There is a need to explore ways to use innovative technology to leapfrog traditional barriers to bringing formal financial services to China’s large under-banked population. Despite the huge strides made in China to socially and economically include citizens and lift them out of poverty, roughly 36 percent of China’s population remains underserved by formal financial institutions, according to a 2011 World Bank study.
A primary reason that people – in China and worldwide – remain financially underserved is because it’s difficult for financial institutions to provide services such as bank branches in a business-sustainable way to remote and rural villages and towns.
Such populations miss out on the benefits of basic financial services, such as the ability to save and protect their money, use payment services and acquire credit and insurance. They also miss out on the security, reliability and convenience of electronic payments, such as credit, debit and prepaid cards that are linked to bank accounts.
They are left to conduct their day-to-day activities in cash.
But the advent of mobile technology has enabled new branchless banking solutions that can provide affordable services to the unbanked (economists call this “financial inclusion”) in areas traditional financial services have yet to penetrate.
As mobile use continues to rise, branchless banking solutions that use mobile money have emerged as a way to extend secure, convenient and affordable financial services to people outside the traditional banking system.