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> Posted by Claudio Storm Quinteros, Director Ejecutivo, Fondo de Solidaridad e Inversion Social de Chile

The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

Imagine your refrigerator breaking down. The mechanic says it can’t be fixed. You don’t have a bank account, you don’t have a high paying job, and while you have saved a bit of cash in your home, it’s certainly not enough to purchase a new appliance. You later wander into a department store on your way home from work, and see it: a brand new refrigerator, on sale today only. You ask what the price is, and it is well beyond your savings. “Do you want to purchase it on credit?” the clerk asks.

Of course you do.

In Chile, about 58 percent of adults are financially excluded, if a bank account is the metric of inclusion (according to the World Bank Global Findex). But many people get their start with financial services through a different route. Retailers have moved into the financial services space and offer the ability to purchase many household items on credit. The product is even available for – perhaps especially aimed at – people whose incomes are low.

This is the population that my agency serves—those who are low income and trying to make ends meet. When serving this population, we address the root causes of poverty through a range of social and economic development activities. When we consider our financial inclusion programs targeting this population, we have to think about how people living in poverty use the financial services available to them—especially the consumer credit to which they have easy access.

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