Digital Financial Inclusion: A Case Study of Mobile Banking and Poverty Reduction

Taking into account the financial lives of the billions of people living in poverty, one of the main obstacles to getting a bank account has been the cost of services. However, today the equation has changed, people now have a mobile phone that they can use as a bank account, thanks to the phenomenon of digital financial inclusion, which is putting mobile banking within everyone’s reach, and converts the phone you use to text your friends into a safe, secure and reasonably priced way to manage your money. 

Mobile banking knocks out two of the biggest problems with traditional banking, distance to the nearest bank and exorbitant transaction charges. It's something that makes life a lot easier, and in places far removed from the cities, eliminates a whole day of work and a lot of expenses that come with getting to a bank, because the money is right where the people are. 

Mobile banking is also fighting poverty by getting rid of the worry of losing or being robbed of one’s cash, with a digital account being a secure place to store one’s hard earned money. The security that comes with digital accounts encourages people to save for the future and money for their children’s education. 

Once someone has a digital account they start to accumulate a financial record, and can use that record to apply for small loans, and also insurance services that they otherwise wouldn’t have been able to get. Governments are now also using mobile platforms to send payments such as pensions, and emergency aid straight to people's phones.