Financial inclusion is defined by the European Community as “being able to access or use financial services in the mainstream market that are appropriate to [people’s] needs and enable them to lead a normal life in the society in which they belong”. A financially included adult should be able to manage day-to-day transactions, meet both predictable and unpredictable expenses, manage a loss of earned income, and avoid or reduce problem debt.
Problem debt is more common than most would think. 73% of overindebted people came to this point “passively”, meaning that their arrears are triggered by unforeseen changes in their income or expenditures due to an accident of life, such as unemployment or divorce.[1] Being excluded from the financial system can turn an acute crisis into a chronic one. Many households take on high-cost debt as their savings are insufficient to cover a shortfall.
When individuals fail to meet the requirements of mainstream banking or lending institutions, they can be denied services like savings and investment accounts, loans, cashless transactions, credit, and insurance. Financial inclusion is not only an issue for selected individuals. On a societal level, financial inclusion increases economic activity, provides greater market transparency, decreases income inequality, and can help reduce corruption and tax evasion.
Hoist Finance has several ongoing partnerships in place to contribute to improved financial literacy and financial inclusion:
- In France we partnered with the game and app Dilemme as part of the Crésus National Financial Education Program to teach both NGOs, municipal services, and children basic financial knowledge as how to make a budget.
- In Germany we collaborate with the social organisation TEAM U who supports SMEs in financial distress, including our customers, to avoid bankruptcy by providing for example budget support and mental health support through self-help groups.
- In Greece, Hoist Finance is a member of the EEDADP which partnered with the Hellenic Financial Literacy Institute to create a platform that teaches children financial knowledge such as understanding how credit and interest work.
We also have multiple internal processes in place to ensure customised support for our customers to help them get back to the financial eco-system and prevent further indebtness and financial exclusion.
[1] Georges Gloukoviezoff, "From Financial Exclusion to Overindebtedness: The Paradox of Difficulties for People on Low Income?", in New Frontiers in Banking Services: Emerging Needs and Tailored Products for Untapped Markets, Luisa Anderloni, Maria Debora Braga and Emanuele Maria Caluccio ed. (Berlin: Springer-Verlag, 2006), 213-245.