Financial identities for world's unbanked would add USD 250 bln to global GDP

Establishing financial identities for the world’s financially excluded (unbanked) population would add an extra USD 250 billion to global gross domestic product (GDP), a new report has revealed.

Oxford Economics study points to India, Indonesia, the Philippines, Pakistan, and Mexico as stand-out markets for growth in financial services for the unbanked. According to World Bank data, 3.9 billion people around the world (68% of adults worldwide) are locked out of the formal economy due to a lack of credit history. These adults are unable to provide the necessary information that would make up their ‘financial identity’, such as a formally recognised credit history.

By providing unbanked people with the means to have their own financial identity using the FiDaaS model, mobile operators can help unlock overlooked sources of cash to expand the global economy’s capital base.

The report, ‘The YES Economy: Giving the world financial identity’, was authored by global advisory company Oxford Economics, on behalf of Juvo, a provider of Financial Identity as a Service (FiDaaS) technology.

FiDaaS technology analyses alternative data using machine learning to build financial identities, allowing billions of unbanked and underbanked consumers to qualify for financial services, often for the first time. Oxford Economics identified India (USD 7 bln GDP uplift), Indonesia (USD 15 bln), the Philippines (USD 15 bln), Pakistan (USD 9b ln) and Mexico (USD 31 bln) as the stand-out markets for this growth.

For the forecast, Oxford Economics devised a FiDaaS enabled scenario to reflect a world in which mobile telecom operators have created a unique financial identity and credit score for their unbanked customers, allowing the provision of financial services to those that lack a credit history.