Financial services can help the poor improve their lives.

Access to financial services such as credit, savings, insurance, and money transfers can help hundreds of millions of people who live on less than $2 per day pull themselves out of poverty. These services enable the poor to build assets and increase their incomes while also protecting them from the financial consequences of natural disasters, health emergencies, and business setbacks. In July 2005, we launched an initiative to evaluate how our involvement can help significantly reduce poverty over the long term by expanding access to financial services amongst the poor. In 2006, our learning had progressed to the point that we decided to expand our commitment to help achieve this goal.

Since the 1970s when pioneering institutions like Grameen Bank and BancoSol began offering uncollateralized loans to the poor, we have seen the emergence of thousands of financial services providers focused on low-income markets. However, only 10 such institutions currently serve more than 1 million clients, and most of them have taken several decades to grow that large. And more than 80 percent of the poor still lack access to financial services.

Given the importance of these financial services, we are exploring opportunities to bring to scale a broad range of sustainable financial services—not just credit. For example, we formed a partnership with the Aga Khan Foundation USA team to develop and test a range of insurance products that can protect the poor from financial shocks related to weather, fire, and illness in Pakistan and Tanzania. In Pakistan, the products will be tested and delivered through Aga Khan's First MicroFinance Bank, which recently received an award for financial transparency from the World Bank. We also recognize that reaching many more poor households will require working through a broad range of institutions: microfinance organizations, commercial banks, and state-owned retail banks. We are beginning to make investments in each of these areas.