Financial inclusion means making financial services accessible to the public—these include deposit and savings accounts, payment services, loans, insurance, and many others, all utilized to meet specific needs. For ordinary citizens, if you have a bank account, borrowed from a loan app, or sent money to your relatives through pera padala centers, that means you’re enjoying the perks of living in a financially inclusive region.
Factors that affect a country’s level of financial inclusion and development comprise of income per capita, good governance, quality of institutions, availability of information, and regulations.
Studies have found that financial inclusion can boost economic growth while alleviating poverty. It can also:
- make daily transactions like sending and receiving money possible;
- safeguard savings that are essential in managing cash flow spikes, smooth consumption, and working capital;
- support in planning and paying for recurring expenses;
- identify new viable markets for financial services purveyors;
- manage costs for unexpected events such as medical emergencies, natural disasters, etc.;
- help finance SME owners to invest in assets and grow their businesses
As per the SDGs, financial inclusion is now a stated goal for both the public and private sectors. Several countries have set formal targets that consist of strategies for financial inclusion.
Financial inclusion indicators include:
- Number of banked and unbanked adults
- Number of people who have access to deposit and loan services
- Number of people with bank accounts and debit and credit card
- Number of people using mobile banking, digital wallets, etc.
With those in mind, take a look at the state of financial inclusion around the world with this data visualization.
How Fintech is changing financial inclusion
Governments around the world have adopted their own policies to expand financial inclusion, and these may actually be paying off. According to the 2017 Global Findex, the global share of adults owning a financial account is now at 69%—this is 7% higher compared to three years ago.
This means that 515 million adults have gained access to financial tools between 2014 and 2017. However, governments, private sectors, and development organizations must encourage people to keep their accounts active.
It’s also worth noting that account ownership has been seeing a rise each year since 2011. The Global Findex data highlighted the continuing evolution of financial inclusion thanks to recent progress, including the advent of new government policies, digital payments, and accessible financial services through mobile phones and the internet.
Digital financial inclusion means utilizing formal financial services in the digital space. Examples for these are online loans and digital credit lines that lend to the unbanked population with fair interest rates and minimal documentary requirements. Likewise, digital wallets allow individuals to make cashless and electronic transactions online or in store; just like a credit card, but without the stiff requirements.
Thanks to financial technology, the unserved and underserved population now have access to financial services through their mobile phones and the internet. With this technology on hand, there is a chance to reach another 2 billion underserved people.
Fintech has been especially leveraged in Sub-Saharan Africa, where 21% of adults have a mobile money account, which is two times higher than in 2014. In addition, the global percentage of adults who have sent or received money through digital means is now at 52% from 42% in 2014.
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