Financial Inclusion

We’ve all heard the tales of money being found in the houses of older relatives – the special fund hidden in Grandma’s mattress or the small fortune tucked away in the old suit jacket of Uncle Johnny. What caused people to hide their savings in some household object instead of putting it in a bank account? In the past, surveys showed that those in a lower economic status often didn’t trust banking institutions or they figured bank accounts were too expensive. A movement began for banking and financial services to become available to the “bankless” and under-banked populations. Financial institutions strategically invited those that may be in poor and remote populations to utilize the banking services offered. Even today, Financial Inclusion can help our families, communities and, ultimately, the world in becoming financially secure.

Some families have been okay with hiding riches in the cookie jar on top of the refrigerator. Although it worked in the past, that method of saving is no longer a secret, and common hiding places can put a person at a higher risk for being robbed. Recent statistical evidence released by the White House Council of Economic Advisers (CEA) shows that 7 percent of American households lack access to a bank account (unbanked), while another 20 percent have a bank account but may supplement it with non-traditional financial services like check cashing or payday loans (underbanked).  Many Americans do not get their basic financial needs met by traditional financial service providers, and instead, turn to check cashing places or high-interest loans.  By turning to alternative financial services, families often face substantial costs – not only direct monetary ones, but also lost economic opportunities. The unbanked pay anywhere from 1 to 5 percent in fees to cash a check. At an annual salary of $22,000, the average for unbanked households, these fees can total over $1,000 a year in extra costs. By contrast, annual fees for a low-balance checking account are typically a little over $100.  Families can actually save money buy utilizing the financial benefits that come with having a bank account.

How can Financial Inclusion help a community? One word: Microfinancing. Microfinancing is a term used for services rendered to the underbanked and underfinanced small business. Financial Service Agencies can offer lending and other financial services, based on their relationship with the customer instead of their credit rating. This can be seen at Credit Unions that often advertise assistance for those with less than perfect credit or no credit at all. There have been lending institutions founded on the Microfinance model. For example, Kiva Lending is an agency that lends small amounts of money to individuals and businesses that lack access to traditional banking services. “Inspired by the work of Dr. Yunus, Kiva was founded in 2005 with a mission to connect people through lending to alleviate poverty. By leveraging the internet and crowdfunding, Kiva allows anyone, for as little as $25, to help a borrower start or grow a business, go to school, access clean energy or realize their potential”. (   Those who have researched this strategy discovered that tiny loans could make a disproportionate difference to a poor person, and given the chance, recipients would pay them back. A small business owner would show the same type of gratitude and possibly, be the best and cheapest advertising for the lending institution.

Acts 20:35 says, In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive. Financial Inclusion and Microfinance remind me of this Scripture. It challenges financial institutions to do their due diligence of giving the “weaker” individual a chance.

Financial Inclusion has become a worldwide initiative. Several countries are providing their citizens with banking opportunities that were unheard of in the past. Over 50% of India’s population is underbanked, but the government is working diligently to change that percentage for the greater good. Financial Inclusion forces the economic system to broaden and develops a culture of saving for more people. With increased savings, individuals and families are more secure and the financial structure of the world will follow suit. Hopefully, the large gap between economic groups will start to close, and discrimination based on economic status will lose its power.

Kellye Johnson is a Kansas native but currently resides in Oklahoma. She is a graduate of Langston University where she obtained a BA in Sociology. Her MBA with emphasis in accounting was acquired from the University of Phoenix. Kellye Johnson is currently Director of Financial Aid for Southwestern Christian University, but has worked at three different schools over her the ten years that she has worked in Financial Aid. Her positions as Director has enabled her to learn a lot about the higher education process and what a student should do to make the transition an easy one. Miss Johnson has also started a small financial consulting business just this year, Kellye Johnson (KJ) Financial Consulting that focuses on auditing and bookkeeping for small businesses. KJ Financial will also continue to help students and parents be financially savvy when dealing with higher education costs. She is also the Founder of Kurvy Kitten Women’s Clothing Company. To view Kurvy Kitten designs go to: email address: