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Approximately 1.4 to 1.7 billion adults worldwide are unbanked, meaning they lack access to formal financial services such as bank accounts or mobile money services. Excluding this population from the digital financial revolution poses significant risks, including increased financial exclusion, a widening digital divide, and hindered economic growth. Without access to digital financial services, these individuals are more vulnerable to financial shocks, have limited opportunities for saving and investment, and often rely on costly and inefficient financial solutions.
Chris Lawrence, Chief of Programs at the Interledger Foundation, has shared insights on how to remove barriers to financial inclusion and promote financial inclusion. The Interledger Foundation is a global nonprofit organization and steward of the Interledger Protocol (ILP) and Open Standards. Its mission is to increase access to digital financial services for individuals in underdeveloped countries who are currently excluded from traditional banking.
Digital Financial Inclusion: The Role of the Interledger Foundation
The Interledger Foundation seeks to support a global community of developers, entrepreneurs, innovators, creators, and artists who are working to eliminate barriers to access and equity within outdated and restrictive systems. The foundation has awarded over $18 million in 188 grants across more than 40 countries. Chris Lawrence said that the Interledger Foundation approaches digital financial inclusion with an open-source mindset and aims to create customized solutions that promote equity within the digital financial system. “We actively support new voices in the tech ecosystem. Our goal is to build a global community that collaborates, learns, and innovates together. This commitment extends not only to the technology itself but also to who builds, who contributes, and who benefits,” he noted.
Having such a large population of unbanked adults worldwide can lead to several socio-economic issues, including increased poverty, inequality, and social exclusion. Chris pointed out that meaningful financial inclusion is not just about bringing people into the system; it’s also about creating systems that work effectively for them once they are part of it. “At the Interledger Foundation, we often say: build with communities, not for them. That distinction is important,” explained Mr. Lawrence.
In discussing the role of Fintech in promoting digital financial inclusion, Chris highlighted the significant opportunities presented by Fintech. He explained that Fintech can respond and adapt more quickly than traditional financial institutions, allowing for rapid iterations to better meet user needs. Chris also pointed out a notable trend: finance is increasingly becoming integrated into various products and platforms, which creates additional access points for users. However, he emphasized that financial inclusion goes beyond just access; it also involves ensuring financial health. He stressed the importance of evaluating whether individuals can achieve economic stability after gaining access to financial services. This, he believes, requires long-term thinking, inclusive design, and the development of ethical technology.
Inclusive Payment Systems
Inclusive payment systems can help reduce the risks of financial exclusion by offering accessible, affordable, and secure financial services tailored to the needs of all individuals, regardless of their geographic location or socioeconomic status. One potential solution to financial exclusion, as noted by Chris Lawrence, is to foster partnerships and collaborations among governments, financial institutions, and technology providers. Chris emphasized, “Fintech companies, banks, and regulators must align around shared goals. We are facing interconnected global challenges, and a resilient financial infrastructure is essential for navigating them.” He also mentioned that significant efforts are needed to “correct past inequities” within the financial system. Moreover, it is vital to adopt a forward-thinking approach. “To advance, we need macroeconomic perspectives that reflect our interdependence. Building an inclusive system requires co-designing it across various sectors,” Chris noted.
Financial exclusion is a significant issue worldwide, and several factors contribute to it. One major reason is the lack of adequate financial infrastructure, which limits access to financial services in rural or remote areas. Additionally, high fees, charges, and minimum balance requirements can make maintaining a bank account unaffordable for many individuals. For some, the challenges of meeting identification and documentation requirements create barriers to accessing financial services. Furthermore, technological obstacles can also hinder access to digital financial services, especially in areas with limited availability of digital devices, internet connectivity, or mobile networks. These factors can vary widely across different regions, countries, and communities, and they often combine to exacerbate the problem of financial exclusion.
Chris Lawrence emphasized that the infrastructure and policy frameworks surrounding financial inclusion are often overlooked when discussing the causes of financial exclusion. Instead of examining these systemic issues, many tend to attribute barriers to financial inclusion solely to the individuals being excluded. Chris argues that this perspective is misleading. He stated, “A beautiful fintech app doesn’t help if someone can’t connect to the internet. In many regions, low or no connectivity remains a significant challenge.”
Mr. Lawrence also highlighted the importance of critically examining policy issues related to financial exclusion. He remarked, “We need thoughtful public infrastructure, support for open financial networks, and broad access to connectivity. Technology might be the last step in the chain, but it’s often the first place people look because it’s tangible.’’ Furthermore, he stressed the necessity for collaboration among individuals and organizations across various sectors to advocate for policies that create a foundation for genuine financial access.
Chris Lawrence is an experienced nonprofit professional committed to creating positive change in the world. For the past 20 years, he has been a dedicated educator, network builder, and advocate for nonprofit organizations. At Interledger, he oversees all aspects of the organization's programmatic activities. He leads the company’s grant-making program and strategic partnerships to further its mission of achieving financial inclusion for the 1.4 billion people who remain unbanked. Interledger aims to do this by utilizing open-web technologies, effective program governance, fundraising, and social media to support grantees and partners in developing innovative solutions that empower individuals and communities worldwide.
