A small business in Colombia. (AP)

A small business in Colombia. (AP)

LatAm in Focus: How the Pandemic Boosted Financial Inclusion

By Carin Zissis

Luz Gomez and Arturo Franco of Mastercard’s Center for Inclusive Growth cover how the crisis accelerated changes that can help buffer against future shocks.

Luz Gomez

For a year now, shuttered businesses and quarantine restrictions have moved many of our interactions—economic or otherwise—online. That means a silver lining for Latin America and the Caribbean, where more than 200 million people were unbanked as of early 2020. In Brazil, emergency aid disbursements resulted in the country’s unbanked population dropping by 73 percent, says Luz Gomez, director for Latin America and the Caribbean at Mastercard’s Center for Inclusive Growth. “There were all these existing trends to digital financial services that were happening all around Latin America that have been really accelerated,” she explains.

“[The pandemic] basically had the effect of doing what we could have achieved in 10 years and compressing that into one year,” says her colleague Arturo Franco. He notes that building access to financial services can lead to tangible improvements in people’s lives, particularly by lifting people out of informality. “What we have seen over the last decade is that financial inclusion doesn’t just help boost economic growth. It can also reduce poverty and inequality,” says the Center’s vice president for data & insights. “It can improve the productivity of business and, ultimately, insure people against economic shocks, like the ones we are going through right now.”

Arturo Franco

From helping to digitize payments to coffee growers in Colombia or assessing why Mexico’s tiendita owners stick to cash payments, Gomez covers the complex, multi-sectoral aspects of financial inclusion and the need to involve institutions ranging from fintechs to traditional banks to coops. With that approach mind, the next step is to build on the momentum gained during the pandemic. “Let’s not miss this opportunity,” says Gomez, who suggests using the current moment to prepare for the next emergency. “It’s also about building a robust ecosystem that's more attuned to serving the underserved.”

Franco notes that the Center is launching a research institute at the Tecnológico de Monterrey in Mexico that will work in partnership with universities in Colombia and Chile to better understand challenges to financial inclusion in the region. On this front, the pandemic is also spurring discussion. Says Franco: “People don't really want to change too much when things look like they're working out, but this is a moment where people are more open to structural change.”

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Katie Hopkins produced this episode. The music in this podcast was performed at Americas Society in New York. Learn more about upcoming concerts at musicoftheamericas.org.

Disclaimer: Mastercard is a Council of the Americas member, however, this podcast is not sponsored content.