Financial Inclusion: Are We Oversimplifying the Complex Problem?

The issue of financial inclusion is often framed as a simple challenge—one that can be tackled with a series of technological innovations. But at the recent Fintech for Inclusion Global Summit in London, the tension between this polished narrative and the deeper complexities of the problem was palpable. Despite well-meaning intentions, financial inclusion initiatives may be failing to address the more entrenched issues of poverty and inequality.

Hosted by Accion, a global non-profit organisation that champions financial access, the summit highlighted the optimistic view many hold about fintech’s potential to improve lives. Michael Schlein, CEO of Accion, reflected on the organisation’s 60-year legacy, sharing impressive numbers: “We’ve impacted 440 million people worldwide and reached more than 168 million in 2023 alone.” He praised the role of fintech in helping millions access essential financial services.

While these statistics demonstrate progress, one question loomed large: Are we oversimplifying the problem by focusing solely on access? Is financial inclusion being reduced to a checklist of product innovations and digital platforms, while ignoring the broader socio-economic issues at play?

Contrarian Voices: The African Experience

Critics of this narrow view, such as Iyinoluwa “E” Aboyeji, founding partner and CEO of Future Africa, have been vocal about the shortcomings of the financial inclusion agenda, especially in regions like Africa. Aboyeji argues that, despite years of effort, financial inclusion has done little to shift the economic trajectory of the poor. He advocates for radical change, such as customised financial products, agent-based banking, and regulatory frameworks that encourage systemic disruption.

Aboyeji’s views resonate with those who feel the current approach is too simplistic. While acknowledging these critiques, it’s important to note that many global financial institutions and governments remain committed to making a positive difference, albeit through approaches that often fall short of addressing the root causes of poverty.

Simplifying a Complex Problem

One example of this oversimplification emerged during a panel discussion featuring TS Anil, CEO of Monzo, and Jorn Lambert, Chief Product Officer of Mastercard. Both companies have made significant strides in expanding financial services, yet much of the conversation revolved around product innovation—such as smarter banking apps and more secure payment systems.

Monzo, the UK’s leading digital bank with over 8 million customers, is an industry leader in product-led innovation. Under Anil’s leadership, the bank has recovered from a near-collapse in 2020 to become profitable in 2023. But Anil admits that focusing solely on products risks missing the bigger picture: “There is always a risk that we might be missing the forest for the trees,” he confessed, underscoring the challenge of balancing access with impact.

This reductionist approach makes financial inclusion feel manageable and achievable, but it ignores the complex, interconnected drivers of poverty. True financial inclusion should not be limited to launching new products or expanding access to digital services; it must also address political, social, and economic inequalities that trap people in poverty.

The Crypto Debate

The conversation about financial inclusion also touched on the growing role of blockchain and cryptocurrency, especially in regions like Zimbabwe and Nigeria, where traditional financial institutions have struggled to meet citizens’ needs. While cryptocurrency’s potential is often overshadowed by speculators and wealth extractors, its appeal in these regions cannot be dismissed. People are looking for alternatives that challenge the status quo, even if those alternatives are imperfect.

However, even with these innovative approaches, the risk of oversimplification remains. Cryptocurrency is not a panacea for the world’s financial problems, and treating it as such ignores the broader challenges that must be addressed for true financial inclusion to take root.

A Complex, Ongoing Challenge

In the end, financial inclusion is far more complicated than expanding access to digital financial services. As poverty and inequality persist, so too must our willingness to confront the messiness of these issues. Simplifying financial inclusion risks creating a narrative that, while comforting, obscures the real challenges at hand.

In quiet moments, as TS Anil pointed out, we must ask ourselves: Are we focusing too much on access and not enough on impact? Financial inclusion must be more than just product innovation; it must address the systemic factors that perpetuate poverty and inequality. Only then can we move beyond oversimplification and begin to make meaningful progress.