“In the developing world there is an issue of absolute low incomes,” says Elisabeth Rhyne, managing director of the Center for Financial Inclusion at Accion, a US think tank based in Washington, which aims to foster financial inclusion in the developing world. “In regards to how much in deposits people would be providing, how large a credit they might want, these are below the threshold of feasibility for banks using traditional branch-based, teller-based models. So you couldn’t put a branch out in a rural area and expect it to be profitable, given the amount of income that it would generate.”
Some countries have already come up with innovative ways to bring about financial inclusion. In Kenya, for instance, M-Pesa uses a simple text message to allow people to send and receive cash, resulting in almost half of the country’s GDP now flowing through the system. Barclays’ ABSA Cellphone Banking service in Africa enables customers to use an app to open accounts, apply for loans and receive funds, without ever needing to step into a branch. Established players like Orange and Telefonica are trying to replicate that success in markets from Latin America to Southeast Asia.