Living Cities is open sourcing our 2014 annual report, asking folks to respond to the question: “What will it take to achieve dramatically better results for low-income people faster?” This blog is a response to that question. In the coming weeks, we will showcase a diversity of points of view around this question. Learn more about the event and follow the conversation on social media with #NewUrbanPractice.
According to the World Bank, 75% of the World’s poor do not have a bank account, not only because of poverty, but also due to costs, travel distance and paperwork involved. Access to affordable financial services is linked to overcoming poverty, reducing income disparities and increasing economic growth. In the United States, the financial inclusion challenges are different but still significant: 45% of all Americans could not weather a significant economic shock and 98 million Americans use “alternative” or no financial services. Increasing access to financial knowledge and services must be part of any comprehensive strategy aimed at reducing poverty and improving the lives of low-income people.
MetLife believes in the transformative power of financial services. That belief has been at the center of our business since 1868. Today, MetLife Foundation is continuing that tradition with an even more intentional focus on financial inclusion. The concept of financial inclusion emerges from a growing recognition that specialized financial institutions aimed at low-income people are unlikely to meet the complete financial needs of the 2.6 billion people who lack even a basic bank account.
2.6 Billion People The number of people, globally, who lack even a basic bank account, according to research by The World Bank.
MetLife Foundation is committed to ensuring that households and businesses in low-income communities have convenient access to a full suite of quality, affordable financial services, delivered by trustworthy providers with respect for the customer. This requires a holistic approach that simultaneously addresses and expands supply, demand and market-building:
- Access and Knowledge: On the demand side, we work to increase the readiness, willingness and ability of individuals and families to engage with the financial sector by removing barriers to entry, identifying “entry point” opportunities, and educating people on the financial services that can be of most benefit to them.
Access to Services: On the supply sides, we focus on delivering high-quality financial products and services, such as savings and credit, by developing appropriate products, providing tools for personal finance management, and using data and implementation approaches known to maximize successful services uptake
Access to Insights: In terms of market building, we focus on investing in research and sharing what we learn with the financial inclusion community and beyond. We do this by funding research and sharing it as thought leadership content, collaborating with peers addressing similar issues and measuring and evaluating our progress.
Collaboration is essential to all of these strategies. We foster connectivity between banks, microfinance institutions, insurers and other financial institutions; as well as with nonfinancial entities such as mobile network operators and retail outlets—in order to expand access to services more effectively than any specialized provider could achieve alone.
This focus on holistic approaches and collaboration for greater impact is also core to the work of Living Cities. Indeed, one of the hallmarks of Living Cities has been its ability to bring institutions together to tackle tough issues. This focus should be a pillar of the new urban practice that the organization, its member institutions and other partners seek to advance. And, it should be applied to move the needle on issues like financial inclusion that can help low-income people to build a more secure future for themselves and their families.