Innovation in financial inclusion. Revenue growth through innovative inclusion

Traditionally, banks operating in emerging markets (EMs) have not viewed financially excluded individuals, and micro, small and medium enterprises (MSMEs) as profitable target customer segments. However, technological advances are increasingly reducing the cost of serving these customers and opening up a potentially significant growth opportunity for banks.

EY believes that driving greater financial inclusion will not only generate sizable economic benefits — boosting gross domestic product (GDP) by up to 14% in large developing economies such as India, and 30% in frontier markets, such as Kenya — but could also increase banking revenues by US$200b. However, improving financial inclusion will be easier in some markets than others.

This report identifies the types of market infrastructure and government policies that will make it easier for banks to rapidly expand financial inclusion through innovative strategies, such as:

• Customizing offerings

• Developing innovative channel strategies

• Employing creative risk mitigation and credit profiling techniques Institutions that act now to increase financial inclusion will be well-placed to dominate retail and MSME banking in EMs for years to come.

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