The Banking Executive Magazine - February 2022

The Horizon Of Digital Financial Inclusion In Arab Banks which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. Financial inclusion efforts typically target those who are unbanked and underbanked, and directs sustainable financial services to them. Financial inclusion is understood to go beyond merely opening a bank account. An inclusive financial system can poten- tially lead to a stronger and more sus- tainable economic growth and de- velopment. As such achieving finan- cial inclusion has become a priority for many countries across the globe. Due to the lack of financial infra- structure many under-served and low-income communities are ex- cluded from banking services. While it is recognized that not all in- dividuals need or want financial services, the goal of financial inclu- sion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial in- stitutions themselves. They often in- dicate poor financial infrastructure, and include lack of nearby financial institutions, high costs to opening ac- counts, or extensive documentation requirements. Demand side barriers refer to aspects of the individual seeking financial services and in- clude poor financial literacy, lack of financial capability, or cultural or re- ligious beliefs that impact their finan- cial decisions. HISTORICAL EVOLUTION OF FINANCIAL INCLUSION Houlin Zhao, International Commu- nication Union ITU Secretary Gen- eral, traced the historical evolution of financial inclusion in the ITU News issue about digital financial inclu- sion. Zhao indicated that financial inclusion has been a recurring topic of policy discussions since the late 1990s and early 2000s, when devel- opment finance organizations stepped up their support for micro- credit which are small loans for peo- ple lacking a steady source of income. More recently, the concept evolved to include microfinance more broadly, along with access to basic financial services such as sav- ings. Financial inclusion today aims to make a wider scope of services, like savings accounts, credit, insurance, payments, remittances, and other fi- nancial products, available to every- one. Clients include “unbanked” individuals, as well as micro, small, and medium enterprises. Inclusive- ness also means reaching them sus- tainably and at a reasonable cost. Digital innovations have emerged as a key element. Mobile applications can give poor and remote popula- tions, largely excluded from tradi- tional bank financing, easy access to a broad range of services. Safer over- all than carrying cash, digital services also promote transparency by creat- ing audit trails and reducing fraud. ISSUE 158 FEBRUARY 2022 the BANKING EXECUTIVE 41