Financial Inclusion Is EmpoweringBy Gustavo Rojo | Thu, 05/20/2021 - 12:52
“For the United States, during the nineteenth century there was a rapid expansion of financial intermediation and banking that was a crucial facilitator of the rapid growth and industrialization that the economy experienced… .” “Why Nations Fail,” by Daron Acemoglu and James A. Robinson.
Development has been an inherent element in human history. Society has created tools that on the one hand are proof of that development, and on the other, are a catalyst for more advancement. People use new inventions to evolve individually and as a society. There is an evident relationship between access to these innovations and advancement.
Financial services are among the instruments that help people improve the odds of performing better in life. These services provide the capacity to manage one of the most important assets people have: their money. Also, financial services broaden the capacity to acquire more inventions that are useful to improve potential development and well-being.
Because financial services have the potential to provide people with means, these services have the potential to offset the gap between social classes. In the same way the internet overcomes inequalities in access to knowledge, financial services can help overcome inequalities in access to the means to progress, including knowledge.
At Vexi, we have witnessed the power of providing capital either to grow a micro business or even to pay tuition. According to our algorithms, our customers see a remarkable increase in their income within two years of getting their credit card. There are many variables that impact this result; however, it is a constant fact that the use of a credit card can develop personal growth.
Empowering people to acquire working capital or knowledge, helps them to evolve and achieve well-being. Even small amounts of capital help goal-driven people to grow and achieve their goals. Providing access to that amount of money at the precise moment they need it is a game changer for most people in Latin America by helping them to unleash their potential.
Beyond Financial Inclusion
Providing access is just the first part of financial inclusion. Beyond that, it must include best-in-class benefits that not only help customers to make purchases using these new instruments but provide the time and flexibility to pay back the money, for example. At Vexi, we provide a 0 percent interest installment plan – known as buy now pay later outside Mexico – at a vast number of merchants. This means that people can pay back the credit within three to 18 months while paying $0 in interest. It means we are taking people from having no access to finance to having the ability to finance their purchases for a period without paying interest.
Any company focused on granting the best access to financial services to empower customers must provide valuable benefits. Premium credit cards, for example, provide access to useful insurance plans. In our case, we researched which cards would provide more benefits to our customers and we added it for free to our offering. In every industry, surprising customers by offering more than what they may expect is a difference-maker.
To get the best from any new tool, it is important to learn 1) how to use it, 2) the different kinds of tools that exist, and 3) how to get the best benefit. In three years, we have confirmed it is crucial for first-time credit card customers to gain confidence in the new services they are starting to use, and they are eager to learn how to make the best use of the services available to them.
It is a constant challenge to generate concise and easy-to-understand communication to explain all the complexities of a product or service; however, it is rewarding to see how new customers evolve in their expertise and how they themselves gain the ability to offer detailed responses to new users. As with most things in life, practical learning is crucial to excel in any field. A product like Vexi offers precisely that practical learning.
Step By Step
When we all started driving, we did not learn in a Formula 1 car. Instead, we learned with an easy-to-drive car. The same principle applies to most things in life, including a credit card. Most banks and endeavors pursuing financial inclusion have the responsibility to ensure there are no traps, such as reckless credit lines that may lead customers to bad decisions. A bad decision can make it even more complicated to have access to financial services.
There are plenty of things we have to do, and we have to do them amazingly well to serve the huge population waiting for financial inclusion in developing countries, which could also push these countries closer to becoming developed countries. There is a gigantic gap, for example, between Latin America and North America regarding financial services as an example from the last century demonstrates: “… by 1914 there were 27,864 banks in the United States… by contrast in Mexico by that time there were only 2 banks…” (“Why Nations Fail”). The potential to make improvements in Latin America is enormous.
These days, change is driven by a population that is starting to discover the benefits that financial services can offer them and they have more information to make the right choices. Together, with financial inclusion, we are boosting the development of our nations.