Monday, September 1, 2014

Banking Service - a must have fundamental human right

Banking service as a new fundamental human right.

It seems not many countries really believe in this that’s why we have 2/3 of world population unbanked even after more than seven centuries of modern form of banking. Banking promotes economic activities while keeping money in circulation where it is needed for good.

In India – a country of 1.27 billion people, 600 million people do not even have a bank account. 87% of the people do not have access to formal bank credit while 95% of the villages still do not have banking facilities.

Currently India top 5 banks have 35,000 branches and opening more every year. There are about 27 nationalized banks, 19 private sector banks, 32 foreign banks and various co-operative banks, regional rural banks operating in India.

In today’s world, money is just data which can flow over various types of mediums so why banking industry lag way behind in providing basic banking services to all. Probably Governments failed to set right priorities for them in many countries and there, Banks purpose has changed to a pure business entity merely focussed on profit making opportunities rather than meeting their first obligation of connecting everyone to banking services.

For years, banking has been a privileged service but time has now come to make it part of everybody’s life.

In recent years, some new players have completely revamped business models around some key banking services like payments, fund transfers and lending.

New banks like mBank in Poland, Fidor bank in Germany, Metro Bank in UK, BforBank in France and Simple Bank in US are offering banking services to consumers in completely new user friendly simple ways or offering tools to let them manage their own funds using banks different products themselves. 

The M-Pesa mobile payment service is used by a staggering 70 percent of the country’s adult population while M-Shwari, a mobile-only banking service there offers account opening to savings and lending services. Customers initiate their accounts from their phones, triggering automated processes to verify KYC information in a few seconds.

Dwalla offers a new payment network much more cost efficient than Paypal, Visa or Master Card. Alipay in China now overtakes PayPal as The Largest Mobile Payments Platform in the world. In 2013, Alipay announced that it processed nearly $150 billion in mobile transactions triggered by its 100 millions mobile customers.

Kiva has transformed micro-lending and its reach globally while Lending Club & Prosper is taking lead in peer to peer lending.

These innovative & disruptive ways leveraging digital infrastructure are good signs for ensuring banking finally reaches to everyone.

Governments need to invest in digital infrastructure & improve regulatory frameworks to allow Banks & financial institutions to extend their services reach to everyone.

Banks need to build long term strategy to benefit from the fortune at the bottom of the pyramid.

Wishing everyone a ubiquitous & joyful Future of Banking.

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