Tackling financial exclusion through the financial markets

Tackling financial exclusion through the financial markets

A global issue

We have never lived in a more interconnected society. We can communicate with friends and colleagues on the other side of the planet in the blink of an eye, and have more access to more information than ever before. In 2017 alone, more data was captured than in the previous 5,000 years of history¹. Yet more than two billion people worldwide do not have access to basic banking services². Principally, the „unbanked“ are concentrated in a handful of countries. Indeed, just 25 countries represent 73% of the total, with India and China together accounting for 32%³.

However, make no mistake, this is a global issue. The United Kingdom has more than a million unbanked people (http://www.financialinclusioncommission.org.uk/facts). In the United States, one in 13 households has no access to a checking or savings account (Financial Exclusion: Why it is more expensive to be poor (2017)).

It is for these reasons that the UN Sustainable Development Goals (SDGs) not only specifically refer to financial inclusion in developing markets, but include a global target to „encourage and expand access to banking, insurance and financial services for all“ (SDG 8, Decent Work & Economic Growth).

A personal and economic problem

Having a bank account allows you to receive income as well as pay bills. In the west it is usually a prerequisite for getting a job. Being outside of the banking system thus forces people towards temporary, unofficial employment. This is not only a disruptive and inconsistent method of income, it is also outside of the national fiscal establishment, meaning there is an opportunity cost in terms of tax loss to the government and ultimately the country as a whole. This is why it is a global issue with consequences for economies and financial markets.
There are many and complex reasons for financial exclusion across the world, but one of the main causes is simple to identify: a lack of access to money. Poverty across the world is pervasive and financial exclusion is a consequence of this. Another barrier is geographical distance, with access to financial services for many in remote parts of the world restricted by virtue of distance to a provider. Finally, a lack of financial services that are specifically designed and appropriately priced for those on lower incomes is also a significant impediment to access.
Tackling financial exclusion by improving access to banking services, such as credit and insurance, will help individuals to establish businesses, and to save, invest and protect themselves financially for the future. This will drastically improve lives and economies.

Towards solutions

Governments and supranationals are coming together to set specific targets to address financial exclusion. At a high level, the UN Sustainable Development Goals have a number of targets focused at the global level – as in SDG 8, Decent Work & Economic Growth, mentioned above. But targets are also being set pertinent to particular groups underserved by virtue of social economic status or gender: hence the inclusion of access to finance considerations within SDG 1, No Poverty; SDG 5, Gender Equality; and SDG 10, Reduced Inequalities.

Specific global initiatives to address the issue also include those driven by the World Bank Group. Its Universal Financial Access 2020 initiative brings together different partners around the globe with the goal of giving a billion people the opportunity to open an instant access account by 2020.4 Additionally, the G20 has committed to advancing financial inclusion worldwide through the implementation of the G20 High- Level Principles for Digital Financial Inclusion.5

The role of investors

Global initiatives will go a long way to helping tackle the root causes of financial exclusion, but investors can also play a crucial role. Organisations addressing financial exclusion can provide attractive opportunities, both in terms of social impact and financial reward.
We have identified a number of organisations dedicated to ameliorating access issues, available via public equity and debt markets. Typically these do one or more of the following: address financial services provision for those on lower incomes; address financial services provision for underserved demographics such as women in some economies; or provide dedicated services for small-scale organisations on favorable terms.

Social and sustainability bonds provide a key mechanism for directing capital towards efforts to improve financial inclusion, for example, the Social Bond issued by the International Finance Corporation (IFC). Recipients of funding must either specifically target increased participation of those on low-incomes within their business models, or be small/medium-sized enterprises in emerging markets owned and run by women. Improving financial access for women in particular represents an enormous opportunity: McKinsey estimates that achieving gender parity in the workforce internationally could add as much as $12 trillion to global GDP by 2025.6

The companies benefiting from the IFC Social Bond are extremely diverse and include: a Romanian clothing business owned by two sisters and with 80% female employees; a Ugandan dairy business using small-scale farmers and suppliers; and a number of specific female-focused projects undertaken by larger companies. For instance, some of the funds raised are supporting the geographic expansion into India, China and Brazil of Essilor, a €115 million market cap company providing glasses and other visionware.7
This illustrates how larger companies, and their investors and financiers, can facilitate delivery of socially advantageous solutions. This also holds true for tackling financial inclusion. Newly listed Brazilian company PagSeguro enables micro-merchants to access banking services by interfacing with merchant smartphones, allowing for formalised payments usually reserved for larger merchants. Meanwhile, Bank Rakyat Indonesia, one of Indonesia’s largest banks, has since 2008 doubled its network of branches and outlets, partly to target underbanked customers in remote areas. The Bank is also collaborating with the Indonesian government to enhance the digitalisation of the sector by providing free domain facilities to a million small entrepreneurs. These efforts directly advance global sustainable development priorities – notably the target within SDG 8, Decent Work & Economic Growth, to „encourage and expand access to banking, insurance and financial services for all“ – while strengthening the domestic economy.

The triple opportunity

We believe that tackling financial exclusion around the world is not just the right thing to do, it is something that will benefit economies and boost financial markets. More people entering the financial system will not only start up more businesses but also boost tax receipts.

As asset managers focused on long-term financial performance, companies and noncorporate issuers actively seeking to address financial exclusion present us and our clients with a compelling trio of opportunities: the opportunity for financial reward; the opportunity to contribute to delivery of the UN Sustainable Development Goals; and the opportunity to play a role in creating a more inclusive and enriched global economy.

20 April 2020
Columbia threadneedle investments logo
Columbia Threadneedle Investments
Share article
Share on twitter
Share on linkedin
Share on email
Verwandte Themen
Share article
Share on twitter
Share on linkedin
Share on email
Verwandte Themen


Tackling financial exclusion through the financial markets

Wichtige informationen

Das hier zugrundeliegende Research und die Analysen sind von Columbia Threadneedle Investments für die eigenen Investmentaktivitäten erstellt worden. Aufgrund dieser sind möglicherweise bereits Entscheidungen noch vor dieser Publikation getroffen worden. Die Veröffentlichung zum jetzigen Zeitpunkt geschieht zufällig. Aus externen Quellen bezogene Informationen werden zwar als glaubwürdig angesehen, für ihren Wahrheitsgehalt und ihre Vollständigkeit kann jedoch keine Garantie übernommen werden. Alle enthaltenen Meinungsäußerungen entsprechen dem Stand zum Zeitpunkt der Veröffentlichung, können jedoch ohne Benachrichtigung geändert werden.

Verwandte Beiträge

4 Oktober 2021

Andrea Carzana & Natalia Luna

Portfolio Manager & Senior Thematic Investment Analyst, Responsible Investment

„Fit für 55“-Paket der EU verstärkt Fokus auf nachhaltige Ergebnisse

Die Europäische Kommission hat ihren „Fit für 55“-Fahrplan bekannt gegeben, der die vorzunehmende Umstellung beschreibt, um das von der EU-Kommission ausgegebene Ziel einer Senkung der Nettotreibhausgasemissionen um mindestens 55 % bis 2030 zu erreichen.
Lesezeit - 5 min
4 Oktober 2021

Natalia Luna

Senior Thematic Investment Analyst, Responsible Investment

Kyle Bergacker

Senior Responsible Investment Analyst

Der Klimawandel: Neubewertung des Risikos von Waldbränden

Die Waldbrandsaison 2020 in den USA zählte zu den schlimmsten seit Beginn der Aufzeichnungen. In Kalifornien brannte eine Fläche von rund 1,6 Millionen Hektar – eine Verdoppelung des letzten Rekords aus dem Jahr 2018.
Lesezeit - - 3 min
1 Oktober 2021

Überdenken des sozialen Zwecks der Vermögensverwaltung

Als ich in den 1990er-Jahren in einem Vorort von Boston aufwuchs, gab es ein paar Gewissheiten in meinem Leben: Die Red Sox werden nie eine World Series gewinnen, Mädchen, die Mathematik mögen, sind einfach nicht cool und rosa Kleidung ist immer angesagt.
Lesezeit - 5 min

Das könnte Ihnen auch gefallen


Teamwork bildet eine wichtige Grundlage unseres Anlageprozesses, der so strukturiert ist, dass er die Ausarbeitung, Bewertung und Umsetzung fundierter und vielversprechender Anlageideen für unsere Portfolios erleichtert.


Columbia Threadneedle Investments bietet eine umfangreiche Palette von Investmentfonds an, die eine Vielzahl von Anlagezielen abdeckt.


Wir bieten eine breite Palette aktiv verwalteter Anlagestrategien und -lösungen für globale, regionale und inländische Märkte und Anlageklassen.