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    Financial Inclusion Definition

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    Irwan Ginanjar
    Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses regardless of their net worth or size. It aims to remove barriers that exclude people from participating in the financial sector. While financial inclusion has long faced challenges, developments in financial technology like digital payments and peer-to-peer lending have expanded access. However, an estimated 1.7 billion adults worldwide still lack access to basic banking services.

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    Financial Inclusion Definition

    Uploaded by

    Irwan Ginanjar
    48 views1 page
    Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses regardless of their net worth or size. It aims to remove barriers that exclude people from participating in the financial sector. While financial inclusion has long faced challenges, developments in financial technology like digital payments and peer-to-peer lending have expanded access. However, an estimated 1.7 billion adults worldwide still lack access to basic banking services.

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    Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses regardless of their net worth or size. It aims to remove barriers that exclude people from participating in the financial sector. While financial inclusion has long faced challenges, developments in financial technology like digital payments and peer-to-peer lending have expanded access. However, an estimated 1.7 billion adults worldwide still lack access to basic banking services.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    48 views1 page

    Financial Inclusion Definition

    Uploaded by

    Irwan Ginanjar
    Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses regardless of their net worth or size. It aims to remove barriers that exclude people from participating in the financial sector. While financial inclusion has long faced challenges, developments in financial technology like digital payments and peer-to-peer lending have expanded access. However, an estimated 1.7 billion adults worldwide still lack access to basic banking services.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    Financial Inclusion Definition

    By Mitchell Grant

    What Is Financial Inclusion?


    Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals
    and businesses, regardless of their personal net worth or company size. Financial inclusion strives to remove the
    barriers that exclude people from participating in the financial sector and using these services to improve their lives. It
    is also called inclusive finance.

    Key Takeaways

    Financial inclusion is an effort to make everyday financial services available to more of the world's population at a
    reasonable cost.
    Advancements in fintech, such as digital transactions, are making financial inclusion easier to achieve.
    However, the World Bank estimates that some 1.7 billion adults worldwide still lack access to even a basic bank
    account.

    How Financial Inclusion Works


    As the World Bank notes on its website, financial inclusion "facilitates day-to-day living, and helps families and
    businesses plan for everything from long-term goals to unexpected emergencies." What's more, it adds, "As
    accountholders, people are more likely to use other financial services, such as savings, credit and insurance, start and
    expand businesses, invest in education or health, manage risk, and weather financial shocks, all of which can improve
    the overall quality of their lives."

    While the barriers to financial inclusion have been a longtime problem, a number of forces are now helping broaden
    access to the kinds of financial services that many affluent consumers take for granted.

    For its part, the financial industry is continually coming up with new ways to provide products and services to the
    global population, and often turn a profit in the process. The increasing use of financial technology (or fintech), for
    example, has provided innovative tools to address the problem of inaccessibility to financial services and devised new
    ways for individuals and organizations to obtain the services they need at reasonable costs.

    Peer-to-peer lending has become particularly important in developing countries, where people may not have access to
    traditional bank financing.

    Some examples of fintech developments that have aided the cause of inclusion in recent years include the growing use
    of cashless digital transactions, the advent of low-fee robo-advisors, and the rise of crowdfunding and peer-to-peer
    (P2P) or social lending. P2P lending has proved particularly beneficial to people in emerging markets, who may be
    ineligible for loans from traditional financial institutions because they lack a financial history or credit record to assess
    their creditworthiness. Microlending has also become a source of capital in places where it is otherwise hard to come
    by.

    While these innovative services have brought more participants into the the financial marketplace, there is still a
    significant portion of the world's population—including in the United States—that lacks such access and remains, for
    example, either unbanked or underbanked.

    The World Bank Group, which includes both the World Bank and the International Finance Corporation, is also
    sponsoring an initiative called Universal Financial Access 2020, the goal of which is to ensure that by the year 2020, an
    additional 1 billion adults will "have access to a transaction account to store money, send and receive payments as the
    basic building block to manage their financial lives."

    If successful, that effort would significantly reduce the number of adults who currently lack even rudimentary financial
    services, which the World Bank recently estimated at some 1.7 billion.

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