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Free Content Innovation and financial inclusion: A review of the literature

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Financial innovation is a major driver of financial inclusion, and its relationship with inequalities in income and opportunities raises some important policy questions. This review covers the following areas of financial inclusion: savings; microinsurance; payments; banking services for the excluded poor; financial literacy; and consumer protection. The review shows that increasing financial inclusion should go beyond the traditional banking sector. This is because mobile network operators have, in most cases, initiated mobile money services, although this is not within the mandate for which they were initially licensed. This has aided the provision of financial services to the majority without bank accounts. There is now competition between commercial banks and mobile network operators, especially when the latter expand financial products on their networks. Partnerships should be established between and among commercial banks as well as between mobile network operators providing mobile money services to fast track interoperability. In most cases, the appropriate institutional and regulatory framework was absent at the inception of mobile money services. Therefore, there is a need for an institutional framework composed of regulators of telecommunications; for mobile network operators as well as central banks to expand financial inclusion without compromising the strategies aimed at eliminating contemporary global challenges such as money laundering.
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Keywords: big data; digital currency; financial inclusion; financial innovation; mobile money

Document Type: Original Article

Publication date: September 1, 2015

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  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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