Financial inclusion remains the first step towards personal and professional well-being and is a prerequisite for achieving several goals under the United Nations Sustainable Development Goals. Despite this, more than half of the world has yet to gain equitable access to finance and this remains one of the greatest challenges facing the world today.
Driving the agenda of stakeholder capitalism, the World Economic Forum has always focused on financial inclusion and the role it plays in helping communities thrive.
This very important topic was discussed during the second day of the ongoing WEF in Davos, with several global stakeholders coming together to discuss this issue.
HM Queen Máxima of the Netherlands opened the session by raising a question about the need for public and private actors to fully understand the goal of financial inclusion and assess how this can translate into better financial health. of an individual.
Karabo Morule from Capital Art, South Africa, raised the topic of financial literacy as a key element in fostering better use of access to finance. Its call for financial literacy finds relevance in various research studies that show a significant correlation between financial inclusion and financial education. In fact, developing countries now report financial literacy as low as 30% compared to the 60% average in developed economies.
In this context, Morule explained how financial literacy would encourage people to invest in insurance, especially among disadvantaged and marginal groups.
His thoughts on connecting disadvantaged people with prudent products were echoed by Adeeb, whose company, LuLu Financial Holdings, is involved in the cross-border remittances and micro-loans segment. With more than 1.1 billion people worldwide locked out of formal financial channels due to lack of verifiable identity, Adeeb took the examples of India’s Aadhar program and the UAE’s Wage Protection Program to highlight. the need for better traceability of consumer spending. According to him, this is important to complement the awareness of products adapted to the needs of the underserved. Adeeb also suggested that while digitalization has its inherent benefits, financial institutions should remember the emotional aspect at the local level and bring a personalized touch to their services accordingly to ensure effective onboarding of last-mile consumers.
Gelsomina Vigliotti of the European Investment Bank, which works with several developing economies on projects at the local level, further mentioned that access to finance should be accompanied by adequate training and skills development. so that the money is used correctly. Simply having financial access does not guarantee growth, but having a strong business case for deploying it makes the difference, she added.
Andre Soelistyo from GoTo Indonesia called for greater public-private involvement to reduce the cost of money transfer to zero. According to him, this is necessary to build sustainable solutions that can lead people to use financial products adapted to their well-being. He explained how his company was able to leverage the potential of digital solutions during the pandemic to onboard millions of bikers in Indonesia, giving them access to the market opportunity.
At the heart of this point of digitization, the conversation also touched on various aspects of cyber fraud, especially with digital newbies unaware of the security involved. Globally, cybercrime has increased by 600% as more people go online, with 67% of financial institutions reporting an increase in cyberattacks over the past year.
In this context, François Villeroy de Galhau, Governor of the Banque de France, admitted that while this is of concern, there should be no trade-off between digitalization and regulation in the march towards greater financial inclusion. He expected stakeholders to work together so that both would grow in tandem with demand.
He also expressed the need to integrate elements of gamification into financial literacy campaigns, strongly suggesting that financial literacy cannot be done in isolation.
The conversation, moderated by BBC Economics Editor Faisal Islam, also touched on several successful case studies in developing economies such as the United Arab Emirates, India, Bangladesh, Indonesia and South Africa. , among others.