Banking in Layers: Five Cases to Illustrate How the Market Structure for Financial Services is Evolving

Digital innovations have changed the financial inclusion space for nearly 15 years. Today, a powerful new wave of digital innovation is gathering on the horizon. One of the most profound may be a shift toward a more modular financial sector and there is good reason to be hopeful that this “modularization” could help expand financial inclusion while also profoundly altering the financial industry in ways that make it both more competitive and more efficient. This working paper explores the market-level modularization of financial services by studying the following illustrative examples of the new models that are emerging, how they are coming about, and what they mean for the financial inclusion of low-income people in emerging markets and developing economies: Grab in Southeast Asia; Paytm in India, M-Pesa in Africa, Daviplata in Colombia, and Kaleidofin in India.