The world bank estimates that 1.7 billion adults worldwide still lack access to a basic bank account. Recently, companies started to recognize this community over unbanked individuals and began creating revolutionary financial technology for financial inclusion.
To understand what inclusive payments mean, you must understand financial inclusion and how and why adults are underbanked. Follow along below for an in-depth breakdown.
Inclusion in finance refers to making financial products and services affordable and accessible to all individuals and businesses, regardless of their personal net worth or company size. The goal of financial inclusion is to remove barriers that prevent people from participating in the financial sector and utilizing these services to improve their lives.
An unbanked adult is someone who does not use or has no access to traditional financial services.
Financial inclusiveness is a strategy that seeks to increase access to financial services for all people at reasonable rates. Every day, financial inclusion becomes easier with the rapid advancement of fintech, such as digital transactions.
When focussing on unrepresented adults there are two main groups: unbanked and underbanked. To break it down, we will define both groups.
Most people do not have access to a bank account because of a lack of money, according to Global Findex. 30% of respondents answered that they did not feel that they needed a bank account. Some other reasons found were distance, documentation requirements, distrust in financial services, and religious concerns.
“Providing financial services to the 1.7 billion people who are unbanked could boost economic growth and opportunity for the world’s impoverished. Harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others,” said Robert B. Zoellick, President of The World Bank Group.
Despite these innovative services, an increasing number of people remain unbanked or underbanked nationwide, including in the United States. Some examples of fintech developments that have aided the cause of inclusion in recent years include the growing use of cashless digital transactions. Some online payment plans have even started accepting cash as a payment method.