Financial inclusion: a strategy to mitigate impacts on the credit market

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The concept of Financial Inclusion has become increasingly relevant in a world that seeks equity and socioeconomic justice. Although the topic is often related to human rights and development, it also plays a fundamental role in the stability and health of the credit market. This article explores how Financial Inclusion can be a robust strategy to mitigate challenges inherent to the credit market.

Financial Inclusion: How Important is it for the Brazilian Reality?
Financial Inclusion is a concept that refers to the ability of individuals and businesses to access and use financial services that are appropriate to their needs and conditions in a responsible and sustainable manner. Financial Inclusion is considered a fundamental right, as it contributes to economic and social development, poverty reduction and the promotion of citizenship.

However, the reality of the Brazilian population is marked by financial exclusion, that is, the difficulty or impossibility of accessing financial services. According to data from the World Bank, in 2017, around 45 million Brazilians did not have a bank account. With the increase in digitalization during the Covid-19 pandemic, this number has reduced, but more recent research indicates that there are still more than 35 million Brazilians who do not have access to banking services.

Financial Inclusion: What factors contribute Israel telegram data to financial exclusion.
Some of the factors that contribute to this situation that affects Financial Inclusion are:

Lack of infrastructure, especially in rural and remote areas, where there is a shortage of bank branches, ATMs and service points.
Deficient financial education, which limits people's knowledge and confidence about available financial products and services and their benefits.
The absence or lack of proof of income, which prevents people from having sufficient resources to open and maintain a bank account, in addition to making access to credit difficult.
Low trust in financial institutions, which can be generated by previous negative experiences, such as abusive charges, fraud, high interest rates and default.
The lack of financial inclusion has negative impacts on both individuals and the credit market. These millions of Brazilians who do not have access to these services generate billions in the economy annually, and financial exclusion reduces opportunities for consumption, investment, savings and financial protection, compromising quality of life and well-being. For the credit market, the lack of financial inclusion reduces the demand for financial products and services, reduces competition and innovation, and increases operating costs and credit risks.

Financial Inclusion: The Great Challenge for Financial Institutions
Given this scenario, the great challenge for financial institutions to promote Financial Inclusion arises :

The challenge is not just to include these people, but how to do it responsibly?

How to offer suitable and accessible financial products and services to excluded or underbanked people?

To this end, it is important that financial institutions develop analysis models that include data enrichment and promote financial inclusion . Data enrichment consists of using alternative sources of information to complement traditional data (such as CPF, name, address, declared income) when assessing customer profiles and behavior. Some of the advantages of data enrichment are:

Expand the range of available information, including other sources that may be relevant to this group of customers, such as registration, behavioral, geographic, social data, among others.
Improve the quality and reliability of information, reducing the chances of fraud, errors or inconsistencies in data.
Increase the accuracy and efficiency of credit analysis, allowing better customer segmentation and greater assertiveness in granting the appropriate limit for each profile.
Expand knowledge about the customer, enabling us to offer more personalized products and services aligned with their needs and capabilities.
Avoid losing good payers by ensuring that those with potential and a history of good payments are not overlooked.