Financial inclusion through digitalisation: Economic viability for the bottom of the pyramid (BOP) segment

The bottom of the pyramid (BOP) in every developing and frontier economy represents a largely untapped segment of the market that is excluded from formal financial markets because it cannot be served using the traditional financial market channels. We use a mixed-method approach to examine the challenges and intricacies of financial inclusion for the BOP segment in developing and frontier economies. To build a foundation for this debate, we conduct a review of the financial services and intermediaries serving the BOP, using case studies, experts’ insights, and quantitative analysis. Perspectives drawn from case studies of microfinancing firms and experts’ insights are used to explain the collaborations between businesses and formal institutions that can create a viable economic channel useful for serving the BOP segment. Further quantitative analysis demonstrates that a higher degree of financial inclusion for the BOP segment is likely to be achieved through the digitalisation of formal financial intermediaries, like banks.