Full inclusion is a term derived from the sphere of education which aims to bring all students, regardless of their disability, under the regular classroom curriculum. This is opposed to inclusion which extends support services to the concerned child rather than moving the child to the common service platform.
Like the service providers in education, suppliers of financial products and services have struggled to cope with the sheer depth and gravity of the inclusive challenge. The common dichotomy has always been an elementary question: whether to tailor products and services to address the special needs of target groups or to make the system dynamic and capable of addressing diverse needs through flexible and agile one roof mechanisms.
The most primitive antidote for this challenge advocated the identification of target groups and the subsequent extension of whole or part of the existing product and service suite. A more sensitive approach hinted at a quick analysis of the ‘special’ needs and the subsequent creation of improvised offerings to suit the former. Many stakeholders adopted this strategy only to arrive at a crucial question: ‘What are these special needs?’ which in turn made the perplexment run haywire in the form of more questions:
Are target groups ever aware of what they seek, rather what they need?
Should one regard the ignorance of target groups as an impediment or as a key business challenge?
Who’s responsible for the financial literacy of target groups? Government, local agencies, supply-side entities or demand-side activists?
Is financial literacy only about creating consciousness among target groups or is it also about ensuring their protection from likely pitfalls and making them conscious about savings, investment and financial prudence?
While the conventional microfinance agencies tried to address some of these concerns in their bottom of pyramid initiatives, they were always far from deciphering the real needs of target groups. In many cases, credit was extended based on hasty, unrealistic assumptions of needs which not surprisingly resulted in haphazard distribution of credit, ripe with the possibilities of misuse or overuse at the cost of depriving other regions with more acute but undefined and unaddressed needs. Moreover, micro finance players were largely confined to the boundaries of their defined products. This invariably led them to force fit client needs to match their offerings instead of the other way round. The credit bureau experience has been similar if not the same.
Financial inclusion, full or otherwise, necessarily demands an effective enabling environment where access to financial services can be adorned with unflinchingly reliability, better proximity and fast and cost effective service. Banks in India have managed to provide this environment with reasonable success but the challenges in this area yet outweigh the accomplishments. Why?
More than merely designing curriculums in target-friendly languages, the process of spreading financial awareness calls for exploding several deep rooted myths, especially plaguing the markedly cut off rural populace. Underprivileged sections still view banks as elitist entities with services that wither they don’t need or can’t afford. There is an urgent need to reinforce financial literacy, refine market research and redefine marketing strategies pertaining to this deprived class of banking clients.
Positive steps in this direction should give rise to smartly tailored and transparent products made robust through tighter regulation and hassle free access and usage schemes. The bank offerings will then be tailored to the specific need. In one region, it could be a seasonal offering in line with the agricultural patterns, in another it could be a smart insurance offering to help combat a known health hazard. This strategy would be mutually rewarding than to replicate a certain credit card scheme that was an instant hit in urban regions.
Banks need to strike a judicious blend between convention and innovation to establish credibility ahead of mere convenience. This way, we could see a noticeable growth in those bank customers who remain untapped either by choice (where they don’t trust the system enough) or by compulsion (where access remains an insurmountable problem). We need to rise above basic banking that remains content with superficial intermediation to engineer an upsurge in disciplined savings and purposeful investments willfully emanating from the demand side, on a mass scale at that.
The preceding banking revolution rode on professionalism and technology to being i
n indisputable benefits. The forthcoming renaissance may well usher in a new brand of inclusive banking in India. If that happens, full financial inclusion will not remain the elusive dream that it seems today. In the hope lies the scope.