PROFESSOR & HOD PGDM
Financial inclusion plays a very significant role in the economic growth and development of any nation. It aims at easy access to affordable financial solutions, financial services, and products such as banking services, credit, savings, mortgage, insurance and digital payments to all including underprivileged and low-income groups. It not only empowers individuals but fosters entrepreneurship, reduces inequality and promotes economic development and growth. It is a critical driver of sustainable development. Among the key stakeholders in this mission, in the present time the youth has a very crucial role to play in leveraging technology, advancing financial inclusion, and promoting sustainable economic practices.
Understanding Financial Inclusion
Financial inclusion relates to having equal opportunity to have access to the financial services and availability to all individuals, particularly those who are under privileged and underserved—such as low-income groups, rural populations, and women. The objective is to ensure that every member of society has access to essential financial tools that can help them manage risks, build wealth improve their quality of life and uplift their status in society.
Financial inclusion remains a challenge worldwide despite significant progress. The Global Findex Report (2021) of the World Bank highlighted that “approximately 1.4 billion adults are still not availing any banking services and remain excluded from the mainstream of financial system, with the major portion of such population residing in developing economies”. However, due to the increase in adoption of digital finance, e-wallets, and advanced technology, there has been a significant reduction in the resistance to financial inclusion, and thereby youth has an integral role to play in accelerating this gradual transition.
The Role of Youth in Financial Inclusion
Youth, a significant portion of the global population, are at the forefront of efforts in financial inclusion, having an edge in being flexible in their adaptability, adopting digital finance, having an innovative mindset, and being digitally proficient. They contribute in numerous ways, including:
1. Driving Digital Financial Innovations
One of the most significant contributions of youth is their role in smart or digital finance. With the increase of technology advancements, fin-tech companies, e-banking, and blockchain technology, financial services are becoming more accessible. Young entrepreneurs and tech innovators are developing smart and easy solutions that cater to underserved populations, such as mobile payment apps, digital lending platforms, and decentralized finance (De Fi) solutions.
For instance, in India, e-wallet platforms like “BHIM UPI, Paytm, Phonepe, etc. have revolutionized financial transactions; enabling people without traditional bank accounts to save, transfer and receive money”. Many of such fintech solutions have been spearheaded or driven by young innovators who recognize the potential of digital financial services in bridging the financial gap.
2. Promoting Financial Literacy
Financial literacy is necessary for financial inclusion since it equips individuals with the requisite financial knowledge and empowers them to make well-informed financial decisions. Youth-led initiatives and organizations are playing a pivotal role in educating communities about savings, banking, investment, and credit and loans.
For example, many young social entrepreneurs are launching financial education programs targeted at the younger generation and underprivileged communities. Through social media campaigns and awareness workshops, online courses, they are making an impact by raising awareness about the importance of personal finance management, investment, and avoidance of financial losses and pitfalls.
3. Encouraging Entrepreneurship
The younger generation is playing a key role in fostering entrepreneurship, a crucial element of sustainable development through financial inclusion. Through small start-ups and unicorns, young entrepreneurs create employment opportunities, contribute to economic growth, and increase access to financial services.
Moreover, youth are advocating for better access to microfinance and venture capital, ensuring that budding entrepreneurs, especially those in rural and marginalized communities, can secure funding for their businesses. Young entrepreneurs with the support of digital crowdfunding platforms, peer-to-peer lending, and angel investing are promoting inclusive financial growth and transforming local economies.
4. Advocating for Inclusive Policies
Youth activism and advocacy are instrumental in shaping policies that promote financial inclusion. Young leaders and influencers are increasingly engaging with governments, financial institutions, and international organizations to frame policies that facilitate easier access to banking products and services, fair credit systems, and gender-inclusive financial programs.
Youth-led policy initiatives generally focus on societal issues such as the reduction of banking fees, integration of digital finance in rural areas, and ensuring that marginalized and underprivileged groups including women and people with disabilities have equal access to financial services.
5. Leveraging Digital and Social Media Platforms
The digital generation is smartly using the power of social media and online platforms to create awareness about financial inclusion. Young influencers and educators are spreading awareness by penetrating the interiors and remote areas through platforms like YouTube, Instagram, and Twitter and making financial concepts more accessible to a wider audience.
Short videos, blogs, and infographics highlighting savings strategies, investment tips, and the significance of credit scores are reaching millions of people, particularly those who lack financial knowledge. This digital outreach is bridging the financial knowledge gap and encouraging people to participate and contribute to the financial system.
Financial Inclusion-an Impetus for Sustainable Development
Financial inclusion not only relates to banking but is a necessary component in the achievement of the Sustainable Development Goals (SDGs) which are set by the United Nations as indicated below:
- Poverty Reduction (SDG 1): Access to financial products and services allows individuals to make financial decisions as they can save, invest, and improve their economic status.
- Quality Education (SDG 4): Financial literacy empowers youth to make better economic choices, while microfinance helps families enter into entrepreneurship and afford education and medical services.
- Gender Equality (SDG 5): Financial inclusion provides females opportunities for entrepreneurship and freedom to make economic decisions independently.
- Economic Growth and Employment (SDG 8): MSMEs and startups foster the creation of jobs and provide better access to financial resources.
- Innovation and Infrastructure (SDG 9): Advancements in Fintech and technology are enabling young innovators to indulge in innovation and develop improved infrastructure.
Challenges and the Way Forward
Despite the potential of youth in financial inclusion, challenges still remain to be addressed. “Many young entrepreneurs face difficulty in accessing credit due to a lack of collateral and formal credit background”. Additionally, the growth of digital financial services has various regulatory barriers in many countries.
To overcome such challenges, a collaboration of governments, private organizations, NGOs, and financial institutions is the need of the hour. Such collaborative efforts aim to:
- Provide financial literacy programs in educational institutions.
- Support youth-led fintech startups with mentorship and funding.
- Frame policies that promote financial inclusion for marginalized groups.
- Encourage digital financial solutions tailored to the needs of the unbanked population.
Conclusion
Youth have a transformative role that can drive financial inclusion towards sustainable development. Their expertise in technology, innovative mindset, openness to adaptability and advocacy efforts are helping in bridging financial gaps and empowering underserved communities. Through the promotion of digital financial services, enhancement of financial literacy, and push for inclusive policies, the young generation is not only shaping the future of finance but also contributing to improved equity and a sustainable world.
Governments, NGOs, Private organizations, financial institutions, and development agencies need to recognize the contributions and cooperation of youth in financial inclusion. With the right support, the next younger generation can be a leader towards a financially inclusive and also economically sustainable future.
