Financial Inclusion Challenge
How can we provide financially excluded individuals and small enterprises with the tools they need to withstand financial shocks and build wealth?
Over 1.8 billion adults are still unbanked or poorly served by existing financial products and services, leaving them unable to pursue economic opportunities, vulnerable to shocks, and at risk of permanent debt or even modern slavery. While the number of people with formal accounts has increased, with mobile phones as a key enabler, innovation is still needed to give underserved or excluded populations the ability to safely transfer and save funds, borrow money, and manage risks with insurance, both for individuals and for their micro, small, and medium enterprises (MSMEs).
The drivers of financial exclusion include lack of access to the internet and financial service agents, unclear explanations of product offerings, lack of formal ID, and discrimination, particularly against women, ethnic minorities, people of color, persons with disabilities, displaced communities, and low-income populations. Ensuring access to tools that allow everyone to take risks, plan for the future, and survive upheavals will require tailored solutions that provide equitable access to affordable financial services. Technology and innovation can help with both increasing access to appropriate services as well as creating products, such as loans secured by digital collateral or weather-indexed microinsurance, that meet the financial needs of the unbanked and underbanked.
The MIT Solve community is looking for eight technology-based solutions that will make transactions easier, protect against predatory debt, and increase the ability of individuals and MSMEs to take risks and build wealth. To that end, Solve seeks solutions that:
- Make it easier and more affordable for individuals and MSMEs to make investments and transfer payments, across geographies and different types of platforms.
- Provide new ways to accurately assess credit-worthiness of MSMEs and individuals, including methods that reduce bias against borrowers who have traditionally lacked equitable access to credit.
- Create and/or reduce frictions to scale safe personal identification methods for individuals who have been kept out of the formal financial system due to a lack of formal identification.
- Help gather, synthesize, or use relevant data to inform the design of insurance products tailored to populations at greater risk of facing shocks such as climate disasters, health-related disruptions, or unstable markets.