Financial inclusion includes any attempts to make financial services and products accessible — and affordable — to more people and businesses. A more inclusive financial sector involves people of varying net worths and businesses of any size. Inclusive finance also involves people from groups that may be traditionally underrepresented in finance because of where they’re from, their gender identity, race, religious beliefs or age.
Why Is Financial Inclusion Important?
If more people have access to financial services — and know how to use them — that makes for a fairer and more equitable world. This is reason enough to support financial inclusion; however, some people want more rationale. Financial institutions are usually for-profit entities, so doing something just because it’s “fair” isn’t always convincing motivation.
Thankfully, in this case, doing the right thing is also the smart thing. This is because promoting financial inclusivity has several knock-on benefits, such as:
- Reduced poverty: If more low-income and marginalized people can access savings accounts, credit and insurance, they can better avoid poverty. This enables them to participate in the economy.
- More economic activity: The people who may have only been scraping by with just a checking account can save their money, invest it or start their own business in a more inclusive financial system. This grows the economy.
- More successful small businesses: It can take a lot of financial savvy to run a small business. If more people with an entrepreneurial spirit have access to financial services and knowledge, then more small businesses can thrive, thus creating a larger pool of customers for the finance industry.
- Innovation: Financial inclusion can foster innovation, leading to the development of new technologies, especially as financial technology (fintech) is a major area of financial inclusivity.
How Can Banks Promote Financial Inclusion?
Here are some ways banks can appeal to a more diverse and often-overlooked demographic:
Offer Mobile Banking
As mentioned above, fintech is great for getting underrepresented people involved in banking. Most people have a smartphone, but they may not feel comfortable, or have the time for, going into a bank and asking questions. They may not even know what questions to ask.
A mobile banking app that allows customers to conduct various transactions can help welcome a wider audience to the financial world.
Provide Educational Resources
Banks should also make important financial information as widely available as possible. Banks can produce free informational resources for people, such as a newsletter or maybe even, say, a blog.
Offer Digital Payments
A banking app may integrate with a digital payment app. Smartphones today have wallets that allow people to pay with their phones.
Talk About It
Another thing banks can do is simply talk about the problem. By mentioning it and encouraging people of various means and backgrounds to get involved, more people can feel welcomed in finance. So if you have any questions, please contact a Vectra Bank professional today, and we’d be happy to talk.
