Facilitators of Open Banking Financial Inclusion

Open Banking Financial Inclusion

One of the world’s most widespread problems lies within the boundaries of one of the UN’s Sustainable Development Goals (SDGs) to reduce inequalities, namely SDG 10. Financial exclusion’s transformation to become a goal birthed new equalities of opportunities and availabilities to access financial services, or as more commonly known, financial inclusion. The endless opportunities brought along by open banking financial inclusion have opened doors that were not fathomable at some point, obscuring financial exclusion challenges depending on geography, legislation, culture, and the most significant one, technology. But to dissect the causes of financial exclusion, first, it is essential to understand that these causes are also changing, birthing a wave of efforts carried out to run the diagnosis before presenting the solution.

The world on its own is plagued with financial exclusion, with each country contenting its full strength to face an opponent threatening and impairing the country’s inclusive drive. While some causes are historically rooted and cultural, others are recently developed incidentally. Still, the common conceptualization remains that the underbanked are close to half the world’s population, with the financially excluded addressable population estimated to be around 1.5 billion. But this also is interchangeable, as it confines within the broad definition of financially excluded, unbanked, and the underbanked.

The aspiration to move to a cashless system demanded inclusivity on all levels. But does cashless mean banked? The truth is, there cannot be a direct consensus on the definitions as the concepts vary regionally. For instance, the presence of mobile money is only dominant in emerging countries, yet does it count in the World Bank’s key performance indicators as a solution? And, if we look at this from another view, is crypto money, in this case, a financial answer for the financially excluded? Could open banking financial inclusion be a means or an end?

Global Use Cases

In the famous Kenyan M-Pesa mobile money, the country’s banking inclusion score reached only 5 percent, driven by high costs of opening branches in rural counties and establishing operations. By way of alternative, Kenya’s mobile telco market, at some point, was well established, with the country obtaining a relatively high literacy score. From that aspect, the idea of sending money, like sending an SMS was implemented at lightning speed, making it a reference story.

The world has adapted to the new digital financial world as the public’s trust in traditional and local banks decreases, demanding more control over their financial processes. And Central America’s Belize is the ideal example, as the country’s VAT reached 20 percent. While it is smaller than Kenya, in this case, distance does not play much of a role in the rural vs. urban factor. As a country heavily relying on tourism and remittances, COVID-19 and awareness campaigns did not help move the country in the right direction. While neighboring countries tried the national wallet and the Central Bank Digital Currency (CBDC), the momentous move to cashless or mobile money is still far behind.

One factor that drove Europe’s statistical factor in terms of financial exclusion is the rising regulatory compliance, and from there follows the fortification of the bank. Nowadays, it is becoming exceedingly difficult for Europeans to own bank accounts in areas where they are not fiscally residents. European residency does not employ banking pass portability, and compliance pressures bankers to accept local tax residents. Now, it is not sufficient to be a European citizen.

What Is the World Doing?

The World Bank, UN, and NGOs have developed and implemented programs to battle financial exclusion through the much-needed funding and training, equipping them with what is needed to win this battle. Yet the question remains, is it enough? Clearly not. Despite the purity of the intentions, on-ground actions are what’s truly needed. Statistics, research, offices, programs, and missions are all good, but is the achievement aligned with the expectations, both pre and post COVID? The main conclusion is that organizations cannot deliver without the people’s intervention. Through their performance at micro, the people deliver on the micro by using the same vital tools: technology, incentives, and creating awareness.

Taking us to the third and final aspect, the solution.

Emerging from the firm belief that there are many causes for financial exclusion, the reality is that there is a one-size-fits-all solution. That solution comes in the shape of various digital ingredients, Banking as a Service (BaaS), Coopetition, and declining costs of smartphones.

There is no arguing that banks are hated as much as taxes. As the world and international organizations cannot solitarily deliver, one industrial sector cannot self-develop, regardless of the intentions. BaaS provides banking services through friendly service providers, mobile applications, and FinTech companies. As long as the overall agreement is that accessibility to financial services is not necessarily a savings account, BaaS can deliver the rest.

Bankers play the role of facilitators and deliver digital solutions by enabling FinTech service providers to reach out to the financially excluded, unbanked, underbanked, and soon to be rejected from banks, using their UX/UI approach at a fraction of the cost for the same service: coopetition. Every Fintech will be competing by differentiating its offer and loyalty program.


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