Monday, 4 November 2013

Financial inclusion: How can poor people have access to the financial services they need?

2.5 billion people around the world lack access to financial services such as savings accounts, access to loans,  insurance and  bank transfers.  According to the Centre for Financial Inclusion, “Access to a range of quality financial services at affordable prices, delivered with convenience and dignity, can change the course of an individual’s, family’s, or business’s future.  A full suite of financial services should be provided with quality, to all who can use them, by a range of providers”.

CARE's Code of Conduct

Financial inclusion is challenging and requires financial service providers to meet the unique needs of all clients, especially the so called "invisible customers", the most under-served and vulnerable client groups.

Last week, the Global Forum “Financial Inclusion 2020” took place in London.  The vision of this movement is to create a financially inclusive world using the year 2020 as a focal point for action. The movement has worked together for over 20 years to promote  responsible microfinance practices.  The focus of these practices is the economic and social benefit of customers, rather than the maximisation of profits for microfinance institutions.

On Wednesday to conclude the forum, the Microfinance CEO Working Group,  who collaborate to improve the way in which their Microfinance institutions work, participated in a conversation with members of the Microfinance Club UK on the development of the Financial Inclusion 2020 initiative.

Discussion around two major questions arose from this conversation:
  1. What does expanding Financial Inclusion mean for the very poor? How do we ensure financial services remain client-focused and that financial sustainability is not achieved at the expense of microfinance's social mission - poverty alleviation.
  2. What role must technology play in driving and expanding financial inclusion? Attendees were in strong agreement that technology is critical to the success of Financial Inclusion and the creation of sustainable business models, for example the use of mobile phones to transfer small amounts of money between users of the same mobile company, as  is being done in Kenya, Tanzania and other African countries. 

The group also highlighted what they consider to be the fundamentals of responsible microfinance. These fundamentals are included in CARE's Code of Conduct in Microfinance and are critical to the success of Financial Inclusion as a movement to build better futures for people with low and moderate income around the world. These are:
  • ensure customer protection 
  • focus on customers’ real needs 
  • reach customers in remote areas 
  • provide services to customers classified as poor 
  • provide training to their customers 
  • being transparent and efficient in their management 
  • work with and empower local staff

Read more about the Financial Inclusion Forum 2020

By Teresa Hall, Assistant

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