Traditional banks cannot afford to serve the poor because of their costs.

The claim is that, as of 2015, the cost structure of traditional banks (branches, staff, transaction costs) made it unprofitable for them to serve poor customers. True: credible research (World Bank Global Findex, CGAP and similar) shows that high cost-to-serve relative to small balances and transactions was a primary reason traditional banks did not serve the poor. Mostly true: cost was a major reason but the absolute 'cannot' overstates it, since some traditional banks did serve poor customers profitably in some markets. Mixed: cost is only one of several roughly equal factors. Mostly false: cost plays only a minor role, or traditional banks commonly served the poor profitably. False: the evidence shows cost was not a barrier.

Set before the research began.

1. E1 WPS7255.txt - Documents & Reports - World Bank World Bank (Global Findex Database 2014, Policy Research Working Paper 7255) · April 2015

   “Affordability is an important barrier to financial inclusion beyond just Latin America and the Caribbean. Globally, 23 percent of adults without an account at a financial institution cited this reason. Fixed transaction costs and annual fees tend to make small transactions unaffordable for large parts of the population in developing economies.”

2. E2 WPS7255.txt - Documents & Reports - World Bank World Bank (Global Findex Database 2014, Policy Research Working Paper 7255) · April 2015

   “Some might argue that the potential for expanding financial inclusion is limited because 59 percent of unbanked adults cited lack of enough money to use an account as a reason for not having one.”

3. E3 World Bank. 2014. Global Financial Development Report World Bank (Global Financial Development Report 2014: Financial Inclusion) · 2014

   “While some of these people exhibit no demand for accounts, most are excluded because of barriers such as cost, travel distance, and amount of paperwork.”

E1 (Global Findex 2014) says fixed transaction costs and annual fees make small transactions unaffordable for many people in developing economies, and that 23 percent of unbanked adults cited cost as a reason. That fits a cost barrier tied to how banks are structured. But the same report (E2) says lack of enough money was cited much more often, by 59 percent. E3 lists cost alongside travel distance and paperwork as barriers. So the evidence shows cost was one of several barriers, not clearly the main reason banks did not serve the poor.