Financial inclusion means that individuals and businesses have 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. Nevertheless, beyond opening a bank account, financial inclusion is more.
According to the 2016 Brookings Financial and Digital Inclusion report that looks at 26 emerging countries across the globe, countries must have these four dimensions to achieve real financial inclusion:
- Country commitment.
- Mobile capacity.
- Regulatory environment.
- Adoption of selected traditional and digital financial services.
Here are 10 myths on financial inclusion:
- Being the most dynamic region in the world, Asia has the least number of people who are financially excluded or unbanked.
- People who have bank accounts use financial products and services often.
- There are more women who own a bank account than men.
- People need to own a bank account to be “banked” or financially included.
- Digital technology benefits only the “banked” or the financially included as they can transact electronically through banks.
- Digital technology is the “cure-all” solution for bringing financial services to people and business more conveniently and faster than in the past.
- Without proof of identity, the “unbanked” cannot become financially included.
- People living in rural or remote areas where there is no access to ATMs or banks cannot be financially included.
- The “unbanked” cannot access credit because they do not have formal income, credit history, collateral or personal identification. This makes it difficult for lenders to understand their risk profile and assess their creditworthiness.
- Digital finance makes the jobs of regulators difficult, as they lose control over the financial system.
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