banking system regulated by^[각주:26] the central bank." 

Since its inception in^[각주:27] the Philippines in 2000 and its take-off in Sub-Saharan Africa^[각주:28] more than a decade ago, "mobile money" - the transfer of cash by phone - has become a global phenomenon, welcomed and encouraged by governments and international organizations. In 2010 the G20 group of countries came up with a set of^[각주:29] "Principles for Innovative Financial Inclusion^[각주:30]". In 2012 the World Bank, with funding from the Bill and Melinda Gates Foundation, produced the first "Findex", or financial-inclusion index, an ambitious attempt to measure the scale of the problem and track efforts to tackle it^[각주:31]. 

This special report will look at some of the fruits of those efforts. It appears at a relatively optimistic time, when the ranks of the financially excluded are thinning fast^[각주:32] and there are strong hopes that the process will accelerate further^[각주:33]. One reason is the growth in mobile-phone and internet penetration^[각주:34], making finance accessible even to those living a long way from physical bank branches or ATMs. According to the Findex, 78% of the world's unbanked adults receiving wages in cash have a mobile phone. Moreover^[각주:35], the "unbanked" are seen as an increasingly attractive commercial market. Firms as diverse as Ant Financial, an affiliate of^[각주:36] Alibaba, China's e-commerce behemoth^[각주:37], and PayPal, a Silicon Valley payments firm, make much of their role in expanding financial inclusion. Daniel Schulman, PayPal's chief executive, says his company's mission is "to democratize financial services^[각주:38]".

The report will consider whether non-profit organizations^[각주:39] and businesses are right to be so upbeat about^[각주:40] the prospects for^[각주:41] more financial inclusion. On the commercial side, tensions have arisen between^[각주:42] the different sorts of businesses engaged in this market: commercial banks jealous of^[각주:43] their traditional quasi-monopoly on^[각주:44] formal finance and yet wary of^[각주:45] further risky adventures in "subprime" markets^[각주:46]; mobile-network operators that now provide the infrastructure for payment, the most basic of financially inclusive services; the "fintechs", aggressive financial-technology startups fizzing with^[각주:47] bright ideas^[각주:48], idealism and sometimes greed; and, increasingly, the "platforms", big internet firms that have a lock on how^[각주:49] people spend their time online. The report will ask whether the winners from all this competition will be consumers, and "especially the relatively excluded", as Olivia White of McKinsey, a consultancy^[각주:50], believes.

Making poverty profitable^[각주:51] 

Although it will look at rich countries, it will focus mainly on the developing world, where the problem is most acute^[각주:52]. One example of a country where financial exclusion is extreme but prospects for greatly reducing it seem bright is Pakistan. Only 24% of the adult population there have bank accounts, a further 7% use^[각주:53] other formal financial services and 24% are served informally. But the country has a huge population (about 210m), much of it young; a high level of mobile-phone penetration (146m accounts) and mobile-signal coverage^[각주:54]; a decent regulatory framework^[각주:55]; and a vibrant ecosystem of non-profits and foreign and domestic businesses committed to the market^[각주:56]. Kosta Peric of the Gates Foundation believes that Pakistan is on its way to becoming "the first fully connected and inclusive economy". 

The latest "Findex", its third iteration^[각주:57], based on 150,000 interviews and covering data for 2017, was published last month. The headline findings are striking: although the problem remains vast^[각주:58], progress has been spectacular^[각주:59]. At 1.7bn worldwide, the number of the "unbanked" in 2017 was down from 2bn in 2014 and 2.5bn in 2011. The proportion of adults with a bank or mobile-money account was up to 69% last year, from 62% in 2014 and 51% in 2011. In the three years since the previous Findex, 515m people had acquired an account^[각주:60]. 

Notional access to^[각주:61] an account is not the same as "inclusion". The Findex report finds that a quarter of all accounts worldwide are inactive^[각주:62], with no deposits^[각주:63] or withdrawals in^[각주:64] the past 12 months. India's numbers are especially misleading^[각주:65]. Following the launch of a bold financial-inclusion plan in 2014, which promised that every Indian would have access to^[각주:66] a basic bank account, some 240m accounts were opened over the next two years. But it soon became clear that up to a quarter of them were "zero-balance accounts", a euphemism for^[각주:67] "unused^[각주:68]". So banks made sure most had at least some money in them, perhaps by depositing tiny sums, often out of the bank staff's own pockets. "Zero-balance" made way for^[각주:69] "one-rupee" (1.5 cents) accounts, but financial inclusion improved only on paper. 

Even if the accounts are in use^[각주:70], some in the field argue that in itself^[각주:71] this does little to enhance inclusion. It does not allow the holder to borrow, save or buy insurance. If financial exclusion is defined more broadly, it also covers many unbanked or underbanked people in^[각주:72] the rich world, where the issue is attracting attention from policymakers^[각주:73]. 

In both rich and poor countries, financial technology, or fintech, is already seen as the dominant force behind the big advances of recent years recorded in the Findex. Leaving aside^[각주:74] the relentless advance of^[각주:75] the mobile phone, the optimism is inspired by progress in two areas. One is the development of cheap biometric systems^[각주:76] allowing even the illiterate with no papers to establish a unique digital identity that a financial institution can use. In India, for exmaple, 99% of the adult population now have a 12-digit universal identity number, known as Aadaar. Such systems are not foolproof^[각주:77]. A surprising number of people lack a distinct fingerprint, and iris recognition^[각주:78] needs high-quality cameras. Biometric-based algorithms always involve a trade-off between^[각주:79] precision ^[각주:80]and ease of use. But when other means of identification^[각주:81] are added, security can be far tighter than it ever was in a paper-based regime.

Second, cloud computing allows ever greater numbers of financial transactions^[각주:82] to be automated^[각주:83] and unimaginable quantities of data to be analysed by artificial intelligence (AI). Ant Financial boasts a 3-1-0 model^[각주:84]: three seconds to reach a credit decision; one second to transfer the money^[각주:85]; no human intervention. Automation also reduces the cost of providing finance and makes it profitable to deal in smaller amounts of money. Instead of being a bad banking risk, the poor have become the business opportunity at the bottom of the pyramid. And new sorts of data, along with more sophisticated ways of using them, may compensate for^[각주:86] the lack of a credit history^[각주:87] and give the unbanked access to finance for the first time. 

1. unbanked ; The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. [본문으로]
2. devastating ; 1. (완전히) 파괴적인, 황폐시키는 ;; 2. <주장 등이> 압도적인, 통렬한 ;; 3. 엄청난, 치명적인, 충격적인 [본문으로]
3. compound ; [vn] 1. [흔히 수동태로] 악화시키다, 더 심각하게 만들다 [본문으로]
4. emergency response ; An effort by public safety personnel and citizens to mitigate the impact of an incident on human life and property. [본문으로]
5. go (out) on strike ; 동맹 파업에 들어가다; [사람들이 집단으로] 요구가 관철될 때까지 직무에 임하는 것을 거부하다 [본문으로]
6. erratically ; [부사] 괴상하게; 변덕스럽게. [본문으로]
7. in full ; 전부[빠짐없이] [본문으로]
8. disburse ; [자, 타동사] 지불하다, 지출하다, 돈을 치르다(pay out). [본문으로]
9. impostor (imposter) ; [명사] (이름・주소・나이・직업 따위를) 사칭하는 사람, (다른 사람 행세를 하는) 사기꾼 [본문으로]
10. take a cut ; 개평을 뜯다 ;; 흐름상 "중간에서 가로채다" 정도의 의미로 보임 [본문으로]
11. switch to ; …으로 바뀌다. [본문으로]
12. deduction ; 1. [U]뺌, 공제; [C]빼내는 금액, 공제액 [본문으로]
13. fraud ; 1. [U] 사기, 기만; [법] 사기(죄); 사기 행위, 부정 수단 ;; 동의어 ; deception [본문으로]
14. respect ; 3. [C] (측)면, 점, 사항 [본문으로]
15. cover ; 10. <어떤 범위에> 걸치다, 미치다(extend over); <분야·영역 등을> 포함하다(include); <사례 등에> 적용되다; <연구·주제를> 다루고 있다; 학습하다, 강의하다 [본문으로]
16. obstacle ; (pl. obstacles[-z]) (…에 대한) 장애(물), 지장, 방해(물); 고장[to]. [본문으로]
17. formidable ; 1. 무서운(terrifying). ;; 2. (적·일 따위가) 손 댈 엄두도 낼 수 없는, 만만치 않은 (difficult to deal with), 가공(可恐)할. ;; 3. 놀랄 만큼 다수[다량]의, 무지무지하게 큰(considerable in bulk or number). [본문으로]
18. hamper ; [타동사] <진행·움직임 등을> 방해하다(hinder), 훼방놓다; 제한[구속]하다; <일의 순서를> 어지럽히다 [본문으로]
19. surname ; 1. 성(姓)(family name) ;; 2. 별명, 다른 이름(cf. NAME) [본문으로]
20. biometric identification ; (IT) <데이터통신>생체 인식 식별(生體認識識別) [본문으로]
21. infection ; (참고: contagion) 1. [U] 감염 ;; 참고 ; cross-infection [본문으로]
22. exclusion ; 1. [U] ~ (of sb/sth) (from sth) 제외, 배제; 차단 [본문으로]
23. inadvertently ; [부사] 무심코, 우연히, 부주의로 [본문으로]
24. telephony ; [명사] 전화 통화[통신] 방법 ;; 미국·영국 [tə|lefəni] [본문으로]
25. collective ; [주로 명사 앞에 씀] 1. 집단의, 단체의 ;; 2. 공동의, 공통의 [본문으로]
26. regulate ; 1. 규제[통제/단속]하다 [본문으로]
27. inception ; 1. 처음, 시초, 시작, 개시, 발단(beginning, start). [본문으로]
28. sub-Saharan ; [형용사] (명사 앞에만 씀) 사하라 사막 이남의 ;; below Sahara [본문으로]
29. come up with ; (수동태로는 안 씀) (해답·돈 등을) 찾아내다[내놓다] ;; …을 생산하다; 제시[제안]하다. ;; 동의어 ; produce; supply. [본문으로]
30. inclusion ; 1. [U] 포함, 포괄; 산입(算入); [논리] 포섭 [본문으로]
31. tackle ; 1. [타동사][VN] (힘든 문제・상황과) 씨름하다 [본문으로]
32. thin ; [자동사] 가늘어지다; 얇아지다, 희박해지다; 드문드문하게 되다, 적어지다(away, down, out, off). [본문으로]
33. accelerate ; [자동사] 가속하다, 속도가 더하다, 빨라지다 [본문으로]
34. penetration ; 3. 세력 침투[확장]; (시장 따위에 대한) 진입, 진출, 침투; (경제·문화 따위에 대한) 영향력. [본문으로]
35. moreover ; (종종 and moreover) 《문어》 게다가, 더구나, 또한, 그 위에. ;; 동의어 ; BESIDES [본문으로]
36. affiliate ; 1. 분회, 지사, 지부. ;; 2. (상업) 계열[관련] 회사; 종속 회사, 자회사. ;; 명사 [ə|fɪliət] [본문으로]
37. behemoth ; [명사] (격식) 거대 기업[조직체] ;; 미국식 [bɪ|hi:mɔ:θ] 영국식 [bɪ|hi:mɒθ;|bi:hɪmɒθ] [본문으로]
38. democratize ; [타동사] 민주화하다, 민주적[평민적]으로 하다; 대중화하다 [본문으로]
39. non-profit organization ; [명사] 비영리 기관 [본문으로]
40. upbeat ; (비격식) 긍정적인, 낙관적인 [본문으로]
41. prospect ; 3. [pl.] prospects ~ (for/of sth) (성공할) 전망 [본문으로]
42. arise ; (arose / ə'rəUz ; 美 ə'roUz / , arisen / ə'rIzn /), [v] 1. (비교적 격식) (특히 문제나 곤란한 상황이) 생기다, 발생하다 ;; 2. ~ (out of/from sth) (비교적 격식) (무엇의 결과로) 유발되다 [본문으로]
43. be jealous of ; 1. …을 시기[질투]하다 ;; 2. …을 소중히 지키다 [본문으로]
44. quasi ; 의사(擬似)의; 유사의; 준(準)…, 반(半)… ;; [형용사・명사에서] 1. <‘유사[사이비] …’의 뜻> ;; 2. <‘준(準)–'의 뜻> [본문으로]
45. wary of ; …을 조심하는. [본문으로]
46. subprime ; 최고 품질보다 못한; 〈금융〉 최우대 금리보다 낮은[못한]. [본문으로]
47. fizz ; 쉿쉿 소리나다[끓다, 거품이 일다](up, out); 흥분하다, 활기띠다; 신나서 들뜨다. [본문으로]
48. bright idea ; 묘안, 명안, 기발한 생각 [본문으로]
49. have a lock on ; …을 꽉 쥐고 있다; 성공을 확신하다 [본문으로]
50. consultancy ; 1. [C] (전문적인 조언을 제공하는) 자문 회사 ;; 2. [U] (전문가의) 조언 [본문으로]
51. profitable ; 1. 수익성이 있는[있을 것 같은] ;; 2. 이득이 되는, 유익한 [본문으로]
52. acute ; 4. <상황·사태·문제 등이> 중대한, 심각한, 매우 어려운 [본문으로]
53. a further 7% ; 7% 더 [본문으로]
54. coverage ; 3. [UC]보도(범위), 취재(범위); (광고의) 도달 범위; (라디오·텔레비전의) 방송(범위), 서비스 구역 [본문으로]
55. regulatory framework ; 규제체계 [본문으로]
56. commit to ; …에 전념[헌신]하다. [본문으로]
57. iteration ; 2. [C] (컴퓨터 소프트웨어의) 신판(新版) [본문으로]
58. vast ; [형용사] (범위・크기・양 등이) 어마어마한[방대한/막대한] [본문으로]
59. spectacular ; 구경거리가 될 만한; 장관(壯觀)인; 눈부신, 화려한, 극적인(dramatic) [본문으로]
60. acquire ; 2. (사거나 받아서) 획득하다[취득하다] [본문으로]
61. notional ; 1. 개념적인; 관념상의 ;; 2. 추상적인, 순이론적인(theoretical) ;; 3. 상상의, 비현실적인; [미] 변덕스런 ;; [ADJ] Something that is notional exists only in theory or as a suggestion or idea, but not in reality. [본문으로]
62. inactive ; 2. 사용되지[일을 하지] 않는 [본문으로]
63. deposit ; 3. MONEY | (은행) 예금[예치금] [본문으로]
64. withdrawal ; 3. [C] (계좌에서의) 인출 [본문으로]
65. misleading ; [형용사] 오도하는, 오해시키는, 그릇된 인상을 주는; 현혹시키는, 혼동케 하는 ;; deceptive, delusive [본문으로]
66. have access to ; …에게 접근[출입]할 수 있다, …을 면회할 수 있다 [본문으로]
67. a euphemism for ; …의 완곡어, 완곡한 표현 ;; 미국·영국 [|ju:fəmɪzəm] [본문으로]
68. unused ; [형용사] (현재) 쓰지[사용하지] 않는; 한 번도 사용되지 않은[쓴 적이 없는] ;; 참고 disused [본문으로]
69. make way for ; [동사] …에 길을 열어 주다, (후계자 등을 위해) 자리를 내주다. ;; 동의어 ; stand aside for, make room for, withdraw. [본문으로]
70. be in use ; 사용되고 있다 ;; 참고 ; be out of use [본문으로]
71. in oneself ; 원래, 본질적으로, 그 자체로는, 실제 [본문으로]
72. underbanked ; Having inadequate access to financial services or formal banking facilities. [본문으로]
73. policymaker ; [명사] 정책 입안자[담당자] [본문으로]
74. leave (sth) aside ; ~을 차치하다[제쳐놓다] ;; to not discuss or consider a particular idea or issue [본문으로]
75. relentless ; 1. 수그러들지 않는, 끈질긴 ;; 2. 가차 없는 [본문으로]
76. biometric system ; 생체 인식 시스템 ; 지문이나 얼굴, 음성, 눈의 홍채 등으로 개인을 식별하는 생체 측정 기술. 유전자에 따라 모습이나 음성이 개인마다 특색이 있는 것에 착안하여 한계에 이른 개인의 패스워드를 대체하려는 인식에서 시작된 시스템으로, 분실 위험이 없고 정확도가 높아 고도의 보안이 필요한 곳에 쓰일 시스템으로 주목받고 있다. [본문으로]
77. foolproof ; [형용사] 계획・기계・방법 등이 실패할[잘못 될] 염려가 없는, 누구나 이용할 수 있는 [본문으로]
78. iris ; (pl. iris·es, ir·i·des) 1. (해부) (안구의) 홍채. ;; 미국∙영국 [|aɪrɪs] [본문으로]
79. trade-off ; ~ (between sth and sth) (서로 대립되는 요소 사이의) 균형 ;; [NOUN] A trade-off is a situation where you make a compromise between two things, or where you exchange all or part of one thing for another. [본문으로]
80. precision ; [U] 정확(성); 정밀(성); 신중함 [본문으로]
81. a means of identification ; 신원 확인의 수단. [본문으로]
82. financial transactions ; 금융거래 [본문으로]
83. automate ; [타동사][VN] [주로 수동태로] (일을) 자동화하다 ;; [자동사] 자동 장치를 갖추다. [본문으로]
84. boast ; 2. (자랑할 만한 것으로) 가지다, 자랑삼다; (때로 풍자)가지다(have) [본문으로]
85. transfer money ; 송금하다, 계좌이체 하다 [본문으로]
86. compensate for ; 보상하다, 보충하다, 벌충하다, 물어주다, 물어내다 [본문으로]
87. credit history ; [명사] 신용기록 [본문으로]