Financial Inclusion
What is financial inclusion?
Over and above discussions around salary and benefits packages, organisations can provide a range of tools and products which can ensure their employees maintain a solid level of financial resilience around their personal situation. At a time when the cost of living is biting deep for some, employers have an opportunity to ease financial stresses through various channels, thus enabling their employees to feel empowered and supported.
Financial inclusion can be defined as individuals having access to useful and affordable products and services as part of an overall household budgeting capability. It allows people to find ways to better manage day-to-day transactions and expenses, and reduce the risk of debt, responsibly and sustainably. Such methods can be related to:
Transactions
Savings plans
Payment methods
Loan schemes
Credit
Insurance
Supply and demand
For a complete picture, financial inclusion should be viewed from two sides of the same coin:
Demand and financial literacy
Awareness of what is available
Knowledge of managing personal finances
Access to information about financial services and products
Operational competence
Supply and financial inclusion by providers
Creating awareness of available solutions
Expert advice on financial management
Provision of appropriate services and products
Accessibility and user experience
Financial exclusion
Financial exclusion at the opposite end of the scale is however, a sad reality for some and more often than not, those most affected by vulnerable financial positions are women and ethnic groups (refer to our Tackling Financial Exclusion report produced in partnership with Wagestream). When an intersectional lens is laid over these two protected characteristics, this vulnerability deepens. People with disabilities have also been shown to have less financial resilience largely due to a lack of adequate education and support.
Financial management is not limited only to bank balances and payslips – there are considerable time constraints to factor in too. Employees without their own transport may have to find alternative, more time-consuming ways of getting to work; expensive childcare can be the deciding component in whether to work part time or full time; long-term budgeting means in-depth research and soliciting paid advice. Time really is money.
Positive impact of financial inclusion
On the individual
A person’s financial situation bears a strong link to their overall wellbeing. Stress about money can impact many aspects of life and minimising it reaps numerous positive rewards in the workplace: a feeling of being heard and acknowledged; a high level of being included; a growth mindset in terms of opportunity, and an increase in overall self-confidence.
On the business
A business is its people and when employees are feeling their best – across multiple areas in their lives – it will positively impact their performance at work. Whether through better productivity, positive engagement or enhanced innovation, an organisation which can provide financial inclusion will notice tangible returns. Providing a knowledge base and practical solutions can make a huge difference to employees' lives.
What can organisations do to create financial inclusion?
Access to and awareness of financial opportunities can lead to financial stability for employees which leads to better outcomes for all. Employers can put a range of measures in place (see list of measures, above) which will ultimately benefit the individual and the organisation for whom they work with improved recruitment and retention levels, employee engagement and productivity rates. Most importantly, employee wellbeing will be enhanced.
More information
Read our report Tackling Financial Exclusion for research findings and case studies from within the hospitality, travel, leisure and retail sectors.