Improved financial inclusion could boost global bank revenues by US$200b

London, 11 January 2018

  • Share
  • Banks’ financial inclusion growth opportunities will be greatest in markets that embrace technology-led innovation
  • Policy framework for financial stability drives financial inclusion

EY - View the online version

Banks could generate incremental global annual revenue of US$200b – equivalent to 20% of emerging market banks’ 2016 revenues – by better serving financially excluded individuals and small businesses in 60 emerging countries, according to the EY report Innovation in financial inclusion: revenue growth through innovative inclusion.

Driving greater financial inclusion – the availability of affordable, accessible and relevant financial products – will generate sizeable economic benefits, according to the report, boosting GDP by up to 14% in developing economies such as India, and 30% in frontier markets such as Kenya.

More than 40% of micro, small and medium enterprises (MSMEs) in the least developed countries reported challenges in obtaining financing, compared to 30% in middle-income countries and just 15% in high-income regions, as traditionally, banks operating in emerging markets (Ems) have not viewed financially excluded individuals and MSMEs as profitable target customer segments.

Jan Bellens, EY Global Banking & Capital Markets Emerging Markets Leader, says:

“There is a multitude of opportunity for banks to increase profits by being more financially inclusive. Not only does financial inclusiveness have a positive impact on financial institutions’ bottom line, but it is also good for local economies and individuals as inclusiveness tends to smooth income trends, grow local businesses, protect against natural and man-made disasters and helps individuals to save for important life events.”

According to the report, banks’ financial inclusion growth opportunities will be the greatest in markets that embrace technology-led innovation and that have a clear and supportive policy framework for financial stability. Drivers of technology infrastructure include mobile adoption and e-payments, national digital identity systems, credit data infrastructure, open access to digital data and currency digitization. Policy and systemic drivers include strong customer safeguards, responsible financial literacy programs, bankruptcy regimes, regulatory incentives for banks, diverse financial ecosystems and interoperable financial systems.

The report states that banks focusing on the following three actions will be most successful in the realm of financial inclusiveness:

  1. Customize offerings to raise relevance and deepen account adoption: To drive financial inclusion, banks must structure highly relevant and simplified financial solutions that meet the specific needs of their customers at an affordable cost. For example, in Kenya and Uganda a global financial institution provides poor communities with a low-cost group savings account, making more than US$229k available in loans to the community.
  2. Innovate channels to reach more customers at lower cost: Financial institutions will likely require a “bricks-and-clicks” distribution model that includes a physical branch presence to build trust and confidence, supplemented by correspondent agents. In Colombia, a telecom company has converted 13,000 pay phones into “payphone banks” allowing underserved customers to deposit coin-denomination daily earnings into their own microsavings accounts, which can be used to pay utility bills or apply for microloans at stores and retailers.
  3. Creatively manage risk to address absence of credit histories: Non-banks, such as venture capitalists and some microloan organizations, are pioneering in this space, developing new underwriting and credit scoring analytics for individuals and businesses. For example, in India, a small business lender that developed credit assessment processes using business and behavioral data, trade associations and referrals, coupled with modern workflow automation. It has disbursed US$32m in loans to MSMEs in India since 2014.

The complete report is available to download here.

- Ends -

Notes to Editors

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About EY’s Global Banking & Capital Markets Sector

In today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. EY’s Global Banking & Capital Markets Sector brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Sector team works to anticipate market trends, identify their implications and develop points of view on relevant sector issues. Ultimately, this team enables us to help you meet your goals and compete more effectively.