Countries create laws and regulations to protect citizens and enhance prosperity and growth. But country lawmakers must adapt to its citizens’ changing circumstances through innovative government financial inclusion laws.
Innovation Improves Regulatory Effectiveness
In the world of business, entrepreneurs continuously create new products and services that improve our world. Likewise, governments must initiate financial regulations that propel groundbreaking ideas. Lack of funding and outdated laws must be overcome.
Companies like Uber completely upended the taxi cab business with a unique model. Despite potential regulatory control of Uber’s operations, the company is an example of innovation in the transportation industry.
Financial inclusion is not a business like Uber; it is an idea, a lofty goal of many entrepreneurs with a vision of a better world. While Governments can’t eradicate poverty, totally change the financial services industry or help the under-served with a single solution, they can innovate. Some countries will need more government involvement than others. But governments that support innovation will produce greater economic growth.
Government Financial Inclusion Recommendations
- Let non-banks offer financial services. Governments should license retailers, telcos, online companies and fintech startups to provide financial services. These companies have invaluable assets like trust and distribution that will serve more individuals.
- Lower the barriers for customers to enter the banking system. Long forms, inefficient ID checks and in-person meetings make opening a bank account intimidating and impossible for some consumers. Allowing newly-banked customers to access basic services easily and using a graduated approach creates better relationships.
- Prevent toxic behavior by existing players. The financial services sphere has a number of incumbent players—both in telecom and banking industries—that could easily stifle financial inclusion growth. Putting necessary regulations in place to keep a level playing field allows more competition, further increasing innovation and lowering prices.
With a smartly-crafted regulatory framework, innovative services will enter the market. People will try them, adopt the best services, change behaviors and increase transactions.
Where there is a need, there is an opportunity. The pain points of the underserved are too great and this opportunity spans the globe. With the help of government financial inclusion regulations, we’ll see a tsunami of change.
