The banking industry often celebrates advancements in real-time payments, but these changes can lead to exclusion for vulnerable populations. As technological progress accelerates, the risk of underbanking for vulnerable adults in the Middle East and North Africa (MENA) region grows, necessitating targeted strategies to ensure financial inclusion.
Introduce the core issue of underbanking and its implications for vulnerable adults
The rapid adoption of digital banking solutions has created a growing divide between technologically savvy users and those who lack access to or familiarity with these systems. Vulnerable adults—often including the elderly, low-income individuals, and those with disabilities—face significant barriers in accessing traditional and emerging banking services. These challenges are compounded by limited digital literacy, inadequate infrastructure in rural areas, and regulatory gaps that fail to address the unique needs of this demographic.
In the MENA region, where rural populations account for a substantial portion of the population, the lack of physical banking infrastructure exacerbates the problem. Many rural areas lack branches or ATMs, forcing residents to travel long distances to access basic services. For the elderly, this physical barrier is often compounded by a preference for in-person interactions and skepticism toward digital platforms. Similarly, individuals with disabilities may find existing banking interfaces inaccessible, whether due to design flaws or a lack of adaptive technologies. These systemic issues contribute to a cycle of exclusion, where vulnerable groups are unable to participate in the formal economy, limiting their ability to save, invest, or access credit.
Technological Solutions for Inclusion
Several technological innovations are being explored to bridge this gap. For example, mobile banking apps with simplified interfaces and multilingual support are being deployed in countries like Egypt and Jordan to cater to non-English speakers. Additionally, biometric authentication methods, such as fingerprint and facial recognition, are being integrated into banking platforms to reduce reliance on traditional passwords, which can be a barrier for users with limited technical skills.
Case studies from the UAE and Saudi Arabia highlight successful implementations. In the UAE, banks have partnered with telecom providers to offer zero-fee mobile money services, enabling unbanked populations to access basic financial tools. These partnerships leverage existing mobile networks to reach individuals who may not have access to traditional banking infrastructure. The UAE’s approach has been particularly effective in rural areas, where mobile penetration is high but physical bank branches are scarce. Similarly, Saudi Arabia’s National Transformation Plan includes initiatives to expand digital literacy programs, ensuring that vulnerable groups can navigate modern banking ecosystems. These programs are often delivered through community centers or local NGOs, providing hands-on training in digital banking basics.
Beyond these examples, other technologies such as AI-driven chatbots and voice-activated interfaces are being tested to assist users with limited digital literacy. These tools can guide individuals through complex processes, such as opening an account or applying for a loan, in simple, conversational language. In some cases, banks are also integrating offline functionality into mobile apps, allowing users to perform basic transactions without an internet connection—a critical feature in areas with unreliable connectivity.
Regulatory Frameworks Supporting Inclusivity
Regulatory bodies across the MENA region are beginning to recognize the importance of financial inclusion. The Central Bank of the UAE has introduced guidelines encouraging banks to adopt inclusive digital strategies, while Saudi Arabia’s CBUAE has mandated that financial institutions provide accessible services for all segments of the population. However, these frameworks often lack specific metrics or enforcement mechanisms to ensure compliance.
Proposed regulatory changes could include mandatory digital literacy training for banks, incentives for institutions that serve underbanked communities, and the establishment of a regional oversight body to monitor progress. Such measures would align with global standards, such as the World Bank’s Universal Financial Access 2020 goals, and could be tailored to the unique socio-economic context of the MENA region. For instance, regulators could require banks to report on the percentage of their services used by vulnerable populations, creating accountability and transparency in inclusion efforts.
The absence of clear metrics in current frameworks also highlights a need for collaboration between regulators and financial institutions to define what constitutes “accessible” services. This could involve setting benchmarks for the number of accessible branches, the availability of multilingual support, or the proportion of digital services that are compatible with assistive technologies. By embedding these requirements into regulatory guidelines, policymakers can ensure that financial inclusion remains a priority in the sector’s evolution.
Significance
Addressing underbanking is critical for economic stability in the MENA region. Financial inclusion not only empowers individuals but also stimulates broader economic growth by enabling access to credit, savings, and investment opportunities. For market participants, the practical question is how to balance innovation with accessibility—ensuring that technological advancements do not inadvertently exclude vulnerable populations. This requires collaboration between regulators, financial institutions, and technology providers to design solutions that are both cutting-edge and inclusive.
The economic impact of financial inclusion is well-documented. Studies have shown that increasing the number of banked individuals can lead to higher GDP growth rates, as more people are able to participate in the formal economy. In the MENA region, where informal employment is prevalent, providing access to banking services can help transition workers into formal jobs, reducing poverty and increasing tax revenues. Additionally, inclusive banking can foster entrepreneurship by enabling small businesses to access credit and manage their finances more effectively.
For financial institutions, the shift toward inclusive strategies also presents opportunities. By expanding their customer base to include vulnerable populations, banks can tap into new markets and diversify their revenue streams. However, this requires a reevaluation of business models to ensure that services are both profitable and accessible. For example, offering microloans with flexible repayment terms or low-fee mobile money services can attract underbanked customers while maintaining financial sustainability.
