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Mastercard’s report sheds light on the financially excluded and underserved in APMEA

Nurdianah Md Nur | May 23, 2014
The report profiles the unbanked and underbanked as well as provides insights on how they could become involved in the financial system in future.

Across the Asia/Pacific, Middle East and Africa (APMEA) region, the financially excluded and underserved are most likely to fall within the economically active age group, with the average age ranging from 28 in Nigeria and 41 in the Philippines.

This was part of the findings from Mastercard's 'Road to Inclusion' report. Based on research conducted in India, Indonesia, Vietnam, Philippines, Egypt and Nigeria from the fourth quarter of 2013 to the first quarter of 2014, the report profiled the financially excluded and underserved as well as provided insights on how to bring them into the economic mainstream.

According to Mastercard's definition, the financially excluded are those without access to formal banking facilities while the financially underserved are those without access to any form of electronic payment.

The report revealed that most of the financially excluded and underserved have completed at least secondary education, are employed, and have an average monthly household income ranging from US$200 to US$500. Financial transactions for the majority of them mainly involve the receipt of monthly salary, payment from family and friends, and monthly pensions.

Most of the financially excluded and underserved were found to be saving through social saving schemes or by storing cash in the cupboard or coin jars at home. Even though they acknowledge the fact that banks will be able to better secure their money, many of them do not have a full bank account as they do not have enough money to open one and perceive banking services to have intimidating requirements and complex processes.

While the report found that less than five percent of the respondents across all markets are using prepaid cards, these cards could potentially be an entry point into financial inclusion. This is because once the respondents were educated about the concept, around 30 to 40 percent of the respondents on average found prepaid cards to be relevant for their financial needs.

Based on the report, more than 69 percent of the respondents across all markets had access to a standard mobile phone. Leveraging this trend, a prepaid card that is linked to the mobile phone account can "provide a simple entry point into the financial system and bridge the gap between the formal financial services sector and the underserved or unbanked individuals," said Matthew Driver, president of MasterCard Southeast Asia. "The key is providing relevant services with high convenience and low cost, such as bill payment and P2P capabilities, that empower them to change their lives for the better."

 

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