What is inclusive finance?

In simple terms, inclusive finance provides affordable, accessible and relevant financial products and services to all individuals and businesses, particularly those traditionally underserved by the mainstream financial sector. 

Most descriptions of inclusive finance focus primarily on low-income households, but small and medium-sized enterprises (SMEs) can also find it hard to access financial services. Perhaps surprisingly, even wealthy individuals sometimes find themselves unbanked or underbanked.  

In this guide, we’ll explain inclusive finance, discuss why financial inclusion is important and explore ways to keep funds flowing. 

What is financial inclusion? 

Financial inclusion ensures that everyone, including entrepreneurs and non-residents, can access essential financial services like bank accounts, loans, insurance policies and payment systems. By providing these services affordably and responsibly, companies practicing inclusive finance help support economic growth and improve the lives of the people and businesses they serve. 

Five core areas define financial inclusion. 

1. Affordable, accessible services 

Affordable and accessible services allow unbanked and underbanked individuals to join the formal financial system. For non-residents, this could mean offering accessible savings or transaction accounts at fair rates, allowing people to work or live in countries in which they don’t have permanent residence. 

2. Robust consumer protections 

Financial inclusion protects consumers by applying policies and safeguarding tools that uphold the interests of financially vulnerable individuals. Strong consumer protection frameworks ensure fair treatment, transparent pricing and ethical conduct by financial institutions, encouraging trust and confidence in the financial services market. 

3. Financial education and literacy 

Financial education and literacy projects equip individuals with the essential knowledge to make informed decisions, budget effectively and understand the benefits of specific financial products. This can make a huge difference in the lives of people who haven’t had access to basic financial education. 

4. Gender disparities 

Initiatives aimed at addressing gender disparities in finance empower women economically. By offering tailored products and literacy programs and by promoting women's entrepreneurship, financial inclusion helps close the gender gap in financial access and usage. 

5. Inclusive credit scoring 

Financial inclusion advocates for alternative credit scoring methods that consider non-traditional data sources, like utility bill payments or rental history. These methods give individuals with limited credit histories a chance to access credit, thus fostering economic opportunity. 

Why is inclusive finance important? 

Taking a broad perspective, economies thrive when everyone has equal access to essential financial services.  

When inclusive finance isn't available, large segments of the population are excluded from basic financial services, leading to increased poverty, reduced economic growth and limited opportunities for individuals and businesses to improve their financial well-being. This lack of access can result in economic inequality and social instability. 

One kind of inclusive finance – responsible financing – means providing loans, investments and other financial services ethically and sustainably. This includes ensuring borrowers can repay their debts without facing undue hardship or resorting to predatory lenders. Responsible lenders also consider environmental and social impacts when making lending decisions.  

Overall, inclusive finance aims to promote financial stability and well-being for both individuals and the broader community. 

Who is inclusive finance for? 

Put simply, inclusive finance is for everyone. Many descriptions of financial inclusion focus exclusively on low-income individuals and households, but entrepreneurs both inside and outside the UK can find themselves unable to access services, too. Similarly, high-net-worth people and overseas business owners can be excluded from the UK banking sector if they don’t meet residency or deposit requirements. 

Examples of high-net-worth inclusive finance might include: 

• Tailored wealth management services that cater to the individual or entrepreneur’s specific needs.  

• Exclusive investment opportunities that aren’t generally available to the public, thereby promoting financial inclusion at a higher level of wealth. 

• Premium banking or alternative banking solutions that provide support for sophisticated global financial needs. 

• Philanthropic investment opportunities that help wealthier individuals drive positive change in a range of different countries.  

• Risk management solutions customised to the unique and often complex needs of high-net-worth individuals. 

• Specialist tax preparation and optimisation services to help wealthier clients manage tax liabilities and international compliance. 

Initiatives like those mentioned above can make it much easier for high-net-worth individuals to work, live and do business in the UK, thus positively impacting the domestic economy. 

Inclusive alternative banking 

One option for high-net-worth non-residents is a UK-based alternative bank account. Many traditional banks in the country have minimum deposit or income requirements for non-residents, which can be burdensome for people who don’t wish to substantially change their financial strategies. 

On the other hand, alternative providers like Interpolitan Money waive minimum deposit and income requirements entirely, providing wealthy non-residents with a viable way to support cross-border financial activities. We pair all clients with a relationship manager and tailor services to meet their needs.  

We also work with intermediaries like wealth managers, accountants, family offices and solicitors, carefully considering the unique circumstances of their clients.  

With an Interpolitan account, you can hold, pay and collect funds in over 55 currencies and do business in more than 160 countries. Because we have an experienced and dedicated compliance department, we’re often able to onboard individuals and businesses with more complex due diligence needs, including politically exposed persons.  

To find out more about our accounts and other services, get in touch today.