Know all about what it takes to lay the groundwork for financial inclusion and how FinTech players along with the accelerated digitization of economies are fostering financial inclusion.
The world’s unbanked population was at a staggering 1.7 billion as per a report by the World Bank in 2017.
Fast forward to today – not much has changed in this global economy that is striving for balance in the aftermath of the pandemic.
The onus is on the governments and private sectors across the globe to join forces and make financial products and services accessible to the masses in a more sustainable manner.
Developing a strong financial infrastructure is critical for economic growth and poverty alleviation. Financial inclusion connects the marginalized and rural segments with the rest of the economy. This increased participation from the unbanked and underbanked population enables developing economies to tap into inclusive growth.
Laying the groundwork for a broader financial inclusion
Over the past decade, even though there has been an evident growth in the penetration of formal banking and financial services, the actual utilization of these services is, appallingly low.
This quote by entrepreneur and philanthropist, Ann Cotton sets the stage for this narrative:
“At base, financial literacy is inextricably connected to control over one’s future.”
In my opinion, promoting financial literacy and enabling easy access to a transaction account is the absolute need today. Teaching people to save and manage money while giving them access to an account to send and receive money is a step in the right direction.
This explains why the World Bank Group’s primary goal for Universal Financial Access 2020 was to ensure that people globally will be able to access a transaction account.
With a transaction account, the underbanked are more likely to make use of other financial services such as insurance or loans thereby broadening the financial inclusion drive.
Achieving sustainable development goals with financial inclusion
Greater access to financial products and services also brings with it additional benefits like enhancing women’s empowerment, increasing earning potential, higher usage of digital platforms, and the likes.
Though financial inclusion is not directed at achieving the Sustainable Development Goals (SDGs) laid down by the UN, as per the reports, financial inclusion is known to be a strong enabler for most of the SDGs.
Financial inclusion owing to digitized payment and financial services will further enable the progress towards achieving the SDGs by 2030 and have a massive economic and social impact on millions around the world.
Digital financial inclusion – democratizing finance
The pandemic has been driving the world into a cashless society. The unbanked population, however, is not ready for a cash-free future.
A conscious shift towards digital financial services could be a game-changer here. Advancements in FinTech services, real-time mobile payments, and online banking can bridge the gap between the unbanked and the financial services.
FinTech players and accelerated digitization of economies are mobilizing finance and fostering financial inclusion in recent years. How are they managing to do this? Let’s take a look:
- Designing financial products that are simple and can be conveniently used by people from all walks of life
- Making banking resources easily accessible and actively engaging with the customers to build personal relationships with them at scale
- Offering customized packages of financial services with the help of artificial intelligence and big data
- Tapping into alternative ways of user authentication such as facial or iris recognition, to not only enable easier access but ensure greater security
If you ask me, innovations from FinTechs can be leveraged not just to drive financial inclusion and sustainability but also to ensure a swift recovery of the economy from the onslaught of the pandemic.
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