What is Financial Inclusion
The Banking Association South Africa defines Financial Inclusion as the access and usage of a broad range of affordable, quality financial services and products, in a manner convenient to the financially excluded, unbanked and under-banked; in an appropriate but simple and dignified manner with the requisite consideration to client protection. Accessibility should be accompanied by usage which should be supported through the financial education of clients.
According to FinScope 2014, in South Africa 75% of adults are currently banked, this is a substantial growth from the 46% that was banked in 2004. The Financial Sector Charter through the Mzansi Account was the genesis of financial inclusion in the sector. Today banks have Inclusive Banking Divisions that have their own Mzansi equivalent accounts in addition to the Mzansi Account; they are now referred to as Access Qualifying Products (AQPs). Targets for AQPs are set through the Financial Sector Code.
Financial Inclusion in its broadest sense goes beyond just banking the unbanked but extends to the availability of an affordable suite of quality financial services. Financial Inclusion 2020 Project defines full financial inclusion as:
"The state at which all people who can use financial products and services, have access to a suite of quality financial services, provided at affordable prices, in a convenient manner and with dignity for clients. Financial services are provided by a range of providers, most of them private, to a financially literate and capable clientele".
Financial Inclusion is now on South Africa’s development agenda both in terms of inclusive growth and the transformation of our society. It is recognised as an important tool to give people a bridge into the economy by both the National Development Plan and the National Treasury policy document on ''Twin Peaks": 'A Safer Financial Sector to Serve South Africa Better'. Financial Inclusion has the potential to boost inclusive economic growth and reduce inequality in South Africa.
Principles underlying the banking industry's working definition of Financial Inclusion:
The main goal of financial inclusion is to improve the range, quality and availability of financial services and products to the unserved, under-served and financially excluded. The definition of Financial Inclusion should embrace certain key principles which The Banking Association considers critical for delivering a broad range of quality financial services and products to the most vulnerable in our society who comprise both the unbanked and the under-banked.
Find the key principles below.