Re-imagining Financial Inclusion is important for the empowerment of low-income communities, especially women. The existing financial services are not serving much to the people who are at the base of the economical pyramid. So how would we do that and is it even possible to redesign the existing system? This article will cover everything.
The discussion has been around now for a long time, but there has been no improvement so far. Many studies have been conducted to do lean research and collect more information, to clarify the impact of financial inclusion in society. However, both the critics and the advocates have their fair points to defend and attack Financial inclusion. It is difficult to draw any conclusion around this topic. The policies have a reasonable impact on many lives, but yet have many areas of improvement to make it accessible.
Therefore it is required to reimagine financial inclusion. The narrative will help to reflect more insight to the topic and also allows us to reconsider the existing policies and system.
Impact of Financial Inclusion on Lower-Income People
The microfinance institutions in 1990 helped the users by offering micro-businesses and small loans to save people from poverty. Then the system evolves and takes a broader narrative. The idea allows access to a wider range of financial services other than just loans.
Then after the evolution of the digital platform, digital financial inclusion comes into the picture. It has simplified many lives but also increased the task for technically illiterate people.
Hence it is necessary to understand that along with the advancement the financial inclusion should be also reachable to all. The financial products surely enhance the transactional methods but the experience surely differs from community to community. Hence the researchers have tried to collect and arrange the data to focus on the different areas like how the financial inclusion framework assists impact different people.
Impact of Financial Inclusion on Women
For a few decades we have been talking about women empowerment, but the gap between men and women still persists in economical references. The existing financial inclusion system is not planned and designed according to the women mindset and favorability.
It is scientifically proven that the minds of women and men work differently. The brain is designed according to gender and society requirements. The norms and behaviour based social expectations impact duty, education, financial freedom, livelihood, economical opportunities, etc. Most women are not allowed to choose their jobs and claim ownership of the banking system.
Existing Financial Inclusion and Banking System
When users go to the bank to open an account, it involves a long procedure. It includes filling the Know your customer (KYC) form, valid issued identification, ownership proof of the land, etc.
The poor people and women mostly do not have much idea about the process. Hence it is important to redefine the banking system for the betterment of the system.
New Theory of Financial Inclusion
CGAP developed a new theory that helps to enhance financial inclusion which can also impact the lives of poor people in a positive way. To begin with they tried to answer a few questions like how this existing financial inclusion system is helping the poor people? How is it allowing them to achieve their financial goals? While finding the answer they find out that a more logical solution is required to make the service accessible for everyone.
TOC starts to look at the problem from the very ground level. They first focus on the ultimate impact of the finance and system regarding it on the people’s lives. The existing centre for financial inclusion does not reduce poverty. Hence financial awareness is needed to increase among various communities, especially among the women and the poor. After a detailed study, they create a few hypothetical pathways for poverty reduction.
They review that financial inclusion has two outcomes, they are:
This outcome refers to the financial services that allow the people to deal with any sudden tragedy and prepare them economically.
It assists the user in a much broader sense like education, investing in a startup, medical treatment, migration, etc.
Upgraded Ways to Improve the Financial Inclusion for Backward Class
However, there are many associations that are thinking about it and helping to make financial inclusion accessible.
It is an organisation that helps the women of the Philippines and India in managing finance.
It is a South Africa based digital bank that allows customers to use digital financial services. The bank also provides financial literacy to help the customer during the coronavirus pandemic.
It is a Pakistan based application that provides mobile money services. It is developed for the marketing campaign that assists women to participate in financial inclusion.
IDRC Funded Research
The service helps to improve the economic experience of women. It also provides a helping hand to transform lives using financial services.
There are various podcasts available regarding Finance Inclusion, which you can go through to gain more knowledge about the topic. With that, it is time to wrap the article. Hopefully, the article provides you with detailed information about how the existing economic system is serving only selective communities and groups. You can freely share your thoughts about the blog in the comment section below. If you liked the article then share it in large numbers and educate the people around. You can also check another interesting and informative articles on our website.