Developing New Pathways to Catalyze Inclusive Growth

By: Carlos Monteverde

According to the World Economic Forum, digitalization could unlock $100 trillion in value for businesses and wider society over the next decade – but what will that look like, and who will it reach? We are seeing a number of new companies and new business models transform the way consumers gain access to goods and services, and many of them may have a profound impact on financial inclusion.

The financial inclusion sector is at an inflection point, where tomorrow’s initiatives will require expanded partnerships that leverage technological change to be more customer-centric and apply new and innovative business models. Mastercard has been at the forefront of the efforts to establish and coordinate these efforts to develop digitally-enabled platforms that will engage a more diverse set of stakeholders, including the private enterprises that drive commerce in underserved communities and, in acting as “last-mile partners,” can bring more people in the formal financial system while benefitting from the efficiencies of digital payments. 

Our latest paper, “The Role of a Market Organizer in Advancing Financial Inclusion,” highlights the ways in which we have worked with these stakeholders to bring a more holistic and consumer-centric approach to organizing markets which drive financial inclusion. A few of the examples we highlight are:

Mastercard partnered with Levi’s, Marks & Spencer and Vanity Fair Corp to identify opportunities in garment manufacturing value chains and provide digitized wage solutions that meet factory and worker needs.

Through its research, the Better Than Cash Alliance has found that garment factories have experienced a 53 percent savings in staff time for their administrative and finance teams by shifting their wage disbursements to digital payments. In addition, it has been found that factories paying wages through digital means are five times more likely to provide appropriate social and labor practices.

Mastercard and Neumann Kaffee Gruppe (NKG) expanded on a pilot program to digitize payments for coffee farmers in Mexico, reaching an inflection point in terms of growth in consumers and expansion into new markets.

The system will link farmers, merchants, and banks into a modern, digital-enabled supply chain that will reduce process costs and enable NKG to reach more farmers directly. For the roughly 2,000 smallholder farmers expected to be participating by the end of coffee buying season in early 2020, it is expected that anywhere from 15-25 percent of the crop value can be saved through modern controls and electronic payments.

Mastercard worked with partners across various sectors in Egypt to build a robust mobile payments ecosystem that is interoperable across industries, the first nationwide open-loop solution of its kind.    

Through these efforts, 10 million mobile wallets have been opened by customers at 11 issuers across the country. As of the first quarter of 2019, 42 percent of Egypt’s processed transactions are powered by the digital ecosystem. With 32 cross-sector stakeholders already contributing to the systems, new use cases and value propositions are being created.

We’ve seized these opportunities to work through our partners and develop consumer-based solutions to achieve the scale necessary for commercially sustainable impact. These market organization efforts cannot be done by just any organization. Mastercard has the necessary capabilities and incentives to play this role and drive ecosystem development for impact. We invite current and future partners to this ongoing conversation as we explore ways to pursue new business models and unlock new pathways for ecosystem development, and ultimately drive commercially sustainable social impact through financial inclusion.

Author:
Carlos Monteverde is a Product Manager at Mastercard, focusing on identifying and building digital products for underserved segments. His team leads the company-wide effort to achieve Mastercard’s stated goal of reaching 500MM unbanked individuals and include them into the world’s formal economy by 2020.