Updated: Oct 7, 2020
Through papers and studies, it has been proven that financial literacy is beneficial to financial inclusion. The correlation between the two seems obvious, as being educated on financial services means being able to use those services. However, education on traditional banking products and services don’t seem to be enough because in this day and age, it is essential for people to also be digitally literate.
Digital Financial Literacy is a combination of financial literacy and digital platforms. It is having the knowledge, habits, and acquired skills to effectively use digital banking services for financial transactions. Because of the domino effect this has on the population, Digital Financial Literacy ensures that financial inclusion for all is achievable.
It all starts with education. Once people are aware of digital financial products and services, this will easily lead to high usage level among the population. It is through awareness that consumers can choose whether or not they need or want formal financial services. It is ideal for them to have this option because this can improve the overall state of their lives by using them for economic opportunities.
One specific example is by owning a bank account. This ensures that any savings they have are safe and secure. Customers can also grow their money because some banks offer interest rate when you put money in a savings account. Because of technological solutions like digital onboarding, opening an account with a bank is much easier and can be done at the customer’s convenience.
Once the customer has a bank account, they can continually use banking services through mobile banking. This enables them to conduct transactions without the hassle of going to a physical bank branch and to send money remotely to anyone. Because of electronic money, payment behavior is changing for the better — from cash to cashless.
Digital onboarding and mobile banking are just two reasons as to why people should be digitally and financially literate. Through digital penetration and the proliferation of digital banking products and services, the scope for financial inclusion widens. No longer do people need to be subjected to traditional banking methods, because digital banking technology makes it possible for banking customers to conduct transactions at their own convenience. It also makes sure that the unbanked population can be reached.
Financial inclusion is essential to the financial empowerment of the individual. Through financial inclusion, they can invest in their health, education, livelihood, and overall life.
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