The concept of financial inclusion has been around for a while, and digital approaches to furthering financial inclusion has received a lot of attention because it is a potentially relatively low cost way to bring a basket of financial services to the doorstep of those who have been ill-served by the formal financial sector. Dan Radcliffe and Rodger Voorhies at the Bill & Melinda Gates Foundation recently published a paper titledĀ A Digital Pathway to Financial Inclusion that does a nice job of capturing some of discussion and evidence surrounding digital approaches to financial inclusion.

In their own words:

We depict what digital financial inclusion would look like and present a growing body of evidence which suggests that connecting poor people to a digital financial system will generate sizable welfare benefits. We argue that countries will not bridge the cash-digital divide in one giant leap. Instead, they will likely pass through four stages of market development along the pathway to an inclusive digital economy.

This image is from page 9 of the paper that captures the central thesis:


You hear about all these digital-based interventions, from cell phones to mobile money to digital deposits of government-to-person (G2P) payments and sometimes it’s overwhelming to try to categories which does what and how it matters in the grand scheme of things. I think this 4-stage schema does a pretty good job at providing one framework for all that.