How Policymakers and Innovative Policies Can Help Further Financial Inclusion
Updated: Oct 7
The COVID-19 pandemic and the resulting lockdowns in different countries have revealed that partnerships between policymakers and financial institutions are important to support the bottom of the pyramid. These partnerships manifested in the distribution of cash assistance to those most affected by the pandemic, and the easing of policy requirements in the financial sector. These responses of the government just prove that they are key to alleviating poverty.
Aside from partnering with microfinance institutions, policymakers all over the world have taken measures to further financial inclusion through laws and strategies. From encouraging the FinTech industry to collaborate to expanding payment services within a country, the following are just some examples of the government stepping up to make sure no one gets left behind when it comes to formal financial services.
India’s Aadhar System
Launched by the government of India, the Aadhar assigns each of India’s residents a biometrically-verifiable 12-digit ID number. The registration for this is free of charge and now 99% of adults in India have the Aadhar identification. Because of the nationwide adoption of the Aadhar, the number of bank accounts in the country increased as the 12-digit number made identification easier and the KYC process faster
Mexico’s FinTech Law
Mexico enacted the FinTech Law to promote financial stability and further financial inclusion within the country. It intends to build a regulatory framework to encourage innovation and collaboration with regards to financial services. The law also aims to increase the level of competition in the country, bringing in more FinTech companies to help with financial inclusion.
Kazakhstan’s “On Payments and Payments Systems”
One of the initiatives the government of Kazakhstan did to encourage the country’s residents to make use of financial products and services was the “On Payments and Payments Systems”. This law regulated the payments system in the country and added new participants in the payment services market. It also encouraged payment services among the population, resulting in financial institutions widening their reach to the unbanked.
Pakistan’s National Financial Inclusion Strategy
The National Financial Inclusion Strategy was enacted in 2015 to address the low levels of financial inclusion in Pakistan. By adopting it on a national level, the government made financial inclusion a priority in the country. The strategy aims to promote financial inclusion by helping individuals and businesses access a wide range of formal financial services.
While policies enacted by the government definitely help in furthering financial inclusion in their respective countries, partnerships with FinTech are also important in making sure that there are innovative means to reach the unbanked population. The FinTech industry provides solutions to better reach the unbanked population, and there are online banking platform providers like BanqIn (A Product of Bank-Genie) that focus on financial inclusion. This is why collaboration among financial institutions, policymakers, and the FinTech industry is so important. It’s only through working with each other that financial inclusion can be attained for all.
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