Banking for the unbanked, made possible by cloud and mobile technology


By Karen Cone, general manager, Worldwide Financial Services at Microsoft

Today at Sibos, Bill Gates spoke on behalf of the Bill & Melinda Gates Foundation on the immense business opportunity financial institutions have to reach unbanked populations around the world. It’s an opportunity that innovative companies in financial services have been exploring for several years now.

Ben Robinson, chief strategy & marketing officer for Temenos, has dedicated much of his firm’s time to developing a cloud solution to help reach unbanked markets because it’s clear that banking services built on costly legacy technology won’t cut it. The billions of unbanked people across the world want access to banking services, to be able to participate in economic progress, but the old model can’t offer these services across the right channels or at the right price point. Cloud and mobile technologies, he says, will bring down the cost of banking provision and enable significant expansion of financial inclusion.

It’s an issue that luminaries around the world are trying to address. For example, Mohammed Yunus, Nobel Peace Prize winner and founder of Grameen Bank, has helped by pioneering microcredit and microfinance solutions. Alfred Hannig, Executive Director for Alliance for Financial Inclusion, has been addressing it by assembling a global network of policymakers and regulators dedicated to providing the world’s 2.5 billion unbanked safe access to the formal financial system through smart policy initiatives.

At Microsoft, we’re also interested in moving this issue to opportunity and we believe the power of cloud and mobile technology will help large financial institutions grow in new markets, and will help small and midsize businesses grow in developing nations by serving the unbanked.

Market dynamics in developing nations

Expanding banking services to emerging markets is a smart long-term growth strategy for businesses. Vital Wave Consulting reports that more than 90 percent of urban growth is taking place in the developing world and nearly half of the world’s population will live in emerging-market cities by 2030- this trend started in Latin America and is now moving to South Asia and Sub-Saharan Africa. Equally important for businesses, economic growth in these emerging-market cities follows the same trend as in developed nations – they become wealthier as they urbanize.

We’re seeing these same trends with our Microsoft customers who are increasingly reaching out to unbanked populations around the world. A growing body of evidence suggests that having access to formal financial services is a fundamental contributor to helping people fulfill their basic needs so they can capitalize on their assets, labor and savings, and build for the future.  So, as people in traditionally unbanked areas gain access to banking tools, they’re often moving into better financial positions. This presents a key opportunity for banks and financial institutions to serve a vital population that has long been overlooked—and grow their business at the same time.

How cloud and mobile technology opens the door

[View:https://www.youtube.com/watch?v=j-Fj3Taky9k&feature=youtu.be :0:0]

The connected customer is rapidly expanding worldwide, even in underdeveloped and poorer nations. Access and affordability of mobile devices around the globe is growing quickly—for example, about 56 percent of the population in Africa are likely to own a mobile phone by the end of 2014, with some researchers estimating penetration reaching upwards of 80 percent. 

At the same time Microsoft has been investing in the cloud to help banks take advantage of the mobile explosion and reach unbanked populations without having to invest in costly physical bank branches or data centers. Banks and businesses of all size can take advantage of Microsoft’s global portfolio of data centers to set up shop without traditional physical branch investment and serve customers in a new market with the security, privacy, and compliance they require. In addition, financial institutions can use our cloud platform, Microsoft Azure, to develop digital banking solutions for the unbanked. Specifically, financial institutions  can build web, mobile and push applications on Microsoft Azure that enable them to communicate with customers around the globe, accept secure payments, and take advantage of lending and other services. “Push” apps, in particular are a great way to give customers a very high quality service without the need to set up any new infrastructure and invest in physical security.

One example of a financial services company building on this platform is Temenos and their T24 core banking and micro-financing solution running on Azure. Micro-financing and banking services are essential to the growth of emerging economies, but it has been difficult for financial institutions to provide such services through traditionally operated systems. With this solution, Microsoft and Temenos have been instrumental in providing access to financing in Mexico, Africa and Myanmar, with opportunities to expand more broadly. This has allowed banks to grow their business by delivering financial services to the poor, or to rural populations, at a very low cost.

It's exciting to see so many people getting access to mobile banking, lending and other services. The message we want to share with our customers is that this is not just a business for new market entrants - cloud and mobile technologies opens up a new market opportunity for existing financial leaders to serve the unbanked on a global scale like never before.


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