What We Do

Financial Services for the Poor

Strategy Overview


Cell phones connect an increasing number of Kenyans with digitally-based financial tools and services.

our goal:

To help people in the world’s poorest regions improve their lives and build sustainable futures by connecting them with digitally-based financial tools and services.

The Challenge

At A Glance

More than 2.5 billion adults do not have a bank account or use other formal financial services—not only because of the challenges of living in poverty, but also due to costs, travel distance, and other barriers.

Access to formal financial services can help people protect their earnings, weather personal financial crises, send and receive payments, and better manage their farms and small businesses.

Our strategy aims to capitalize on rapid advances in mobile communications and digital payment systems to expand the availability of affordable and reliable financial tools that serve the needs of the poorest people.

Our Financial Services for the Poor strategy is led by Rodger Voorhies, director, and is part of the foundation’s Global Development Division.

Every year, millions of people around the world transition out of poverty in any number of ways—by adopting new farming technologies, investing in new business opportunities, or finding new jobs, for example. At the same time, large numbers of people fall back into poverty due to health problems, financial setbacks, and other shocks. Compounding this situation is the fact that the majority of those living in or near poverty lack even the most basic banking services. Effective tools for saving, sending, and borrowing money and mitigating financial risks can help people weather setbacks and achieve greater financial stability over the long term.

Worldwide, more than 2.5 billion adults do not have an account at a financial institution, according to the World Bank’s Global Financial Inclusion Database. Only 41 percent of adults in developing economies have an account—and that number drops to just over 20 percent among adults living in extreme poverty. Women, in particular, are largely excluded from the formal financial system. In developing countries, only 37 percent of women have accounts, compared to 46 percent of men.

Most poor households operate almost entirely in the cash economy, particularly in the developing world. This means they use cash, physical assets (such as jewelry and livestock), or informal providers (such as money lenders and payment couriers) to meet their financial needs—from receiving wages to saving money. However, these informal mechanisms can be insecure, expensive, and complicated to use. And they offer limited recourse when a major problem arises, such as a serious illness in the family or a poor harvest.

The Opportunity

A growing body of evidence suggests that access to the right financial tools at critical moments can determine whether a poor household is able to capture an opportunity to move out of poverty or absorb a shock without being pushed deeper into debt. However, the existing “bricks and mortar” banking system doesn’t work for poor people, in part because most of their transactions are conducted in cash. Handling cash transactions is costly for banks, utilities companies, and other institutions, which pass along the costs associated with storing, transporting, and processing cash to their customers.

In wealthier countries, people conduct most of their financial activities in digital form, storing value virtually and transferring it instantaneously. The global revolution in mobile communications, along with rapid advances in digital payment systems, is creating opportunities to connect poor households to affordable and reliable financial tools through mobile phones, kiosks, and other digital interfaces.

A migrant worker (left) uses a service point in a neighborhood shop to access his savings account and send money home.

In fact, research has shown that the most effective way to significantly expand poor people’s access to formal financial services is through digital means. In addition to cost savings, digital financial services offer a wide array of benefits:

  • They connect poor people to the formal financial sector and enable them to become customers and suppliers within the wider economy.
  • Financial flows can be accurately tracked, resulting in safer and speedier transactions as well as less corruption and theft.
  • Providers can use financial histories to develop products that are better suited to customers’ needs, cash flow, and risk profiles, including fee-for-service offerings and smaller-unit transactions.
  • Direct deposits (including wages and government assistance) allow money to “bypass” the home, helping users save rather than spend—which often gives women more financial authority within the family.
  • Automatic reminders, positive default options, and other choices offered via mobile phone menus offer convenience and save time.

Our Strategy

The Bill & Melinda Gates Foundation’s Financial Services for the Poor program aims to play a catalytic role in broadening the reach of robust, open, and low-cost digital payment systems, particularly in poor and rural areas—and expanding the range of services available on these platforms. Until the infrastructure and customer base are well established, this might involve a combination of mobile banking services that are accessible on digital devices and brick-and-mortar facilities where subscribers can convert the cash they earn into digital money (and vice-versa).

Our approach has three mutually reinforcing objectives:

  • Increasing poor people’s capacity to weather financial shocks and capture income-generating opportunities
  • Generating economy-wide efficiencies by digitally connecting large numbers of poor and low-income people to one another and to financial services providers, government services, and businesses
  • Reducing the amount of time and money that poor people must spend to conduct financial transactions

A tea vendor in Uttar Pradesh, India, checks her bank balance on her mobile phone.

We are not focused on a particular product or distribution channel, but rather on finding innovative ways to expand access and encourage markets to determine which products and channels are most effective. At the same time, we are aware that interventions in this and other areas too often involve technologies that are made available to the intended users but are then not adopted. To address this demand-side challenge, we are supporting research and product design experiments to identify design features, price incentives, and marketing messages that will encourage poor people to adopt and actively use digital financial services. We are also supporting policymakers as they work to develop policies and regulations that facilitate these developments and provide oversight and accountability.

We believe that the combined effect of these interventions will accelerate the rate at which people can transition out of poverty and build their financial security. Our strategy also recognizes that countries are at different stages in developing an inclusive digital financial system and that any solutions must be appropriate for the cultural and economic context.

Areas of Focus

Digital Payment Systems

In countries with a minimum level of connectivity in poor and rural areas, specifically in Bangladesh, India, Indonesia, Pakistan, and Nigeria, we work with in-country providers to extend the reach of digital payment systems into those communities and encourage people to adopt these systems through a mobile phone, kiosk, or other digital interface. Payment systems are crucial because they enable people to collect payments from customers; buy goods; pay utility bills; pay for housing, healthcare, and education; and send money to friends, family, and business partners. They also enable governments to collect taxes, pay public workers, and disburse social payments. When these transactions are costly and inconvenient, economic activity is impeded.

Digital Financial Services

In countries where digital payment systems have taken hold in poor and rural communities, specifically in Kenya, Tanzania, and Uganda, we work with banks, insurance companies, and other providers to increase the range of financial services that people can access in digital form. Many of these services are designed to meet the specific household management needs of low-income people, particularly smallholder farmers and women.

Global Partnerships

We work at the global level with governments, donors, financial standards-setting bodies, and the private sector to maximize our collective impact on poor people’s access to financial services.

Research and Innovation

We collect data to measure the impact of our grants and interventions and to help key stakeholders make better decisions. We also conduct research and nurture innovations that could lead to longer-term improvements in delivering digital financial services on a broad scale.

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