How tech can help bank the unbanked in the Mena region

United Nations data shows that 3.7 billion people, almost half the world’s population, the majority women, and most in developing countries, are still offline

By Ehtesham Shahid

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Published: Mon 26 Dec 2022, 10:43 PM

Last updated: Mon 26 Dec 2022, 10:44 PM

Strange as it may sound, the Middle East and North Africa (Mena) region has among the world’s largest unbanked population. It also has the largest financial inclusion disparity. Even in the relatively more prosperous Gulf Cooperation Council (GCC), around 22 per cent of the population is unbanked. In a global context, 85 million of the world’s two billion unbanked adults live within and without the glitz and glamour of our megacities.

Here is why we should pay due attention to these statistics. Access to banking services is a critical parameter and a crucial enabler in reducing extreme poverty and boosting shared prosperity. A McKinsey report says 2.5 billion of the world’s adults don’t use traditional banks or semi-formal microfinance institutions to save or borrow money. “Nearly 2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East,” says the report.


According to the Global Findex database, 1.7 billion adults worldwide are unbanked, which means they do not participate in any primary financial product or service. Quoting a CGAP 2020 data, a Cambridge University study says only 41 percent of adults in the Mena region have access to banks. Since essential financial services and strengthening women’s role in finance help boost economic growth, the region’s policymakers consider creating more opportunities for them as their primary development challenge.

Beyond these numbers, though, lives are spent without optimum access to the basic minimum services most of us benefit from. From the banking sector’s opportunity perspective, and perhaps more importantly, unserved does not necessarily mean “unservable.” Once the unbanked are tapped as people who need to be brought under a financial inclusion umbrella, one has to go to the technology drawing board to find solutions fitting most of their requirements.


If the banking system has failed the underprivileged, at least so far, technology has come to the rescue. Financial technology, more popularly referred to these days as Fintech, has been bringing significant value to the unbanked and underbanked. Their solutions mostly transcend regional limitations, enable trust, and enhance efficiency.

So, for an agriculture worker, a wallet app’s service would facilitate wage-tracking, bonuses, and deductions daily, something banks are ill-equipped to do these days. Such apps – and other financial solutions – make mostly unbanked workers aware of when to access these funds. For those hiring such workers, it is a matter of workforce retention and a longer-term service guarantee.

However, it would be a mistake to assume that access to technology is uniformly available. The United Nations data shows that 3.7 billion people, almost half the world’s population, the majority women, and most in developing countries, are still offline. Moreover, attached to financial inclusion are other underlying issues such as gender parity, social empowerment, and, indeed, sustainable development.

The lack of financial inclusion has a tangible impact on economic growth. For instance, the OECD says women generate less than 1/5th of the region’s GDP, resulting in an annual loss of $575 billion. Technology may not have all the answers, but it can do wonders if it develops a gender-intelligent approach over and above traditional gender-neutral products.

Service providers also need to leverage the region’s optimum access to technology and also market readiness. Even the 65 million unbanked women in the Mena region own a mobile phone. However, as many as three million among them work in the private sector and get paid in cash. Since women traditionally live longer than men and have shorter working lives on average, perhaps they require more financial awareness and empowerment than men. Their remaining unbanked is a discrepancy craving attention.

The challenge so far has been that the unbanked population remains relatively high despite widespread penetration (96 per cent) of smartphones in our region, substantially above the 58 per cent global average. However, the good news has come from the technology demonstration effect, which has touched traditional banks as they are beginning to employ more robust data analytics to pursue their objectives. Some have even prioritized investment in compliance over capabilities for better results.

An unbanked population can leave adverse fallouts in society. Besides not having easy access to financial institutions, they also do not use services such as insurance, deposit-making, credit facilities, etc. No access to these essential services compels them to use cash and other equivalents to carry out their financial transactions. Those who have fallen through the cracks deserve better, even if it is just a matter of choice.

- Ehtesham Shahid is an editor and researcher based in the UAE



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