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Financial Inclusion: UAE banks embrace financial inclusion

The UBF and the Central Bank are working on an initiative that includes the ability to provide financial services to various segments of the population through mobile phones

The term ‘financial inclusion’ very often makes people think ‘banking for the under-privileged’. It is actually much more than that – it is a belief that equates individual financial independence to a nation’s economic potential. Put simply, financial inclusion not only correlates with the aspirations and intrinsic wealth of any nation, but actually supports it.

It is a well-known fact that financial inclusion is about delivering financial services at affordable costs to disadvantaged and lower-income segments of society. So it follows that inclusive financing will empower society, increase individual independence and support an economy, as well as the organisations such as banks that operate in it.

Professor Muhammad Yunus, the Nobel prize winning founder of Grameen Bank which provides micro-credit to millions of poor people in Bangladesh, is to many the personification of financial inclusion. He believes that poverty is not created by poor people. Poverty is an artificial imposition on people. Poorer people are endowed with the same unlimited potential of creativity and energy as any other human being of any walk of life, anywhere in the world. It is a question of removing the barriers to unleash poorer people’s creativity to solve their own problems.

The UAE Banks Federation encourages all of its members to make available the financial services they offer to as wide a spectrum of the population as possible. Obvious rules apply of course, such as affordability and transparency both on their part and on the part of their customers.

In the UAE we have taken great strides to improve and enable an environment ripe for financial inclusion, as for instance most adults in the professional economy here hold more than one bank deposit account. But we still need to continue to innovate and improve technologies that enable financial inclusion while also avoiding risks inherent with potential microfinance options.

We wholeheartedly support high quality regulatory and supervisory standards within the UAE’s banks. We encourage innovation and continuous assessment of new technologies that pave the way for increased accessibility. We also encourage competition among the banking community, since we believe that this will support financial inclusion which will feed into the competitiveness of the nation as a whole.

There are a number of factors that drive such an initiative as financial inclusion – fairness, transparency and access. Most of the financially less well off in the UAE tend to be in remoter parts of the country, and often for them lack of accessibility is a key deterrent to knowing about and taking advantage of the services available. The UBF and the Central Bank are working on an initiative that includes the ability to provide financial services to various segments of the population through mobile devices. A number of member banks in the UAE have been assisting with the design and feasibility of this important, potentially lifestyle changing project. Embracing technology, harnessing and cultivating a financially aware generation means banks and our society can work together to make financial inclusion a reality throughout the UAE.

All of the above is underpinned by education. If we can stimulate a clear understanding of financial literacy among the youth of today, we can help avoid the pitfalls seen in recent times, whether it’s the sub-prime mortgage catastrophe in the US or the everyday problem of hidden or misunderstood charges. There is more than one definition for ‘access’, and educating all on the benefits of personal finance if responsibly managed will bode well for a more inclusive financing society in the UAE. The banking community in the UAE has an opportunity to lead the way.

AbdulAziz Al Ghurair is the Chairman of the UAE Banks Federation