According to WorldBank, an estimated 1.7 billion adults around the world aren’t able to access even the most basic financial services. However, mobile technology is enabling a number of financial inclusion strategies to connect these individuals with the products and tools they need to thrive.
What are the features of financial inclusion?
Investopedia describes financial inclusion as “efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size.” The goal of these efforts is to bring financial products and services to the unbanked or underbanked no matter where in the world they are.
Financial inclusion also focuses on sustainability. People and businesses not only need to be able to access services but also continue using them in the long term. This requires stable, secure platforms accessible even in remote or rural areas where traditional financial institutions are few and far between.
Without financially inclusive options, the unbanked and underbanked are left with little choice but to use high-priced, less-secure alternatives. These solutions often carry a high level of risk and offer few options. Financial inclusion, by contrast, opens the door to:
- Long-term savings.
- Personal and business loans.
How can mobile technology improve financial inclusion?
Embracing a mobile financial model makes it easier to connect unbanked or underbanked people and businesses with “micro” services for savings, loans, and insurance, which allow users to get started with small amounts of money and improve their finances over time. Mobile credit card readers enable secure transactions and payments for a variety of goods and services across industries.
Big banks don’t realize much profit from working with customers lacking significant monetary resources. Accounts and services through these institutions also typically come with a range of fees, including the risk of overdraft fees if funds get too low. Mobile solutions cost less and have fewer fees, which offers more security to those just venturing into the world of banking.
How does financial inclusion help businesses?
Being able to set up a low- or no-cost bank account through a mobile service enables entrepreneurs in areas around the world to establish and grow their businesses. Mobile technology bridges the gap between these individuals and the loans they need and makes it possible to maintain regular payment schedules.
Using a mobile device, business owners can move beyond cash to set up mobile credit card processing. This gives businesses access to wider markets and increases their financial security. Payments made through mobile credit card processing aren’t subject to loss or theft to the same degree as cash. Plus, business owners receive transaction funds in their accounts quickly and can use the money to reinvest in the continual growth of their business.
For those living in areas where credit, savings, and loan services are almost impossible to access, mobile technology can mean the difference between barely making a living and running a thriving business. As financial inclusion efforts expand, more people around the world will be able to build businesses, achieve independence, and enjoy more stable futures.