All About Financial Inclusions

Financial inclusion refers to how individuals and businesses get equal opportunities to access appropriate and affordable financial products and services. It is a method of offering financial solutions and services to every individual in society without any discrimination. Financial inclusion eliminates several barriers and provides economically priced financial services to the economically underprivileged people of the society. Financial inclusion helps people to be independent financially without depending on charity or other means of funds that are not sustainable. It also intends to spread financial awareness and financial management among the people of society. Financial inclusion provides greater access to financial services for the needy and helps to boost the economy of poorer regions and countries. 

Objectives of Financial inclusion :

There are several objectives of financial inclusion which helps to develop formal and systematic credit paths for the poor people. 

• Financial inclusion intends to increase the awareness of the benefits of financial services in economically underdeveloped societies.
• It works to create financial products suitable for the less fortunate people of society. 
• Financial inclusion leads to improved financial literacy and awareness in the nation. 
• Its goal is to build and maintain financial sustainability so that needy people can have a certainty of funds they struggle to have.
• It also brings digital financial solutions to the economically underdeveloped people of the nation. 
• It aims to establish the proper financial institution to serve the needs of poor people. 
• Financial inclusion intends to help people secure financial services at economical prices, such as deposits, loans, insurance, fund transfer services, etc.  

Pillars of financial inclusion

Financial inclusion is an essential key to building a prosperous society. Not only businesses but also the Government should take action to ease the conditions of financial inclusion. Six significant pillars help to boost financial inclusion in the developing world. 

• Financial access and literacy: It is essential as it boosts the usage of financial services and makes the right choice for a sustainable financial future. Financial literacy provides total power to the agents to push the services in a manipulative way. It mainly targets the youth to provide financial education. Although financially educated young people can make sustainable financial choices that positively impact society.
• Financial Identity: Global financial institutions report that financial inclusion is related to financial identity. The poor population in the developing country do not have any formal financial identity, which is a huge problem. Alternative data can create a financial identity to destroy the population’s obstacles to using financial services.
• Mobile Banking: The developing world has moved a step closer to financial inclusion with the revolution of smartphones. Mobile technologies made everything possible and democratized banking for the LATAM(Latin America) region. While mobile penetration is growing, the number of bank accounts is not changing significantly.
• Alternative forms of Banking; Reputed banks find innovative ways to heap the population. Another way to heap the population in the developing countries can be through branchless, agent powered banking. \
• Microfinancing for individuals: It is one of the effective methods that can create an impact on financial inclusion in a positive way. The benefits of microfinancing bring progress to developing countries though there are still certain drawbacks. Some of the issues regarding MFLs in the developing world are connected to abusive collection practices that have traumatic impacts on families.
• Consumer Security: It is significant for the developing world where financial literacy needs significant development. It can be an obstacle to the economic growth and improvement of the financial services industry if the measures are not taken to build adequate infrastructure for dispute settlements.

Aspects of Financial Inclusion: 

Financial Inclusion strategies can lead the way for low-income individuals and develop businesses to participate in the mainstream economy on favourable terms. The types of financial inclusion include a focus on the following areas.

• Financial Literacy: Educating people about financial topics helps them use higher quality products and make better decisions. It helps people understand basic financial concepts, avoid mistakes, and develop a savings culture.
• Service availability: Good quality financial services are hard to find in highly rural areas. But higher technology makes services available even when the infrastructure is limited. Mobile phones help consumers and businesses negotiate business as long as the cellular service is available.
• Mobile wallets: One of the most critical aspects of financial inclusion. These are excellent alternatives to cash, which has to be carried and stored, and it is risky to always carry cash with oneself. A mobile wallet can store digital money and be used for money transfers. 
• Distrust: Business confidence in providers is also essential for financial inclusion. If authentic protection is not available, it needs to be produced, and awareness of the same has to be given to the public. Transparency of financial institutions is a must, and they must avoid expensive surprises to customers.    

Conclusion : 

As seen in the above article, financial inclusion is one of the critical aspects of a country’s economy. This concept means equal opportunity for all to avail various financial products and services. Bank accounts are the gateway to other services. Hence it is an important focus and an essential aspect of financial inclusion to open bank accounts for individuals and businesses. Some of the groups working to provide financial inclusion to all are the World Bank and FINCA. Finally, we can conclude that financial inclusion is an initiative to ensure that all individuals or businesses can access all kinds of financial services and products, whatever the cost of it.