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Building an Inclusive Financial System at Speed and Scale

 

All Lives Have Equal Value

Wrapping up Day 1 of the Strum Executive Innovation Summit, credit union executives attending the summit heard from Rodger Voorhies, President, Global Growth & Opportunity Division at the Bill & Melinda Gates Foundation.

Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people's health and giving them the chance to lift themselves out of hunger and extreme poverty. Financial Services plays a significant role by buffering the problems people face.

Voorhies emphasized that poverty is not static. Every few years around 10-30% of the world’s population fall into poverty and 10-40% escape it.

The Gates Foundation believes in four strategies to help fight poverty:

  • ensure children and young people survive and thrive

  • empower the poorest, especially women and girls, to transform their lives

  • combat infectious diseases that particularly affect the poor

  • inspire others to take action to change the world

Rodger Voorhies.jpg

And to address providing financial services for the poor, the foundation has this vision: Our goal is to help people in the world’s poorest regions improve their lives and build sustainable futures by connecting them digitally based tools and services.

To service the poor in undeveloped countries, financial services providers can’t navigate traditional channels. Branches are high-cost, and are only viable where there are rich people with vast sums of money in their accounts. Digital services are the only route to go where transaction volume can drive profitability and scale for all, including the poor. The up side for providers is that low-cost digital financial services benefit everyone, not only the poor.

Presently there are almost 2 billion adults who are financially excluded from traditional banking. The top 10 countries include over 50% of these excluded adults. Mind-boggling, isn’t it?

Voorhies tasked the group of credit union executives to imagine the following impact of providing digital financial services:

  • with the press of a button on their phone, the poor can send money, pay their bills, open a savings account, get a loan, or buy insurance to pull themselves out of poverty.

  • small farmers get loans to buy seed and fertilizer they need to improve crop yields and boost incomes

  • migrant workers send money to their families’ phone instantly, and for freed rural people are winning back the hours spent walking or on a bus to a cash agent, and being able to work instead

  • millions of aspiring entrepreneurs can get a loan to grow their business because they can effortlessly document their digital revenue streams

  • government institutions are stronger and leaner because assistance is paid directly to phones of the poor who need it the most, thus eliminating the waiting lines, leakage and corruption

  • humanitarian aid agencies can deliver targeted relief, faster, and at a fraction of the cost

The Gates Foundation envisions a world where every person has the opportunity to live a healthy, productive life and it takes access to financial services to make it happen. The goal is to establish net worth, or savings for each individual. This is the difference maker over simply providing access to credit.

From the perspective of the credit union leaders at the Summit, they felt this missional journey aligns significantly with the credit union philosophy and movement and that Voorhies’ presentation provided new inspiration for them to take back to their organizations.

— John Mathes, Director of Brand Strategy, Strum