Thematic Intelligence: Financial Inclusion

In 2024, financial inclusion initiatives tend to fall into four broad categories. In the developing world, initiatives focus on the millions of unbanked or underbanked who face real friction, if not complete exclusion, from mainstream financial services. In the developed world, initiatives focus mainly on consumers who are underbanked due to credit scores and socioeconomic status; consumers who are marginalized by mainstream providers due to their nationality, ethnicity, gender, or sexuality; and consumers who can access financial services but not in a way that advances or supports strongly held political or religious beliefs. A few factors align to make each of these types a priority, including a political climate more cognizant of difference, digital technologies that make segmentation more economically viable, and the need to unearth new market segments to drive revenue growth in a more difficult macroeconomic climate.

The analyst defines financial inclusion as: “efforts to increase the accessibility, affordability, and applicability of financial services”. This has much, if not everything, in common with the mindset and corporate initiatives related to the decade-long focus on customer centricity. By identifying barriers and key sources of friction, providers can give customers more of what they want, more quickly (and cheaply) than before. Historically, the “inclusion” element meant focusing efforts on consumers experiencing the most acute pain from a lack of financial services, such as the 1.4 billion unbanked worldwide. But many now use the term to cover any consumer sub-segment that is in some way discriminated against by mainstream providers.

Scope

• Many of the most successful new digital banks in the world are primarily about the economics of financial inclusion, whether that is Nubank in Brazil, WeBank and MYbank, in China, Digibank in India, Ualá in Argentina, and TymeBank in South Africa.
• Despite a much more difficult funding environment, significant investment dollars continue to flow into markets where mobile penetration is high but banked populations are low, because many believe financial inclusion is big business.
• Many financial inclusion startups target key remittance corridors for target demographics, then expand out into additional financial services. The analyst’s 2023 Financial Services Consumer Survey reveals that individuals who send money abroad to family or friends are almost four times as likely to have suffered from financial fraud compared to those who have not sent remittances.
• Alcohol consumption is one of the first focal points for changed behavior when consumers seek to pursue healthier lifestyles.
• Half of drinkers globally state they are often or always influenced in their product choice by how an alcoholic beverage impacts their health and wellbeing.
• More than two thirds of alcohol consumers find products that have been fortified with added nutrients to be somewhat or very appealing.

Reasons to Buy

• Identify the core components of meaningful financial inclusion around the accessibility, affordability, and applicability of financial services.
• Understand which technology trends are enabling a new breed of highly segmented, digital-first financial inclusion providers in both emerging markets and established economies.
• Understand the latest regulatory trends impacting financial inclusion, and where arbitrage opportunities may exist for new entrants versus incumbent banks.
• Understand what are the best attack vectors for financial inclusion in terms of product and experience, as well as which markets are most ripe for new entrants (based on growth forecasts, consumer openness, etc.).
• Review firm-level insight on the best financial inclusion propositions worldwide.
• Understand and identify the "better for you" alcohol drinks innovation trend that consumers are interested in.
• Identify the specific aspects of healthiness that will appeal to consumers in the sector.
• Access valuable strategic take-outs in the form of specific opportunities to enhance future decision-making and inform new product development.