An August White Paper from the World Economic Forum (WEF) caught our eye recently, for the recommendations it contained on how to build inclusive financial systems.
The paper, Shared Principles for and Inclusive Financial System, leads off by discussing the effects of COVID-19 and the associated “Great Lockdown” that the world experienced in 2020 and the acceleratory effect this had on digital services. It also highlights the fact that while 1.2 billion people worldwide have obtained access to financial services since 2011, there are still 1.7 billion individuals without access.
The principles that the paper lays out are intended to encourage a systems approach to financial inclusion and are primarily focused on increased digitization. They also speak, however, to broader “financial services eco-systems”. There are seven multi-stakeholder principles for an inclusive financial system which are proposed as a shared framework for all.
A number of the principles speak directly to the type of services provided by NILA installment lenders, particularly:
- Inclusive by design: The aim must be to reach the maximum number of people and businesses that can access bank-style financial services while supporting specialized financial services (e.g. installment lenders) for the rest.
- Digitally led: While expanding digital access as a leading channel for the delivery of financial services is a major focus for the paper, it also calls for this to be allied with maintaining “robust physical access channels” (e.g. store-front locations in local communities).
- Economically sustainable and commercially viable: In keeping with calls from groups like Pew Charitable Trusts, the paper recognizes the need for financial service providers to balance cost, affordability and quality, to ensure business viability.
- Effectively regulated: Beholden to laws and regulations that enable innovation and competition while maintaining stability, integrity and consumer protection. This, of course, would rule out laws that effectively ban viable installment products, as we have seen in Illinois, this year.
The paper can be downloaded or viewed here: “Shared Principles for an Inclusive Financial System”
The WEF describes itself as follows:
The World Economic Forum is the International Organization for Public-private Cooperation. The Forum engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas. It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests. The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance.
SOURCE: World Economic Forum