FinTech will be Needed to Effectively Administer UBI Programs

CGAP recently reviewed some key question affecting India’s proposed Universal Basic Income (UBI) program which highlighted a couple points regarding the infrastructure needed to facilitate UBI. As a basic example, the poor simply cannot access their UBI payments without a bank account. To this end, India’s “Jan Dhan Scheme” has helped in opening 267 million bank accounts and helps explain how 99 percent of households in both rural and urban India have at least one member with a bank account.

I was reminded of a great visual Alex Rampell (at A16Z) put together last year describing the full stack of components involved in a digital wallet service.

Credit to A16Z blog

While the stack above is of course specific to the digital wallet ecosystem, it’s apparent that most government programs considering UBI programs concern themselves with only the last 2 or 3 components. The conversation typically revolves around the specific dollar amount per person that should be distributed, and the economic incentives such a program will bring.The top, and arguably most important part of the stack, is often easily dismissed as something that will be handled “by mobile solutions” or by last-mile banking agents. While both of these distribution solutions have demonstrated success in the microfinance space, the much broader scale and daily use inherent for a basic income would certainly stretch the existing model.

Fortunately, it seems like there are new, international UBI pilots popping up every month that can explore these challenges. Even better, I’ve been surprised by the open and design-thinking based approaches many of these pilots have followed. I’m looking forward to seeing a program specifically targeting the infrastructure and distribution aspects for UBI.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.