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Tapping an Invisible Market: We Can Make Financial Inclusion a Reality

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Five years after the near-collapse of the financial system, the rules of the global economy have changed, creating opportunity where no one expected to find it. Anyone unconvinced of this need only consider one fact: The economy of Africa is now growing as fast or faster than that of any other continent on the planet -- at roughly double the pace of the United States, five times as fast as Northern Europe and vying for first place with Asia.

That growth is being mirrored across what used to be called the 'developing' world, with the result that hundreds of millions of people who until very recently subsisted on less than $2 a day are now moving into a new income bracket of between $4 and $12 -- a level at which they can make decisions that affect their economic future, rather than just surviving day to day.

This emerging class is at the leading edge of a global economic shift of unprecedented proportions -- and that's before you consider the rest of the "invisible market" -- the roughly 2.5 billion people who currently live in poverty and lack access to the many financial services we take for granted. By 2020, their combined economic power will near $6 trillion.

This is a new class of consumer -- a micro-consumer, on a potentially enormous scale. Its millions of members are not waiting for outside help to climb the economic ladder and work their way out of poverty. But their exclusion from financial services hinders their progress and locks us all out of a massive, mutually beneficial market. Meeting the full spectrum of their financial services needs will increase their economic security, accelerate sustainable growth, and ultimately yield benefits for all of us.

Global innovators have already recognized the potential for this market, transforming the landscape of the possible and disrupting the old assumptions of development aid along the way. For instance, AllLife Insurance has developed a way to provide micro-insurance for thousands of South Africans living with HIV aids -- and they are doing it in a scalable, sustainable and, yes, profitable way.

In Bogota, I met an empanada seller who also exemplifies this trend. Last year, Carmen wanted to expand her business, but was thwarted by the distance she had to travel to access a bank loan. Today, thanks to mobile technology, the bank has a pilot program that sent a loan officer and his portable office right to her neighborhood, where she can access her credit and make monthly payments with a few key strokes. Ten million pesos (about USD $5,640) later, Carmen continues to grow her business and now employs eight people and sells over 1,200 empanadas every day.

Delivering financial services to the base of the pyramid should not remain the exclusive province of nonprofits, NGOs and a handful of progressive banks and social impact investors. So, The Center for Financial Inclusion at Accion is convening a gathering of new partners from a broad array of sectors and areas of expertise, including commercial leaders like Citi, Visa, MasterCard, MetLife and Western Union and large philanthropic institutions like the Bill and Melinda Gates Foundation.

We are calling this gathering Financial Inclusion 2020 -- an international effort to connect the world's working poor to a full suite of quality, affordable, and convenient financial services, delivered with dignity. We're still in the early stages, but momentum is building -- as highlighted by World Bank President Jim Yong Kim's recent commitment to help achieve universal access by 2020. According to our research mapping the "invisible market," it turns out that the majority of the 2.5 billion in this truly emerging market live in just six countries: Nigeria, Pakistan, India, Indonesia, Brazil and China. A focused effort here will make a massive difference. To do that, we are building a Roadmap to Financial Inclusion - designed to reach these potential clients and put their needs first. The biggest financial institutions have built their traditional business models around serving predictable growth, mostly in rich countries. The next wave of global growth will not be as predictable. It will require agility, bold thinking, a tolerance for smart risk, and a willingness to experiment. We've already seen businesses with an international reach and homegrown nonprofit initiatives make impressive inroads on this new frontier. It is time to think bigger -- making the "invisible market" a visible, thriving sector for sustainable growth, and helping 2.5 billion people work their way out of poverty and improve their lives.

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Michael Schlein is the president and CEO of Accion, a global nonprofit dedicated to building financial inclusion.