Davos 2006: IT Leaders Say Financial Services Are Key to Digital Inclusion
3/30/2006
World Economic Forum (WEF) Annual Meeting in Davos, Switzerland in January said that finding ways to provide financial services for people in high-growth markets ranks at the top of a dwindling list of challenges they face in accelerating the pace of technology adoption around the world.
The industry leaders, who comprise the WEF IT Governors group, summarized the results of a series of meetings they held in a report delivered to delegates who attended the Annual Meeting this year. While the report detailed several key challenges to fulfilling the promise of global digital inclusion, financial services were seen as particularly important. This includes not only microfinance, but also developing new ways to detect and prevent identity theft, fraud and money laundering.
The report, however, was equally notable for what it didn't include — a discussion about the need for new kinds of technology products or solutions.
"For the most part, the technology is there," AMD CEO and Chairman Hector Ruiz told 50x15 Connections. Ruiz has been a WEF IT Governor since AMD became a member of the Forum three years ago. This year, at the request of WEF officials, Ruiz also took on a leadership role within the IT Governors group and helped define the issues the executives should address.
"We can refine technology and even deploy it in new ways, much like the way AMD is bringing technology to places in Asia, the Middle East, Africa, Russia and Latin America," Ruiz continued. "We already have the right technology for the job. We need to continue working on the business models."
In Davos this year, one IT Governors meeting took the form of a joint session with the Financial Services Governors. The goal was to learn more about the role each industry could play in helping to bring financial services to emerging markets and to map out the beginnings of a strategic plan to do so.
"Among the half-dozen case-study proposals for collaborative work, from both groups of CEOs, participants agreed that they share an interest in bringing down the cost of 'banking the un-banked' the IT Governors wrote in their report. "...(M)any Western banks would be grateful for a solution to be found through such collaboration, especially as the cost of remittance in rural areas is an issue they have yet to solve."
The Governors also have committed themselves to answering the following questions:
- Must a bank have a branch in a village, or can it work through partners?
- Can it use a POS terminal at a small local shop or must it design a new ATM to take deposits which will cost one-tenth of current ATMs?
- Can the collaboration create a standard platform that will work with 200 or 300 microcredit partners, thus establishing a scalable, cost effective model?
As readers of 50x15 Connections know, a core principal of AMD's 50x15 initiative emphasizes the need for establishing an entire ecosystem of partners to ensure the success of any digital inclusion program. This ecosystem must include a full range of services provided by industry, non-government organizations, non-profit organizations and various governmental bodies at the local, national, regional and global level. From the beginning, this has included microfinance organizations — such as those AMD is working with in Brazil, Asia, China and other regions — that can help fund infrastructure development and can act as a resource for local entrepreneurs.
AMD's experience has shown that microfinance organization involvement is a critical factor in building a self-sustaining, long-term effort that continues to put technology into the hands of people around the world for many years to come.