Financial inclusion is at the forefront of all the initiatives to combat poverty and raise the quality of life for humanity on a global scale. While technological leaps have done wonders in this regard, there is always more work to be done.
Still, many don’t know what exactly is meant by financial inclusion or understand why it’s so important. Our team at Steady is on the front lines of the initiative, and we are committed to raising awareness and economic empowerment worldwide.
Let’s discover the true meaning of financial inclusion, explain its necessity in the modern world, and analyze what public and private institutions are doing to advance the goalposts.
This initiative requires all hands on deck, but with Steady and our partners leading the charge, we believe progress is only a matter of time.
With so many forms of inequality in our world, why focus on financial inclusion, and what does it entail?
Different organizations define the concept differently, but the general thrust is to increase access to critical financial servicesfor global populations that have been left behind during advancements in the information age.
There are a few elements of financial inclusion that we should outline before exploring action steps and what happens next:
Like any broad and bold initiatives of its kind - think social justice or climate change - financial inclusion is somewhat hard to define and seemingly beyond the scope of what’s possible.
However, if we define this mission more precisely and set forth attainable short-term objectives as part of a larger plan, financial inclusion is absolutely within reach, especially as fintech resources diversify and expand worldwide.
Thinking globally is good, but let’s remember that financial inclusion can also happen on a small, local scale. It’s not just tech but also education, opportunity, and all the other elements that go into a more equal financial ecosystem for people everywhere.
Even the most minor actions and adjustments can lead to a more inclusive financial system, whether that’s an investment in education, tech, infrastructure, or simply lending a helping hand to those in need.
The idea of inclusion only makes sense when people are left out. Therefore, we first need to determine financial exclusion — which people get excluded from these essential services and functions. Only then can we take steps to bring these population segments into the fold in an efficient, sustainable way.
According to organizations like the World Bank, a five-pillar strategy is in place to help countries achieve greater financial access and outcomes.
The first dimension of the approach is geographic, targeting nations and subnational groups of the highest priority and subject to the broadest current disparities.
This involves determining specifics, deploying large-scale financial inclusion data collection and analysis efforts, as well as metrics and performance indicators to measure results. These practices are crucial for maintaining a complete vision of progress throughout the mission.
From there, specific products and services are a point of focus, most notably those which move the dial regarding access and inclusion. These might be microfinance programs — mobile banking apps that allow previously unbanked or underbanked users to transact and transfer freely. Another option is peer-to-peer lending platforms that generate momentum for local economies through fluid investment.
The following steps include implementing consumer protections and developing legal frameworks that keep users safe when conducting financial activities in these newly established domains. The key is to avoid the “wild west” syndrome that comes with blazing new trails in underserved economies and ensuring everyone is safe.
Finally, education and long-term investment in these regions will bring financial inclusion efforts to their maximum potential, bridging gaps between personal finance and positive economic overhaul. From the ground up and the top-down, we must coordinate financial inclusion on every level, including policy reforms and national strategies over the long term.
With a working definition of financial inclusion and a framework for implementation, we know this concept and how it works in practice. But what are the positive implications of financial inclusion, and what benefits can we expect from sticking to the game plan outlined above?
From the outset, financial inclusion benefits those it serves, the individuals, communities, and nations that have been left behind in the big picture of global development.
We’re not just talking about the past 20 years with the internet, smartphones, and digital finance. Some areas of the world have many decades - even centuries - of economic growth to catch up to as they strive to compete in the modern economy.
With increased access to credit, basic financial services, and financial education, these populations have more personal autonomy, economic freedom, strategic capacity, and a greater ability to fend for themselves in every facet of life.
This leads to positive trends like increased wealth for families and generational building assets vital to lifting communities out of poverty and creating on-ramps for other, previously disenfranchised members of society.
Security is also a core benefit of financial inclusion, an issue of sharp focus during the events of the COVID-19 pandemic. With access to better financial technology and institutions, families and networks can brace themselves for economic affairs and protect against recessions and other threats.
The result of all these benefits combines to be something amazing: better lives for people everywhere and an actual path toward an equitable world.
These aren’t pipe-dream ideas that don’t work in reality. Financial inclusion efforts are legitimate, viable, and can make a tangible impact on the future of humankind for the better.
The financial sector, with its private companies and entrepreneurs, primarily focuses on profits, but the most impactful organizations have mission-driven actions concerning financial inclusion.
Competition in the free market leads to rapid innovation. As we’ve seen in fintech, those efforts span the globe with positive ripple effects. Even without directly acknowledging the financial inclusion agenda, many financial institutions are already on track and making significant strides in the right direction.
Look at neobank advancements over the past decade or so and how much ground they cover geographically - and in terms of functionality. These companies have minimal overhead, innovative platforms, blazing-fast platforms, and put the power in the hands of the customer like never before.
And that’s just checking and savings. Credit products are increasingly diverse and influential, along with investment platforms and opportunities that were out of public reach just a decade ago. The stage is set for rapid adoption and financial inclusivity on a massive scale.
The limiting factor for private companies here is infrastructure and regulations, which may put the brakes on wide-reaching overhauls. With any broad initiative of this kind, competing interests complicate things, and progress occurs slower than we’d like.
Nevertheless, the momentum of the private sector cannot be stopped with financial inclusion, as this is the natural outcome of a more globally connected and advanced society.
As a leader in financial inclusion, Steady and our partners are taking consistent steps to advance objectives on every level. The app empowers users as they plan career moves, track income from multiple sources, access credit and banking products, and position themselves for an organized, efficient tax season.
On top of those services, our income boosters and cash incentives encourage intelligent financial decisions and promote a hands-on experience that can’t be attained through education alone. There’s no better way to teach about investing, for example, than for someone to set up their portfolio and watch it grow in real-time.
Every facet of Steady is dedicated to financial inclusion and development for individuals, families, communities, and beyond.
Many governments and policymakers have acknowledged the financial inclusion gap, putting it on the radar in the public sphere. Organizations like the United Nations have also made the nod to financial inclusion as part of their poverty eradication plans, dating back to 2015.
While governments can’t create these financial products and services independently, they can absolutely shift conditions to expedite these goals and facilitate cooperation with trusted private institutions, large and small.
Governments can also secure funding directly boosting financial literacy goals and incentivizing communities to develop more robust economic networks.
The G20 Global Partnership for Financial Inclusion is one example of an organization accruing data and insights that allow communities and private sector movers to make smarter, more effective efforts in accelerated timeframes.
This brings into question governments' role in a sweeping project like financial inclusion and how action plans should be structured fairly and equitably. Ideally, governments will act as a compass for intelligent investment and development as private sector firms step up and implement their technologies and networks with free-market efficiency.
Financial inclusion isn’t a far-flung idea waiting on the back burner. It’s real, it’s actionable, and it’s happening all around us, every day.
Forget about the UN and the World Bank for a moment - financial inclusion is most effective when it happens on a grassroots level, energized by people and on-the-ground organizations that push for change through action.
That action may be a person opening up the first bank account in their family or securing a loan that puts them on track for home ownership. It could be placing that first $20 in an investment account that one day lifts a family out of poverty.
Maybe it’s simple as using Steady's Income Passport tool to make filing taxes less daunting.
So when you hear the words financial inclusion, think in real terms. Think about what small actions can generate momentum for generations of people who deserve more. That way, it’s only a matter of time before the mission of financial inclusion is accomplished.