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In the traditional banking environment of high cost proprietary distribution channels and back office systems, the corresponding high direct and indirect costs to customers have resulted in very limited penetration of current accounts within the population. Many poor and rural people manage their lives without using the services of the formal banking system. For some it is simply not an option, whether because of lack of physical bank presence, lack of appropriate documentation, or prohibitive cost.

Access to finance entails access to a basic legal, institutional, and physical infrastructure that permits flexible transferring of value now and in the future. In principle, the most flexibility would be achieved if at least four basic elements were in place:

• a payments network that (i) allows value to be routed between all the parties on the “grid” and (ii) provides for ubiquitous points (access nodes) at which cash can be converted to electronic value (or vice versa) 
• a range of providers (banks or other financial institutions) that creates and markets a range of finance products (e.g., a savings, loan, or insurance product) to meet customers’ needs. Customers would need to trust the provider–product package enough to accept it in the marketplace. Thus, the provider’s brand hinges on relevant products and trust 
• a basic or transactional account for each individual that can be used to collect and transfer value electronically. It is the individual’s landing point onto the payment grid 
• an enforceable legal framework that specifies the rights and obligations of each player in the system. This would promote trust in the enforcement of contracts and the protection of consumers

For the payments network to be useful, people need to be able to transfer value through the payment network in a way that is convenient, reliable and secure, widely available, affordable, and useful.

The fact that financial institutions have to rely on physical branches that are limited in their reach makes it difficult and costly for populations in rural areas or in poorer districts to take advantage of financial services. It is also a problem for the state, which needs to distribute public sector salaries, pensions, and social benefits to a dispersed population. Three key innovations help transform the economics of financial service delivery at the customer end: 

•  use existing retail outlets 
• deliver trust through technology 
• use existing mobile phones
  

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