Tackling global financial exclusion through local education

Financial exclusion is a worldwide crisis that has left 1.7 billion people unable to access mainstream financial services.

The scale of the problem is stark. According to the World Bank, more than a billion people in Asia Pacific lack access to formal financial services, while 45 million in the USA have no credit profile. In Brazil, 45 million are unbanked and over five million in the UK have limited credit history.

Such is the gravity of this issue that the United Nations has included access to financial services, such as credit and microfinance, among its Sustainable Development Goals. However, when addressed effectively, there is growing evidence that solutions to this issue can open the door to opportunities for people to transform their lives – from homes and healthcare to education and entrepreneurship.

Behind the bleak headline figures, there are multiple stories of real people and communities being held back because they are excluded from the financial system.

One example is Teddy Cairuna Cauper, the leader of the Shipibo-Conibo Indigenous Community in Peru who says his community has been hit hard by the pandemic.

Schools switched to online teaching, but they had no internet access and the children were falling behind.

Without the usual tourist visits and crafts fairs, the local women had no one to sell their handicrafts to and ongoing deforestation is damaging their food and medicine supply.

Teddy’s dream is to build a community business to further the education of their children and protect the future of the Amazon forest.

He said: “We are very far away from the city and it made us feel that we didn’t have support. We felt forgotten and alone in the jungle.

“Our community’s dream is to develop an experiential tourism business to showcase Shipibo traditions and culture and to send our children to university.

“We want to set an example to these communities by being a protector of the forest as it protects us and there is everything we need here - materials for construction, food, medicine and clean air.”

But the indigenous community did not have access to financial education and services until Experian offered support and partnered with organisation Perspektiva to provide laptops, web connectivity and introduced business mentoring.

Members of the community now have weekly mentoring calls, access to daily online support and have developed their business plans and launched marketing campaigns.

Of the 17 people who received business coaching in Shipibo-Conibo, eight have launched new businesses selling online for the first time.

As one of the world’s largest data and technology businesses, Experian is using innovation, technology and education to help people achieve financial inclusion worldwide.

“We see examples of people struggling to get access to affordable finance in both the developed and developing world,” says Abigail Lovell, Chief Sustainability Officer at Experian.

“Sometimes the simplest methods of financial education can deliver life changing results. However, as the global economy develops, we also need to find new methods to help ensure that people can get fair and appropriate access to mainstream financial services, to take control of their financial circumstances, growing their businesses and building their futures.”

Lovell believes that it is through a combination of dedicated financial education programmes coupled with the innovative application of new technology and new data sources that financial exclusion can be tackled effectively.

Following the pandemic, Experian launched its United for Financial Health initiative, partnering with NGOs to deliver financial education, tools and resources to vulnerable communities, helping people like Teddy to recover and grow their businesses.

In other projects, innovation has been the key driver for change. Experian’s ProveID product helped 22 million Indian citizens without formal documentation, using alternative data to help them access mainstream financial services. While in the USA, Experian Go™, was launched to help 50 million American ‘credit invisibles’; people with no credit history, begin building credit on their own terms.

“We’ve had some success, but there’s much more to do,” adds Lovell. “People need to be given the opportunity to prosper and flourish no matter what their background may be.”

Thanks to their ingenuity, hard work and a new support network, Teddy and his community are now earning up to three times more than the average community wage and 15 jobs have been created locally. Small steps have made a huge difference – and Teddy’s example demonstrates how lives can be genuinely transformed by tackling financial exclusion.