A recent paper from the Aspen Institute caught the eye of the Direct Express® team due to its focus on inclusive financial systems.
The paper, Building an Inclusive Financial System: A Global Economic Imperative for the Decade looks at the progress made around the world in ensuring individuals have access to a bank or other transaction account and the factors that have driven it. Despite this progress, the paper says, challenges remain in making “…financial services inclusive, useful and valuable to all people” and that there is a consequent need to refocus the “role and power of finance to drive a stronger and more inclusive economy”.
Against this context, the paper seeks to contribute in four areas:
- Make the case that building an inclusive financial system that delivers measurable improvements in household well-being and growth must be a national policy priority.
- Understand the elements of and key stakeholders (across public, private and social sectors) in building an inclusive financial system.
- Ensure the key principles underpinning an inclusive financial system inform that policy agenda.
- Develop a policy agenda to build an inclusive financial system relevant to their national context and formalized in a next-generation financial inclusion strategy.
The paper defines an inclusive financial system as:
An inclusive financial system provides all people with the ability to access, utilize and reap the benefits of a full suite of financial products and services that facilitate stability, resilience and long-term financial security
It goes on to the importance of payments the required “enabling infrastructure” of an inclusive financial system, saying:
The payments infrastructure is what allows for the movement of money between individuals, businesses, and governments, and is the backbone of a financial system, as it enables efficient arms-length transactions…. Without a payments infrastructure that is universally available, certain parts of the economy are shut out of the overall economic system and incur much higher costs in transactions they can conduct.
The goal of Direct Express® is clear: Placing a network-branded prepaid card in the hands of those who do not have bank accounts. As such, the program is providing the “transaction account” that the Aspen Institute references, to 4.5 million Americans. By allowing cardholders access to the “enabling infrastructure” of electronic payments, the Direct Express® program is playing its part in driving critical financial inclusivity in the United States.
SOURCE: Aspen Institute