McKinsey: Banks Can Help the Poor--and Themselves

Roughly half the world's adults -- or 2.5 billion people -- don't use financial services to save or borrow.

That can make poor people even poorer, concludes McKinsey & Co. in a new report (registration required). OK, so actually using financial services can make you poorer, too (overdraft fees, anyone?), but the consulting firm has a point. As the growth of microfinance shows, a huge swath of people out there want access to loans, ATM cards and all the other goodies the rich world tends to take for granted. Much of that demand also comes from people who are desperately poor.

Of the 1.2 billion adults who use banking services in Africa, Asia and the Middle East, roughly 800 million live on less than $5 per day, McKinsey found. In India, for instance, 345 million adults surviving on that income use some form of financial service.

That leaves a huge "unbanked" market for financial firms, writes McKinsey:

Large unserved populations represent opportunities for institutions that are able to offer an innovative range of high-quality, affordable financial products and services. Moreover, with the right financial education and support to make good choices, lower-income consumers will benefit from credit, savings, insurance and payments products that help them invest in economic opportunities, better manage their money, reduce risks and plan for the future.