Gates and World Bank Back Tech-Aided Access for the Underbanked
Monday, November 10, 2014
Imagine living without a connection to a bank or financial institution. Your check from your employer must be cashed at a check-cashing store, where they charge 5 percent of the check amount. You cannot shop online, do not have access to credit, and are likely terrified of being robbed. If you need to send money to a child living in another state or family member living in your country of origin, you are charged 5-8 percent to send funds to them, and they then pay another 5-8 percent to cash the money order. Luckily, new technology is on the horizon to help millions gain monetary protections and increase credit opportunities, leading to small business expansion and more hope for those trying to climb out of poverty.
The number of people living in the United States and in the developed world without access to the convenience and safety measures banks provide is staggering. In the U.S., an estimated 9.6 million adults live without a bank account. Internationally, an estimated 2.5 billion adults, including 59 percent of people in the developing countries, live in a cash-only society without access to credit or other opportunities to grow their small businesses. Access is particularly limited for women in these countries: 63 percent, compared to 54 percent of men, do not possess an account. The numbers increases to more than 75 percent for adults living in extreme poverty.
In the United States, the end of the recession and the onset of new technology have created new avenues for the poor to access banks and financial institutions. According to the Federal Reserve, 25 million Americans built a relationship with a bank or other financial institution for the first time in 2013. Of those, more than a third opened an account because their new employer required direct deposit.