Financial inclusion has become necessary in a world where being able to use financial services is a must for economic participation and decision-making. Ensuring that all citizens can access financial products and services may not seem a high priority. Still, it significantly impacts how economies, especially emerging ones, function. This blog details the importance of enabling each member of society to access financial services. It shows how seemingly small steps can greatly affect people, communities, and even whole economies.

What is Financial Inclusion?

Financial inclusion means that all members of society, irrespective of their social status or income level, can access a wide range of financial services. This includes opening and managing bank accounts, accessing loan insurance, and using digital payment systems. It boils down to ensuring that everyone can participate in economic activities, make intelligent choices about their money, and plan for the future.

The Social and Economic Impact

Financial inclusion exceeds just having a bank account. It is about helping individuals and their families escape poverty and growing the economy. Studies have shown that when individuals have access to financial services, they are better equipped to invest in education, healthcare, and entrepreneurial endeavors. This not only makes their lives better, but it also helps communities grow more generally.

Consider the story of a small-scale animal farmer who gains access to credit to purchase seeds, livestock, and material/labour to build a shed for his goats. With higher yields, they can ensure that their family has food, which brings in more money and helps the community’s food security. He can, in turn, save and re-invest this money with a financial institution of his choice and prepare for the future. This will also ensure that he has less reliance on the social services provided by the government.

Removing barriers

Despite this, many people still cannot access banking services. Lack of proper identification, isolation, and cultural prejudices all fall into this category. In some societies, women are more likely to be economically excluded due to barriers in schooling and documentation. To fully realise their potential, emerging economies must remove these impediments for underprivileged communities to spur economic growth.

Technology and Financial Inclusion

Technology has become a game-changer in recent years, facilitating the spread of financial inclusion. Mobile banking, digital wallets, and other fintech innovations have helped eliminate physical barriers and streamline financial transactions. Even those in remote locations can manage their funds and use banking services with just a mobile phone. Emerging economies are also responsible for bolstering their telecommunications and technological services to ensure that they can take full advantage of modern banking innovations to benefit their people and economies.

Financial Literacy and Education

Financial inclusion is more than providing access to services. It is also about equipping individuals with the knowledge to make informed financial decisions. Financial literacy in emerging economies empowers individuals to understand concepts including budgeting, savings, and investments. When people are educated about their financial options, they can make choices that align with their goals and aspirations.

Challenges and Future Prospects

Despite the progress made, challenges persist. Limited infrastructure, regulatory hurdles, and data privacy and security issues continue to pose roadblocks to universal financial inclusion. However, as technology advances and global awareness grows, there’s hope for overcoming these challenges.

Financial inclusion may seem like a small thread in the big picture of economic growth. Even so, this small step could be the start of a story of empowerment, development, and equality in emerging economies. It can create a world where dreams can come true, businesses can grow, and societies can thrive by ensuring everyone has access to financial services regardless of their background. There is more to it than just banking. It is about building a future where small actions can lead to significant changes. This is why Phoenix International is more than just banking. As our mission states, “we are on a mission to catalyse financial inclusion and fintech adoption in emerging markets globally.”

Financial Inclusion is a priority for us. If you wish to access products and services that can help to break down barriers, visit our page below and sign up for a FREE call.

More Than Just Banking – Phoenix International