World Savings Day was established in 1924 to promote the value of thrift. Representatives of 29 countries wanted to bring to mind the idea of savings and its relevance to both the individual and the economy.
Today, the focus of the banks that organize World Savings Day is on the “unbanked,” the more than 2.5 billion people who lack access to formal financial services. Most of these individuals are living close to or below the poverty line. And without access to the banking services many of us take for granted, the unbanked are not able to reach their full potential.
Without a savings account, it can be difficult to save for unplanned expenses like repairing your home. Without health insurance, your family is at risk if one of you gets sick. Without the ability to take out a loan, you can’t start a new business that will enable you to become economically self-sufficient.
Financial inclusion is an approach to help all people become financially independent and economically self-sufficient. This is achieved by providing access to affordable and relevant financial products and services. Financial inclusion helps underserved people increase their productivity, incomes, and resilience to withstand the unexpected. They become able to provide food, housing, and healthcare for their families as well as invest in education for their children.
Consider Thomas Bugembe who lives in Uganda. Thomas is committed to serving the children in his community. Ten years ago, he made his vision of building Maryhill Junior School real: two small rooms on a rented plot of land and just under 40 students. Opportunity International, a global non-profit organization, provides financial services and training to people like Thomas.
Over the years, Thomas has taken out multiple loans to expand Maryhill, availing himself of the school improvement loans and other educational support services offered by Opportunity International. The school now has kindergarten classes, an assembly hall, clean running water, and electricity. Today, Thomas’ school serves 356 students from K-7, many of whom live on campus. Thomas’ efforts also have created new jobs in his community: the school now employs 14 teachers and seven caregivers. Thomas hopes to add computers and a library in the near future.
With help, the unbanked can lift themselves out of poverty and contribute to the growth and vibrancy of their communities. However, many of the most vulnerable people live in rural and remote areas, making it difficult to reach them. In addition, many financial institutions are not able to handle large numbers of small transactions in a sustainable manner.
To overcome these challenges, organizations like Opportunity International are turning to digitization. Digitization connects people, processes, and things intelligently. For example, mobile banking enables organizations to scale and reach more people like Thomas living in rural and remote communities, and provide the types of services that can best serve them. Digitization also gives us access to more data that we can use to make better decisions and so derive more benefit from the digital revolution.
Digitization will play an important role in reaching the unbanked. Accelerating Financial Inclusion with Digitization: Bringing an End to Extreme Poverty shares Cisco’s point of view for how technology can bring the world together to make the vision of ending extreme poverty a reality.
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