Financial Inclusion for the ‘Unbankable’: Redefining Wealth with Non-Monetary Value Systems

For millions of people around the world, particularly in marginalized communities, the notion of being “unbankable” has been a persistent barrier to accessing financial services. These individuals, lacking formal employment or traditional credit histories, are often excluded from conventional banking systems. However, as the landscape of finance shifts towards greater inclusivity, radical new ways to assess value and provide services to these populations are emerging, challenging traditional concepts of wealth and creditworthiness. By redefining wealth through non-monetary value systems, we can unlock financial inclusion for the "unbankable."

The Trap of Traditional Creditworthiness

Creditworthiness has long been defined by financial metrics—steady incomes, assets, and a clean credit history. This system works for those embedded in formal economies, but it alienates the millions of informal workers, small-scale farmers, and rural entrepreneurs who lack these traditional markers. In rural Africa, for instance, many smallholder farmers generate significant value in their communities but often rely on informal economies. Without formal bank accounts, their financial activities go unrecorded, effectively rendering them invisible to banks and other financial institutions.

In India, where over 80% of the population works in the informal economy, millions of micro-entrepreneurs face similar challenges. Women running small home-based businesses or street vendors lack documented financial histories, making them ineligible for loans despite their consistent income streams. As a result, they are left to rely on informal lenders, often paying exorbitant interest rates.

The very definition of wealth, which equates prosperity with monetary assets, has contributed to this exclusion. However, innovative systems now challenge these narrow definitions by recognizing the value of social capital, community contribution, and alternative assets.

Expanding the Concept of Value

Emerging financial models are now starting to redefine wealth to include non-monetary assets such as social relationships, trust, skills, and community reputation. In this expanded concept of value, an individual’s standing in their community, their knowledge, and even their cultural contributions can be considered forms of wealth. These new perspectives open up possibilities for those typically shut out of financial systems.

One powerful example comes from Kenya, where a revolutionary alternative currency system known as the Sarafu Network enables unbanked people to participate in economic exchange. The Sarafu system is a community currency that doesn’t require Kenyan shillings for transactions. Instead, it allows members to trade goods and services using credits earned through community engagement. For instance, a farmer may earn Sarafu by providing excess produce to neighbors or a craftsman may offer repair services. These community credits can then be exchanged for other necessities. This model empowers people to participate in economic activities and build local economies without relying on traditional currency or credit.

By fostering trade based on social capital and community bonds, the Sarafu Network allows people to accumulate non-monetary value and improves access to essentials without depending on formal banking. Sarafu participants can also use the credits to access additional financial services, such as microloans or investments in their businesses, leveraging their community activity as collateral.

Unlocking the Power of Social Collateral

Social collateral is another emerging concept that can help those deemed “unbankable” gain access to financial services. It involves using a person’s standing in their community, their social networks, or even their reputation as collateral to secure loans.

In South Asia, this model has been successful in various forms, particularly among women. Grameen Bank in Bangladesh pioneered microfinance by providing loans to women with no formal collateral. What made this system work was not the women’s financial assets, but their community ties. Borrowers were organized into peer groups, and the success of one was tied to the success of the group. This created a form of social collateral: women had an incentive to repay their loans because their peers’ financial futures were at stake. The results were astonishing. Women with no prior credit history demonstrated higher repayment rates than traditional bank clients, fundamentally challenging the concept of creditworthiness.

A similar model is being implemented by community-based lending circles across Mexico. These lending circles—called tandas—operate on the trust and accountability of community members. Each member of the circle contributes a fixed amount to a communal pot, which is then lent to one member in each cycle. As loans rotate, individuals benefit from accessing lump sums without the need for formal credit. These systems are built on trust and reciprocity within the group, offering financial opportunities to those typically excluded from formal banking systems.

Alternative Assets: From Land Tenure to Livestock

Beyond social capital, there is increasing recognition of alternative assets that can unlock financial services for the unbankable. In many rural areas, wealth is tied to land, livestock, or other physical assets, which may not be liquid but still hold significant value.

In Ethiopia, smallholder farmers with limited cash income but substantial livestock holdings are benefiting from livestock-backed financial products. A farmer who owns cattle may not have the cash flow needed to invest in expanding his farm or improving productivity, but by using his livestock as collateral, he can now access credit. This system, pioneered by organizations like the International Livestock Research Institute, recognizes that wealth doesn’t always take the form of money in the bank.

In Colombia, farmers can secure loans using land tenure as an asset, even if they lack formal land titles. Programs like Landesa work to formalize and recognize land tenure, giving rural populations leverage to access financial services. This approach has opened the door to greater financial inclusion, particularly for indigenous populations and smallholders.

The Digital Revolution: Data as a New Form of Wealth

One of the most exciting developments in expanding financial inclusion for the unbankable is the use of alternative data to assess creditworthiness. With the rise of digital finance, individuals generate vast amounts of data through everyday interactions. This data—ranging from mobile phone usage, utility payments, and e-commerce activity—can provide insights into an individual’s reliability, spending patterns, and even earning potential.

In China, fintech company Ant Financial (a subsidiary of Alibaba) developed a credit scoring system known as Sesame Credit, which evaluates users based on their digital footprint. Instead of relying on traditional credit history, the system factors in behavior such as on-time bill payments and spending patterns. While not without privacy controversy, this model shows how data can become a new form of wealth, allowing previously unbanked individuals to demonstrate their creditworthiness and access financial services.

In the context of refugee populations, this model has immense potential. Refugees often lack documentation, assets, or financial history, but they may have mobile phones or other digital devices that generate data. By using this data, financial institutions can assess the creditworthiness of displaced individuals, offering them a pathway to economic participation.

The Future of Financial Inclusion: Beyond the Monetary

The redefinition of wealth to include non-monetary value systems is not just an innovation—it’s a necessity. By expanding the concept of value to include social capital, alternative assets, and digital data, we can build financial systems that work for everyone, including those traditionally considered “unbankable.” As these models continue to evolve and gain traction, they hold the potential to bring millions more into the fold of economic opportunity, allowing them to build wealth, not just in monetary terms, but in ways that reflect the true richness of their lives and communities.

By broadening our definition of wealth, we take a significant step toward a more inclusive financial future.