Every individual and organization should have access to financial services leading them closer to financial inclusion. Both developed and developing economies are prioritizing it for sustainable development. In this blog, let’s dive into the details of Financial Inclusion, its role
on the global forum and the factors that are barricading it.

What is financial inclusion?
Financial inclusion enables people and businesses to have a technologically empowered banking environment. It is a process that provides easy access to affordable and timely financial services.

Financial inclusion can be characterized as the availability of financial services, such as transactions, equity, credit, and easy access to other financial services, to everyone. The aim of financial inclusion is to channelize individuals, groups, and organizations into formal
economic structures and provide them with economic prospects for development and growth.

Four Pillars of Financial Inclusion
1) Financial Literacy: Our formal educational system often neglects financial literacy or does not prioritize it. Educating people from the beginning will lead to a greater and faster rate of financial inclusion.

2) Bank Accessibility: This is the base of financial inclusion as financial inclusion necessitates having accounts in banks. Historically, the emphasis on access to banking facilities has been restricted to a limited segment of society. Keeping them uninformed and unaware of the benefits of banking and ultimately off the radar of the banking system. Although the situation is changing drastically, the ratio is looking promising in the coming years.

3) Product availability: Savings, loans, a click-to-pay option, insurance, and investments are all products that provide people with advantages. The advantages of various financial products encourage consumers to open and maintain accounts, hence boosting financial
inclusion.

4) Risk Management: Risk management is critical to maximizing the benefits of financial inclusion. It is an important component of Financial Inclusion and is addressed by financial literacy. The competitive difficulties of detecting potential risks and implementing adequate risk mitigation and management techniques. Overall, risk management entails monitoring and managing the same throughout the investment.

The Global Ride and Race of Financial Inclusion
Many countries are seeking to expand the network of financial inclusion in order to transform their existing financial services. Direct Benefit Transfer (DBT) in India is an example of it. G20 pledged to advance and widen the network of Financial Inclusion across the world and the first Global Partnership was initiated for Financial Inclusion. The first G20 Global Partnership for Financial Inclusion (GPFI) was held this year in January to foster its implementation. Currently, the Philippines is the most advanced in financial inclusion on the Asian continent. While Kenya, Colombia, and Brazil lead the world in financial inclusion.

India in the Race
The government of India strongly advocates financial inclusion, and various policies reflect this. In 2014, the country’s major improvement in its financial sector drove a significant increase in its financial inclusion pace, according to the World Bank’s Global Findex Database.
When it comes to financial inclusion, initiatives like the Zero Balance Accounts Opening in Banks, initiatives like the Pradhan Mantri Jan Dhan Yojana, the Pradhan Mantri Mudra Yojana, DBT, the India Post Payments Bank, and the game changer, UPI are altering the
entire existing system. As a result, India is now one of the most digitally connected economies in the world. Symbolizing the country’s enormous potential to become the world leader in the future.

Factors affecting financial inclusion
● Digital Divide: The availability of the internet in remote regions of the world is one aspect of the problem that needs to be solved, but the actual utilization of the internet on the other end poses a challenge. As, the internet in India is finding huge spaces for entertainment purposes and dopamine boost on social media Instead of productive utilization.

● High Enumerate Rate: To reap the most benefits of financial services, numeracy knowledge is required. A comprehensive understanding of the fundamentals involved in finance in the form of numbers is essential to unlocking the maximum potential in it.

● Limitation of technology reach: The lack of familiarity with technological advancement is another barrier to Financial Inclusion reaching all sections of society.

● Un-banking Ratio and Last Mile Challenge: Access to the formal banking system has huge limitations and is one of the top reasons contributing to the negative impact of fintech, as accounts are the gateway to financial inclusion. Its growth is hindered by the decreasing number of account holders and the challenge of last-mile delivery.

How can Financial Inclusion help the economy?
The higher the banking population of a country, the better it will be. Financial inclusion plays a role in decreasing the percentage of poverty and empowers people financially. Removes the loopholes for corruption by eliminating the interference of middlemen. At times of economic collapse, stability is maintained by providing a solution for economically vulnerable segments. Preventing them from fraud and falling into debt.

Likewise, parallel economic development and the development of an alternate microeconomy are also being developed, resulting in an overall inclusive economic structure. In India, a rapidly growing economy, the informal sector is just as important in laying the
groundwork for microeconomic development as the formal sectors are. Millions of employees receive financial support from small manufacturing units and independent service providers. Innovative frameworks at the ground level are integral parts of the nation’s
economy, providing financial opportunities and stability at crucial stages.

Evolute deals with Fintech and is helping to support and accelerate the process of financial inclusion. Our innovations provide a range of innovative, end-to-end financial inclusion solutions for economic advancement. From mobile banking to digital payment products, from
reducing customer costs to increasing customer engagement. With Evolute, we are trying to pave the way towards economic upgradation that will improve financial inclusion.