One of the biggest barriers preventing impoverished people from improving their economic status is a lack of access to financial services. In many cases, access to some sort of financial services such as loans, savings accounts, or insurance, is the only thing keeping people impoverished. Below, you can learn how access to financial services fights poverty, as well as find out about organizations which are working to widen the distribution of access to such services.

Types of Services

In the modern-day, digital services are becoming the standard. Digital services are integral to improving the ease of access to financial services on the whole, as it makes those services far more efficient. Such digital services as payments and transfers, insurance, savings, credit and securities are essential to uplifting impoverished people. According to the U.N., digital financial services uplift people in poverty by way of asset accumulation.

Access to devices that can support such services is equally important. Smartphones, for example, have a plethora of finance apps that can be used to level the economic playing field. There are also risks associated with introducing such technology, though it is worth acknowledging that lack of understanding of the technology introduces security risks. To mitigate this, the U.N. recommends not only providing access to these services but also educating the population on how to properly utilize them and manage any necessary risks involved.

Organizations Seeking to Help

A movement organized around how access to financial services fights poverty is no small feat. It takes a significant concerted effort by large groups to make it possible. Thankfully, there are several organizations that are paving paths forward to uplifting impoverished people.

The Bill and Melinda Gates Foundation has a program entitled Financial Services for the Poor (FSP). The FSP program provides funding for partners who are working to establish easily accessible low-cost digital financial services in various at-risk regions. The FSP program prioritizes countries with some of the largest impoverished populations, working in Bangladesh, India, Nigeria, Pakistan, Indonesia and East Africa.

The Grameen Foundation is also working to innovate and improve not only access to financial services to those in poverty but also to the platforms enabling those financial services themselves. The Grameen Foundation works to connect people, especially women (who are disproportionately negatively affected) with necessary technologies such as mobile phones. It also partners itself directly with banks and microfinanciers to provide those services directly to the people who need them. In Kenya, the Grameen Foundation partnered with the 100 percent cashless microfinance institution Musoni to launch a mobile-based agricultural loan known as Kilimo Booster, specifically for small-scale farmers who traditionally lacked access to financial services. Over a three year period ending in 2016, the partnership resulted in more than 6,000 loans and the disbursement of more than $2.2 million.

A Positive Trend for Financial Service Access

Overall, it is important to recognize the ways in which access to financial services fights poverty. Such services are extremely vital in ensuring economic empowerment, and a population of people who can really improve their economic situations. Things are looking up, with a wide array of different organizations all contributing to an improving trend of access to important fiscal services. An estimated 1.2 billion people have gained access to banking since 2011, in part thanks to the efforts of various organizations who are seeking to help. With these collaborations, financial services can be provided and poverty can be downsized significantly as a result.

– Jade Follette
Photo: Flickr