What is Financial Inclusion?
Financial inclusion is when individuals and businesses are given access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
- Financial inclusion has been identified as an enabler for 7 of the 17 Sustainable Development Goals.
- The G20 committed to advance financial inclusion worldwide and reaffirmed its commitment to implement the G20 High-Level Principles for Digital Financial Inclusion.
- The World Bank Group considers financial inclusion a key enabler to reduce extreme poverty and boost shared prosperity.
Why is Financial Inclusion Important?
According to the World Bank’s Global Findex, 1.7 billion adults worldwide lack access to basic financial services. This means they:
- Don’t have a secure place to save money;
- Have no way to receive money—including customer payments or remittances from relatives working abroad;
- Have no safe, reliable and easy way to make payments, such as to suppliers, schools or doctors.
These people are, effectively, “financially excluded.” Most of the unbanked live in developing countries and more than half are women.
Ways Financial Inclusion Changes Lives
When poor families have access to financial services, they can earn more, build assets and cushion themselves against external shocks.
- Household income
Financial services can improve lives by providing needed financing for basic necessities as well as education and business activities, which can increase household incomes. Financial services help families save, manage cash flows and reduce the need to sell assets in times of crisis.
- Build assets
With increased income, financial services provide the means for poor families to acquire land, construct or improve their home, purchase livestock and consumer goods or expand their businesses.
- Create jobs
Not only do financial services provide people with the opportunity to create jobs for themselves, but also they ensure that growing businesses will provide opportunities for others in the community to access jobs as well.
For these reasons, financial inclusion is a critical strategy for helping to alleviate poverty and build a world of greater equity and opportunity.