Investment Institute

To exist financially is to exist socially.

  • 05 May 2022 (5 min read)

Financial inclusion: Significant developments in emerging countries

Access to basic financial services - such as a current account, credit, insurance or a savings product - is a key global issue for economic and social development. Financial inclusion is an essential foundation for being part of a community. However, there are an estimated 1.7 billion adults worldwide without a basic bank account, according to the World Bank1 . But the range of basic financial and banking services on offer in developing countries is increasing, for example through microfinance or digital access via a mobile phone.

Financial exclusion also affects people in developed countries, often those in precarious and low-income jobs. In our view, financial inclusion represents a huge need and an obvious catalyst for social progress.

Technology as a facilitator of digital inclusion

Digital inclusion means making technology accessible to everyone and enabling people to use these tools to improve their social and economic integration. Digital technology has been transformative, particularly in the past few decades, with new innovations significantly changing our lives. In developing countries, growth in digital services is allowing new players to innovate and offer low-cost solutions, helping expand access to underserved populations.

For example, PagSeguro Digital is a Brazilian company offering digital payment services to micro-entrepreneurs. Initially launched as an online payment platform, the group has grown to offer new services, such as PagBank, a digital bank that operates via a smartphone app, targeting people with little access to banking services.

The development of these digital services would not be possible without a solid infrastructure, like companies building telecommunications towers in areas with little or no fixed-line infrastructure. In this way, these services are vital for communities – including providing them access to digital banking.

Social improvement and greater inclusion

Access to banking services represents progress and is a lever for social improvement that also allows individuals to be part of a more sustainable community. Meanwhile, technology facilitates and improves access to banking services in both developed and emerging countries, fostering greater inclusion. We see continued opportunities in both the financial services providers and the technology companies that allow them to reach customers in these underserved markets.

The companies are named as an illustration only and do not constitute investment advice or a recommendation from AXA IM.

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