While I was privileged to go to school, get educated, watch tv, buy books, during my adolescent days. I never realized some people do not have access to primary education until I saw this ad on Doordarshan – राष्ट्रीय साक्षरता मिशन [National Literacy Mission. My first question to my parents was – why is education so important yet inaccessible ? Guess you reap what you sow, and in 2016 when I was working on my dream project, I was again stuck with the same query only change being education replacing financial education.
My mission of enabling change, empowering lives by including them into a formal financial system was based on the knowledge of money, the power to learn, analyze, and grow. Unless people know about the power of money – its growth pattern, method, or savings schemes, why would anyone be willing to attach himself/herself to a system? That’s why I regard Financial literacy as the fourth pillar of financial inclusion, with the other three being – technology, women inclusion, and regulation.
Financial Education –What it means and Stats?
Financial education helps individuals in understanding numeracy, risk diversification, inflation, and interest compounding. It assists individuals in making informed decisions regarding – balancing a budget, fund the children’s education, buy a home, avail a personal loan, understand the risk associated with debts and ensure an income at retirement.
When people are financially literate, they would be keen to explore the products and services offered by banks and use them for their benefits. It accelerates the pace of financial inclusion, where everyone can access the necessary banking facilities rather than relying on the orthodox systems of money market such as borrowing money from Zamindaars or village money lenders
As per stats available from Nov 2018, the highest financial literacy in any country is 71%, while in developing and underdeveloped nations its below 25%, what the figure indicates that a lack of knowledge about finance and financial products, many people are unable to access banking and financial services, and are therefore kept out of financial markets making financial illiteracy a critical barrier to financial inclusion.
How to Improve Financial Literacy?
While improving knowledge in modern days could be done via online apps or courses, our focus should be creating awareness of financial literacy. So how it could be attained, here are few pointers –
If you a Bank or NBFC looking to use technology and innovation in expanding the business and enable social inclusion, we are here for you.
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Watch out this space to get more insights on Banking as a service [BaaS] and Financial Inclusion.