What You Need To Know About Financial Inclusion For A Better Future
For some people, opening a savings account, applying for a credit card and health insurance, or arranging for financing to buy a home might not be as easy. Making sure that all Malaysians are able to get such services, whether it’s to safely save and invest or even apply for a home loan is what financial inclusion is all about.
Under the definition of Bank Negara Malaysia (BNM), financial inclusion means providing suitable, affordable and quality financial services to everyone to create sustainable economic growth and development.
If you’re wondering what financial inclusion has to do with you, then you might want to take the time to understand why it matters, and how it impacts you.
Financial inclusion helps make a better future possible for everyone
So, what is financial inclusion? World Bank defines it as having access to useful and affordable financial products and services that meet the needs of individuals and businesses (i.e., insurance, savings, payments, loans, etc.) in a responsible and sustainable way.
Financial inclusion is a big part of the United Nations’ Sustainable Development Goals (UNSDG) which were adopted by the UN, with the aims of ending poverty, protecting the planet and ensuring peace and prosperity for all.
For example, increasing access to financial services such as banking and insurance helps provide opportunities to address poverty and inequality. Getting funding and loans can also help people working in industries such as agriculture to manage their finances, push for higher yields, and possibly provide better food security.
Equal and easy access to financial services can also help address gender equality by empowering more women in business.
Financial inclusion creates opportunities for all
Helping more people and businesses around the world gain access to financial services can also lead to additional benefits and opportunities in the following areas:
Welfare of people and businesses
Access to mainstream financial services can help individuals and small businesses improve their welfare. In particular, reliable digital banking services and banking platforms that provide access to underserved communities such as those in rural areas or with low or unstable incomes help enable and encourage individuals and small businesses to invest, grow, and save to improve their welfare.
Having various and reliable channels or options for financial services can help underserved communities plan for and expand their businesses while providing individuals with affordable financial services to build their assets (homes, properties, etc.).
Access to financial services
At the heart of achieving long-term economic sustainability, it’s important to prioritize and equip people with the necessary skills and essential financial knowledge to make sure that they are equipped to make sound and informed financial decisions.
Financial inclusion will allow for better accessibility/penetration of financial resources and education. The National Strategy for Financial Literacy supports the government’s aspirations for the improved financial well-being of Malaysians, by ensuring that key financial inclusion goals such as increasing access to financial management information, tools, and resources are prioritized.
A better understanding of how to manage their finances will help people to keep their money safe by putting it in trusted financial institutions and lead a meaningful, content and sustainable life, free from constant financial worries, and being able to withstand temporary income shocks and changes in life circumstances (including emergencies) without any financial burden.
Drive economic growth
The collective benefit of financial inclusion can help drive economic growth and develop communities.
EY believes that the drive towards greater financial inclusion led to a 14% growth in India’s Gross Domestic Product (GDP) and a 30% increase in frontier markets such as Kenya by providing mobile banking and better digital platforms for the community.
A better/growing economy may help improve overall living conditions including higher income, better education, better healthcare, and reduced poverty.
Principal strives to foster a world where financial security is accessible to all
Principal is committed to increasing the number of people reaching financial security around the globe. This purpose guides Principal as they work with customers, investors, communities, and employees. They remain dedicated to their commitments to corporate sustainability and the social, environmental, and economic impact they have on their stakeholders.
As such, Principal strives to educate and provide access to financial services that will further provide people with financial security, and financial freedom, for themselves and their loved ones.
Aside from ESG-focused investments, Principal has made investment accessible to more Malaysians and allows more opportunities to achieve financial security.
These initiatives include:
- Empowering eligible Malaysians to invest from as low as RM10 via the Principal e-Cash Fund and GoInvest (which is also available via Touch n’ Go eWallet app).
- EPF i-Invest to diversify your EPF savings in approved Unit Trust funds with Principal.
- Principal PRS funds to help Malaysians save for retirement.
- Principal Investment Portal which provides ease of access and accessibility for online/digital investment.
- General awareness and education on investment through webinars, articles, and videos.
The information in this article has been derived from sources believed to be reliable, however, we do not independently verify or guarantee its accuracy or validity. It contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. The information it contains does not take account of any investor’s investment objectives, particular needs or financial situation. Investors should consider whether an investment fits their investment objectives, particular needs and financial situation before making any investment decision.
The data presented is for information purposes only and is not a recommendation to buy or sell any securities or adopt any investment strategy. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment.
All expressions of opinion and estimates in this article are subject to change without notice. This article is not intended to be, nor should it be relied upon in any way as a forecast or guarantee of future events or investment advice regarding a particular investment or the markets in general.
Environmental, social and governance responsible investing (ESG) is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, will reflect the beliefs or values of any one particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may or may not be accurate or complete, and such information is used to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. ESG, while a component of our investment analysis, is only one part of the overall assessment in our decision-making activities. ESG criteria may present additional advantages or risks and does not protect against market risks or volatility. You should not make any investment assumptions based solely on the information contained herein. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.