1. Bank accounts are key to better money management
The experts agree – financial inclusion improves financial outcomes. In its simplest form, this means having a bank account. When you have somewhere to put your money, it’s easier to keep it safe, plan where it goes, and save more. A bank account is a key ingredient that enables families to take control of their finances – and for kids living in poverty, greater financial security is a stepping stone to better health, safety, education opportunities and wellbeing.
2. Nearly a third of people live without a bank account, and more than half of those are women
Even today, around one in three people in the world do not have access to a bank account. More than half of people without a bank account worldwide are women, translating to one billion unbanked women. Families in rural areas and people out of the workforce are also disproportionally affected. This reality compounds the disadvantages that already exist for these groups of people, making it even harder for them and their families to break the cycle of poverty.
3. Banking is a girl’s best friend
You might never have thought about your bank like this, but boosting women’s access to banking is a powerful weapon in the fight against gender inequality. When a woman has a bank account, she has more financial independence, privacy, security, and self-determination, and she can also contribute more to her household’s and community’s bottom line. Even better, research consistently shows that when a woman can use financial services, her children benefit too.
4. Financial inclusion equals more resilient families
With savings in the bank, families are better equipped to face unplanned costs and respond to unexpected emergencies. They become more resilient and can set long term goals. At the same time, financial services like loans can unlock a whole new sphere of income earning opportunities for a family, like giving them access to start-up capital for a small business. World Vision child sponsors enable thousands of families to access financial services, often for the first time, through savings groups and microfinance services. These services are provided alongside training in skills like sewing, sustainable agriculture, and many other jobs, as well as financial literacy, to help families make the most of their opportunities.
5. What you do with your money really can be a national issue
Financial inclusion impacts seven of the world’s 17 Sustainable Development Goals (SDGs), including those to end poverty and hunger and improve health, and gender equality. And it’s not just about individuals – it’s a national problem when financial systems are weak. Countries with better-developed financial systems grow faster and their growth is both a result of, and the cause of their financial development. When a country doesn’t have capital funds to run the nation, or invest in security, business, production, healthcare and infrastructure, the safety, wellbeing and prosperity of its people suffers. A 2023 United Nations report found the finance divide could translate into a lasting sustainable development divide if left unchecked. On the flipside, improving financial systems at the national level can have positive ripple effects for everyone.
6. Debt can be a double-edged sword
Debt financing can enable countries to respond to emergencies and fund long-term investments – but it can be a double-edged sword for developing countries if repayments become too high. Recent world events, from a pandemic to conflicts that disrupt supply chains, have created devastating global financing conditions for countries with high debt levels. At the beginning of 2022, three in five of the poorest countries were at high risk of or already in debt distress, and one in four middle-income countries were at high risk of fiscal crisis. Some developing countries spend more on debt repayments than they do on healthcare. Millions of families experience knock-on effects on their children’s health, education and economic wellbeing from events that are completely beyond their control.
7. Not all barriers are equal
Access and proximity are two main obstacles to banking services for people in developing countries. People who live in remote, rural communities often don’t have a bank nearby, because banks tend to be in urban, populated areas. At the same time, people who don’t have documentation like birth certificates or the literacy skills needed to open or manage a bank account can be shut off from financial systems too. As well as giving families access to community-based financial services like savings groups and microfinance, child sponsors are helping to address these underlying barriers to financial inclusion too, ensuring that children are registered for a birth certificate and have the chance to get an education.
8. When cash is king, workers pay the price
People who don’t have access to financial systems have to rely on cash. Cash-based jobs are often less secure and workers often don’t have the legal protections of more regulated systems. The same barriers that make it hard for people to access banking services, like a lack of literacy or documentation, can further increase their vulnerability to exploitation – and threaten their children’s wellbeing. By strengthening financial, social and educational inclusion, child sponsors help families to break the cycle of poverty, for good.
9. A little capital can do big things
From the Bangladeshi mothers pivoting to mask making during COVID to teenagers selling ice-cream from the back of a bike in Ecuador, an entrepreneurial spirit is flourishing, especially in the most remote corners of the world! But a lack of access to the financial services that enable savings or loans means the capital needed to turn plans into reality can be hard to come by. By giving families access to capital through savings or microloans, child sponsors can help parents or caregivers break through the barriers, unleash their entrepreneurial potential, and transform their children’s future.
10. It’s a digital world
The world is more digital than ever and people living in poverty will prioritise cheap phones and Wi-Fi to connect. This digital transformation in remote or poorer communities opens up a whole world of possibilities – like helping to overcome those proximity barriers to banking we were talking about, for example – but it also exposes people without digital access or literacy to a new sphere of disadvantage. Child sponsors, along with other World Vision partners like DreamStart Labs and Vision Fund, are helping to close those gaps. In some communities, savings groups have been digitised and through the use of shared smartphones, members can transfer money, access training and learn important digital skills.