A number of funders, including The MasterCard Foundation, insurance giant MetLife, and the Gates Foundation, have hitched their wagons to the idea that financial inclusion begets financial security. And by the looks of how things are going so far, the idea is showing a ton of promise.
There are a few small problems, however: It's hard for very poor people to save and bank money when they earn so little, and it might not be profitable for banks to invest in bringing services to these people. Who wants to open bank branches in places where many residents may earn under a $1000 a year? Even if people do save and set up accounts, the balances are likely to be very low.
Social Money is rolling out a solution for both banks and its potential customers with its CorePro software, and the Gates Foundation is backing the project with a nearly $1.3 million grant.
The Gates grant will help fund the development and testing of the CorePro software, a low-cost, highly flexible goal-based savings solution. For banks, the system can be up and running in about six months and cost 85 percent less than traditional processing platforms. Additionally, the program makes servicing low-balance accounts feasible. For customers, it means access to banking services for India’s poorest populations.
As for expanding savings, Social Money has had a presence in India since 2012 and has worked on its mission to “provide people of all walks of life financial empowerment through the simple idea of setting money aside to manage their finances and create financial security.” Its CorePro software allows financial institutions, payroll companies and merchants to integrate savings accounts into online and mobile banking platforms.
Social Money’s grant was awarded out of Gates’ Financial Services for the Poor program. Although the foundation awards close to $4 billion in annual grants, it’s pretty choosy when it comes to its Financial Services grantmaking, awarding only about 20 grants per year out of the program. Just because Gates doesn’t award a huge number of financial inclusion grants annually doesn’t mean it’s not throwing some serious money at the cause. Since 2005, Gates has made about $700 million in financial inclusion grants, with the average grant coming in at around $5.5 million.