Financial inclusion is the effort to make everyday financial services available and affordable to all people, regardless of how much they make or the size of the company. The end goal of financial inclusion, also called inclusive finance, is to remove barriers that exclude participation in the banking system and help them use those services to improve their lives. This especially applies to those who are underserved or excluded from the traditional banking system. This includes people who are unbanked, those that don't have a bank account, and those who are underbanked, which means they have limited access to financial services for different reasons.
Why is Financial Inclusion Important
This movement can help to reduce poverty, promote economic growth, and improve the overall well-being of people and their communities. When some have access to formal financial services, they can save money, make transactions, and access credit, which can help to build assets, start businesses, and invest in their own education and health. By expanding access to financial services, we can foster a more inclusive and sustainable environment that benefits everyone.
What Are the Barriers to Financial Inclusion
While financial inclusion is often associated with developing countries, it's also an important issue here in the United States. Research is being conducted to better understand the barriers to financial inclusion and identify ways to improve access to banking services for underserved populations. This includes examining the role of technology and digital banking in promoting financial inclusion.
Barriers include lack of access to physical bank branches, high fees and minimum balance requirements, and lack of financial literacy. To address these problems, there is a wide range of initiatives, programs, and services, such as mobile banking, microfinance, and financial education. Mobile banking, for example, allows people to access financial services through their smartphones, which can be particularly helpful in areas where there are few physical bank branches. Microfinance provides small loans to individuals and businesses who may not qualify for traditional bank loans. Finally, financial education programs can help to improve financial literacy and empower people to make informed financial decisions
Overall, financial inclusion is an important goal for promoting economic development and reducing poverty. By increasing access to financial services, people can better manage their finances and build a more secure future.
How WaFd Bank is Contributing to Financial Inclusion
There are many financial inclusion programs offered across the country. WaFd Bank directly offers:
Bank On is a national initiative that promotes access to safe and affordable bank accounts for people who are unbanked or underbanked. Bank On works with local governments, financial institutions, and community organizations to create and promote low-cost, low-fee bank accounts that meet certain standards for safety and accessibility. WaFd is proud to partner with Bank On and offers a Fresh Start Account to help people get back into the banking system. This account includes a debit card, person-to-person payments, online and mobile banking, and the option to upgrade to a traditional banking account once a positive account history has been built.
Financial Coaching Services
Financial Coaching services provide one-on-one support that helps individuals and families improve their financial literacy, set financial goals, and develop strategies for managing their money. No question is too small for our friendly bankers!
Save at School Program
WaFd's Save at School program allows banks to volunteer in classrooms to teach students the value of a dollar and the importance of saving. In addition to financial literacy lessons, there are monthly bank days throughout the school year where students can bring their savings to school and make a deposit to their account. A WaFd Banker stops by the classroom to gather deposits and talk with the students about saving.
Articles, Virtual Coaches, and more with Banzai!
WaFd partners with Banzai! to offer articles, virtual coaches, and more on a wide variety of topics. This is open not just to our clients but to our nonprofit partners as well. We offer a Banzai! page free of charge to nonprofits who have received a grant from our Washington Federal Foundation so they can help those they serve even better.
More About Financial Inclusion
Several publications and media outlets have covered the topic of inclusive banking, and there are a few that cover them regularly:
The World Bank
The World Bank provides insights into global efforts, best practices, and case studies related to expanding access to financial services.
The Financial Times
The Financial Times frequently covers topics related to inclusive banking, financial inclusion, and social impact in their articles and opinion pieces.
The Guardian, a renowned international newspaper, covers various aspects of inclusive banking and financial inclusion, particularly from a social and economic justice perspective.
Forbes features articles on inclusive banking, including insights into innovative models, trends, and the impact of financial inclusion on economic development.
The Economist is known for its in-depth analysis and coverage of global economic issues. They have published articles and reports on inclusive banking, examining its implications for individuals, communities, and economies.
Consultative Group to Assist the Poor
CGAP (Consultative Group to Assist the Poor) is a global partnership of over 30 leading organizations that focuses on advancing financial inclusion. They publish research, articles, and case studies on inclusive banking practices and innovations.
Devex is a media platform that covers global development and humanitarian news. They often feature articles and interviews related to inclusive banking, highlighting initiatives and challenges in promoting financial inclusion.
Accion is a global nonprofit organization dedicated to financial inclusion. Their publications and articles discuss inclusive banking, microfinance, and the role of technology in expanding access to financial services.
Behavioral Finance - Biases Impacting Financial Literacy
Behavioral finance is an area of research that explores how cognitive biases and emotions impact personal decisions about money. This includes looking at how people make these decisions, identifying common biases, and developing strategies to overcome these biases. Behavioral finance is an interdisciplinary field that combines insights from psychology, economics, and finance to better understand how cognitive biases and emotions impact financial decision-making. The field of behavioral finance recognizes that people do not always behave rationally when making financial decisions and seeks to identify the ways in which emotions and biases can lead to suboptimal financial outcomes.
Behavioral finance researchers have identified a number of common biases that can impact financial decision-making, including:
Overconfidence bias refers to the tendency to overestimate one's abilities and knowledge. This can lead people to take on more risk than they should or to make overly optimistic financial predictions.
Loss Aversion Bias
Loss aversion bias refers to the tendency to feel the pain of losses more strongly than the pleasure of gains. This can lead people to hold on to losing investments for too long or to avoid taking risks that could lead to potential gains.
Confirmation bias refers to the tendency to seek out information that confirms pre-existing beliefs and to discount information that contradicts those beliefs. This can lead people to make investment decisions based on incomplete or biased information.
Herding bias refers to the tendency to follow the actions of others, even when those actions may not be rational or well-informed. This can lead to market bubbles and other forms of financial instability.
Behavioral finance researchers also study the impact of emotions on financial decision-making, such as fear, greed, and regret. By understanding these biases and emotions, behavioral finance researchers aim to develop strategies and interventions that can help people make better financial decisions. This may include providing education and training on financial decision-making, designing financial products and services that take into account behavioral biases, and developing tools and technologies that can help people overcome these biases.
WaFd Bank is Here to Help
Wherever you are on your financial wellness journey, no question is too small for our friendly bankers. With WaFd Bank, you have access to tools and services to help you manage your finances and get the most from your money. Visit us at your neighborhood branch, give us a call at 800-324-9375, or check out what WaFd online banking has to offer.