Q: Why is the foundation tackling financial services for the poor?
A: Only an estimated 10 percent of the 2.5 billion people who live on less than $2 a day have access to the basic financial tools that help people manage life's risks and take advantage of life's opportunities. For the vast majority of the world's poor, this lack of financial services is yet another obstacle to meeting day-to-day needs and overcoming the vicious cycle of poverty.
Microfinance—formal financial services tailored to the needs of the poor—has proven highly effective in helping poor people meet basic needs, weather unexpected events, and increase their financial security. For example, setting aside small sums in a safe place can help poor people build assets, guard against risks like illness or crop failure, and invest in educational and other opportunities for the next generation.
Over the past few decades, there has been inspiring progress in microfinance, particularly in the field of microcredit. However, demand still far outstrips supply, and those who do have access are often limited to credit products. We believe that poor people need a range of financial services—and that meeting this need sustainably will require additional efforts and new models and approaches.
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Q: Why has the foundation chosen to focus on savings?
A: We believe that poor people need access to a range of financial services. We have chosen to focus on savings because of the need, challenge, and opportunity for impact. The need to store and access money is universal. Savings products are highly demanded by the world’s poor—no matter where they live or how they earn their living. Setting aside small sums in a safe place allows poor people to guard against risks, build assets, and provide opportunities for the next generation.
Still, savings has received little attention and resources, and the vast majority of the world’s poor must resort to risky, expensive, and inefficient ways of saving. We believe that safe places to save could eventually provide hundreds of millions of people with an important tool for getting out and staying out of poverty.
We recognize the important work that others have done in bringing a range of services to the poor. We will continue to support targeted work in areas such as microcredit and microinsurance in addition to supporting technology and other efforts that help increase the availability of a range of quality, affordable financial services for the poor.
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Q: Can poor people really save?
A: Poor people can and do save money. But they usually must resort to saving in expensive, risky, and inconvenient ways, like hiding cash at home or converting savings into livestock and jewelry. Safe, affordable places to save would allow them to increase their financial security and improve their lives. In places where such services are available, the demand is extremely high.
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Q: Will mobile banking really reach the poor?
A: Many people living on less than $2 per day already have access to a mobile phone. A study of five developing Asian countries recently showed that more than 90 percent of the poor used a mobile phone once in the past three months. Even where ownership was low, most non-owners could reach a mobile phone within five minutes. Use of mobile phones is also increasing rapidly. In Africa, mobile operators added 70 million users in the past year—a growth rate of 33 percent. M-Pesa, a mobile banking service that is successful in Kenya and Tanzania, is already demonstrating how mobile banking is able to reach the poor.
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Q: What is the role of financial regulations?
A: We believe a strong regulatory environment that promotes investment and innovation while protecting consumers is possible—and critical to expanding the poor’s access to financial services. If regulations are not kept up to date, countries will miss out on investments and promising opportunities in this sector. We are investing in research on policy issues, collaboration with international and national policy makers, and sharing of lessons learned to help identify the best ways to foster environments where financial services are both broadly accessible and safe. Policy makers from countries that have adopted new policies, such as the Philippines and Kenya, provide a wealth of experience for the rest of the world.
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