Achieve Financial Inclusion: 4 Reasons Why It’s Genius6 min read
It is difficult to live a life without having convenient access to financial services: from running regular errands to emergency medical services – everything becomes inconvenient (and costly) for the people who don’t get banking. Yet thousands among us live without a checking account, insurance, or even any savings. That is to say, some of us are not invited to the grand financial party!
But how do we change that and invite everyone to this awesome party? Why do we need to go in the first place? Let’s dive deep into how to turn financial exclusion into financial inclusion.
- 5 Steps for Selecting the Best Financial Advisor by Jack Waymire and Jonathan Dash
- How the Other Half Banks by Mehrsa Baradaran
Why Does Financial Inclusion Matter?
A financial sector that welcomes and includes everyone is so much better than one that doesn’t. It not only takes care of a person’s wealth management but it meets their psychological needs too. Let’s take a closer look:
Financial inclusion can help you manage your cash flow and save money. If you are banked, you are less likely to sell your assets in order to survive in times of crisis. The services can even finance your business, helping you generate more profit and passive income. As soon as you enter the authorized banking system, you do not have to look for any alternative services such as pawnshop loans, payday loans, rent-to-own agreements, which naturally charge you higher fees. Thus financial inclusion improves a middle-class poor family’s overall living standard and eliminates social exclusion in turn.
Easier Transaction, Reduced Vulnerability
Now that you are under the wings of financial services, you have access to a formal and convenient transaction processing system. You can now take your everyday survival plans a step further and plan for the future.
Financial security serves as your money safe so you can store bulk of your wealth in a place where you don’t have to worry about it being compromised. In fact, your savings can earn you more cash. You won’t be able to do that if you are storing your money under the mattress or in the cupboard; plus, then there is always a risk of your money being found and stolen. So if you face a shock or an unprecedented turn of events, your financial systems will have your back.
Better Financial Strategy
Through a convenient banking system, you can manage your cash flow better, you will get a better understanding of how much to spend, where to spend, and how to save for the future. As a result, you can develop a strategy to pay for recurring expenses such as house rent, school tuition, essential commodities, and others.
What Can We Do to Make it Right?
Starting from the CEO of major tech companies to your mailman – all economically productive people have a need for a formal banking system. Unfortunately, not everyone has access to one. So what can we do to achieve financial inclusion at large?
- If you are a business owner, sign an oath that would put your customer’s needs first, and live by it. Avoid loopholes in the agreement for the credit process which will take your customers deeper into debt. You can make all the difference to level the playing field in our financial system.
- Use electronic payment systems. Majority of the population today owns a smartphone or at least has access to one. Financial inclusion can be achieved through mobile banking. The government and organizations are launching straightforward apps where there is no need for extensive paperwork and anyone can easily trade and manage their money easily, including you! Moreover, you might consider using debit cards as one of your payment gateways to enter the world of electronic payments as it reduces cost and promotes transparency.
- You should embrace financial inclusion as a fundamental part of your business. Make it your mission to prioritize customers who have lower than average income by serving them with low-interest rates and products that are crafted to meet their individual needs.
- Introduce and engage in micro financing. There are government and non-government organizations that hand out loans in small amounts at a low-interest rate especially to those who live under the poverty line. It makes a direct impact on financial inclusion. Microfinance encourages entrepreneurship among the excluded people bringing stability, security, and social inclusion in their lives.
- Most importantly, educate yourself and the people around you about the benefits of financial inclusion and encourage them to move towards a more inclusive system. You can engage in dialogues with regulators and policymakers through forums; exchange ideas and take systematic actions.
These are only a mere few methods from an indefinite list of things we can do. When it comes to achieving financial inclusion in society everyone has a role to play: individuals, corporations, government – everyone! To better understand how to turn financial exclusion into financial inclusion, you should check out the following books:
Two Must-Read Books
To achieve financial stability you need specialized expertise and ethical advisory in order to develop a planned-out strategy. Choosing the right financial advisor might be a good place to start. That’s what this book is all about: helping you choose the right financial advisor with the help of resources available online.
The authors, having spent decades in the financial service industry, have seen how investors make wrong choices all the time. So, they went on to write this book to help people make informed choices when it comes to selecting a financial advisor. It is so detailed and information-oriented that you might as well call it the bible of financial advisory.
The banking system in the United States is basically classified into two groups: one preying on another. The author of How the Other Half Banks addresses this form of inequality in the American banking system. He reminds everyone that banks were originally established to credit the public with low-interest loans, which would have played a significant role in establishing financial inclusion. But as they expanded in size they shed their promise and abandoned the less low-income customers.
This is one of the main reasons why 40% of US citizens are skeptical of banks today. Baradaran, in this very insightful and intriguing book, explains why the display of unity between the public and the bank is a false image and proposes a solution to overcome. If you are eager to explore the dynamics of financial institutions in the States, then we suggest you give this book a read.
Financial inclusion is critical to a good and a well lived life. It removes poverty and promotes equity, equality, and greater opportunities. Financial institutions along with the people and the government need to actively pursue financial inclusion. We have to see the bigger picture here and play our individual roles.