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How Middle East banks can bridge the financial divide

Financial inclusion is crucial to ensure the region's sustainable economic development

Woman bank money Reuters/Amr Abdallah Dalsh
About half of the unbanked individuals across the world were women, members of rural households of limited means and workers outside the formal economy

Financial inclusion involves expanding access to banking services – be that opening a bank account, transferring money, receiving wages or obtaining insurance – to all segments of society.

Its societal and economic benefits are clear.

Bridging the financial divide has the potential to unlock new business opportunities. It will empower individuals with greater financial independence and generate sustainable economic progress throughout the region. 

Close to one-third of adults worldwide – or 1.7 billion people – were still unbanked, a 2017 World Bank study found. 

About half of the unbanked individuals were women, members of rural households of limited means, and workers outside the formal economy. More than half of the world’s unbanked adults live in seven economies, including Pakistan and Egypt. 

These figures indicate the stark inequality within our societies and point to the importance for banks and governments to focus on driving financial inclusion. 

Addressing the needs of the underserved

While banks in the Middle East and North Africa seek to increase access to financial products, identifying the key demographics is crucial to ensure that any initiatives are effective. 

Extending services to groups that are historically unbanked or underbanked – including youths aged 16-21, women and the self-employed – remains a key factor in building on the region’s progress. 

Banks should also focus on simplifying the process for opening a bank account for customers across the board by streamlining the Know Your Customer due diligence.

These practices are key to ensure that anyone can use their National ID as the sole identification requirement. 

Maintaining momentum on this front creates progress and provides great long-term benefits to banks. By helping more families and businesses plan for everything from long-term goals to unexpected emergencies, they can gain loyal customers.  

Collaboration between private and public 

In tandem the private and public sector can reach overlooked groups and truly make a difference in accelerating financial inclusion in the region and beyond.

Banks have the resources, infrastructure and expertise to drive change by bringing their financial expertise and the latest technological advancements to the table.

Financial inclusion is one of the UAE Central Bank’s key areas of focus. All the region’s banks must follow this lead. Developing and deploying inclusive products and services tailored to their specific needs will help underserved communities.  

Digitalisation is also pivotal in the global push to make financial services accessible to all.

The UAE Central Bank’s latest initiative is to accelerate the digital transformation of its financial services sector. Doing so will mean key financial products are more accessible to all UAE residents.

Mashreq is playing its own part, introducing facial recognition technology for its digital Mashreq Neo bank. This cutting-edge tech validates and authenticates users.

Public institutions, meanwhile, possess the regulatory authority and policy influence to provide an enabling environment. They establish inclusive regulatory frameworks and facilitate the necessary infrastructure. 

Building upon the positive progress made already means recognising that financial inclusion is not only a key component of fostering stronger and more resilient economies. It also ensures sustainable equal growth for all countries in the region. 

Fernando Morillo is group head of retail banking at Mashreq