Financial Inclusion (finclusion) refers to making financial services and products accessible to all individuals and communities, regardless of their financial status. A very primary indicator of finclusion is the proportion of banked and unbanked individuals in a country.
Financial Literacy for Financial Inclusion
Digital literacy in general and financial literacy more specifically, open doors to a plethora of high utility services in the fintech ecosystem. While platforms try to make services more user-friendly and interactive, financial literacy provides the necessary skills to use such services. A lot of digitally empowered tools can help to expand the access, availability, and affordability of financial services:
Use of blockchain technology can make KYC screening processes quicker and hassle-free.
Mobile-based banking interfaces improve last-mile banking by offering overdraft facility, low balance requirements, and low maintenance fees
Partnerships among banks, regulatory bodies, financial institutions, and fintech ecosystem members can help find cost-effective ways of developing innovative products and financial services
Environmental, Social, Governance (ESG) has been increasingly championed over the past year to improve people’s livelihood and reduce poverty and accelerate post-pandemic economic recovery. Practices including equitable distribution of resources, addressing workplace diversity appropriate pay, and focussing on environmental sustainability, have a positive effect in creating a culture that benefits all in the long run.
Use of digital sandbox technology, simulation tools and synthetic data for pilot studies in secure environments can help identify reasons why financial inclusion is still less than universal.
Central banks across the globe are already experimenting with Central Bank Digital Currency (CBDC) to increase enrolment and education of the deprived societal sectors and foster interoperability domestically and across borders .
According to the World Bank, beyond mobile money, fintech has also shown promise in areas such as Government to Person payments and cross-border remittances . This was apparent during the COVID-19 crisis, when digital delivery channels helped governments to transfer cash quickly and securely to vulnerable consumers, minimising any physical contact.
Moreover, fintech not only comes with a promise of finclusion, but also prevents possibilities of discriminatory treatments and behavioural apathy towards marginalised sectors of society.
However, to really rely on fintech to achieve finclusion, preparedness in the form of digital literacy remains the most crucial starting point. NayaOne is helping banks, businesses and other organisations approach financial inclusion by offering a platform, APIs and many tools and partnerships for ESG compliance , fraud management, rapid experimentation and much more. Get in touch with us!