Shifting From Financial Inclusion to Financial Health

This article originally appeared in The Wall Street Journal ahead of the World Economic Forum #WEF18.

In a time when technology has transformed people’s lives in so many ways, financial services is one area where the potential of the internet era remains largely unrealized. We’ve been hearing for decades about the demise of cash and the dawn of the digital economy.

So far, though, the traditional financial order is still standing tall. The way most people move and manage their money hasn’t changed much since credit cards appeared on the scene 50 years ago. Working-class Americans spend more than $170 billion a year on fees and interest to use their own hard-earned money. In much of the world, simple transactions like paying a bill or receiving an overseas remittance can be time-consuming—even dangerous.

But it isn’t all bad news. The latest numbers from the World Bank show that we are moving ever closer to the goal of universal financial inclusion by 2020—which includes a basic bank account and a safe and convenient way to send and receive money.

But this should be just the start. Even with the rapid increase in bank accounts around the world, the truth is that most people are underserved by the financial industry. We still live in a world where too many people lack sufficient savings to cover an unexpected expense. In the U.S. nearly half of all families don’t have enough money to pay for a $400 emergency; 40% of U.K. citizens have less than ￡100 saved.

As we head into 2018, we have the opportunity—and the responsibility—to expand our focus from traditional notions of financial inclusion to the broader goal of universal financial health. This means instead of just measuring how many people have a payment account, we must consider all of the financial services that people need to take control over their financial lives—everything from financial-planning tools for managing budgets and expenses to access to affordable credit to start businesses and invest in college; insurance to help deal with unexpected expenses; retirement accounts for long-term savings; and more.

All of this will require much broader collaboration across the financial-services ecosystem. Financial-technology companies and traditional financial-services providers will need to work together to eliminate the barriers that slow the adoption of innovative products and services. We’ll all need to work in partnership with governments and nonprofits to improve financial literacy and education so that people have the knowledge and information they need.

The fact that financial-technology innovators have the ability to create services that support financial health and economic empowerment doesn’t guarantee that they will. I believe we must expand our definition of success beyond financial return alone. Managing and moving money should be a right for all citizens, not just a privilege for the wealthy.

In 2018 and beyond, financial-technology companies, governments, and social-sector organizations must work together to deliver innovative services that reduce costs, increase convenience, and strengthen spending power for people and businesses around the globe. If we do this, we all stand to profit from the growth and prosperity that will result.