With many families still trapped in financial crisis, the ability to save and invest has always been a pipe dream and most of these families have been chasing ghost shadows. However, MasterCard is challenging the status quo with the launch of its financial inclusion lab that will incubate financial tools meant to free people entombed in these financial traps.
The lab which targets over 100 million people globally has been boosted by a $11 million grant from Bill & Melinda Gates Foundation to fund the research and incubations taking place at the workshop.
“Too many people lack access to the most basic financial services, leaving them trapped in a cash economy that imposes greater risks and costs on those least able to afford them,” said Ajay Banga, president and CEO at MasterCard. “Through the investment made by the Gates Foundation, coupled with our strong innovation processes, MasterCard will create and scale financial services that open up a world of inclusion and help people build better, brighter futures.”
The Gates Foundation works with the private sector, NGOs, governments and others to direct resources and expertise to address critical challenges that can’t be solved by market forces alone. With this grant, the foundation seeks to extend financial services to those whose economic lives are inhibited and eclipsed by a combination of local factors and institution-wide exclusion. The grant enables MasterCard to reach into these new markets that may otherwise be commercially unviable.
Despite many global innovations that help guide people on investment and financial management, there are still 2.5 billion adults around the world who are excluded from the formal financial system. These people lack access to basic financial services and are forced to rely on cash, which creates instability and significant risks.
The new lab will be part of MasterCard Labs, MasterCard’s global Research and Development division that focuses on the evolution of technological and consumer trends and has created hundreds of prototypes over the last several years in a variety of areas from payment acceptance to authentication to Person-to-Person payments. Leveraging the proven innovation process, the lab will generate financial inclusion solutions and fast-track the best ideas from concept through prototype, pilot and into commercialization faster than ever before.
If incubators develop more ideas at the incubation stage, the Fund will add $8 million to enable the startups reach maturity stage, hoping for commercialization at some stage.
MasterCard will manage the MasterCard Labs for Financial Inclusion in a manner that ensures global access. This ensures that the results stemming from the lab have true benefits for poor people with the widest possible application and the capacity to extend solutions regionally and possibly globally.
The work done at the MasterCard Labs for Financial Inclusion will lead to new products and services for poor people that leverage existing and new infrastructures, including those that are not specific to MasterCard. The lessons from the MasterCard Labs for Financial Inclusion will be distributed for the public good, and all products and services coming out of the Lab will make use of standards ensuring maximum flexibility to empower local financial service providers for the benefit of poor people in the developing world.
