Wednesday, March 20, 2013

Financial Literacy - Ways of Making People Aware of Financial Services

Everyone needs financial services, even if they do not have a single penny. This is because it is impossible in this day and age to live without money and, hence, without financial services. However, a tiny fraction of the world population uses financial services, because outreach of banks and other financial institutions is small and also because people simply do not know about this 'need'.

Urban dwellers often use formal financial services offered by banks, insurance firms, small credit agencies, but people in rural areas, especially those in developing countries, rarely do. Instead, they rely on informal financial services, which have plenty of downsides.

For instance, loan sharks are rampant in areas where formal financial services are lacking, and these opportunistic lenders simply rip money off the borrowers. In many areas, where formal saving account services are scarce, communities have come together to form informal saving groups, however, they lack proper book keeping and security is a concern.

It is all the more important, as a result, to teach people about the benefits and variety of financial services available to them, but that is not an easy task. In less developed countries, the main question is, how can we reach all these people, scattered over large geographical areas? To make matters more difficult:

    They have different levels of formal education,
    Speak a variety of languages, and,
    Have disparate access to media.

Here are some basic ideas that can help convey some measure of utility to different audiences at a national or regional level.

Channels for Financial Literacy Campaigns

Training sessions, workshops, ads, etc., can be delivered through the following channels:

    Radio - ubiquitous nature helps reach the masses
    National TV network - good geographical reach and low cost of subscription
    Mobile phones - especially useful in countries with mobile banking
    Local convenience stores and post offices - suitable for distribution of pamphlets.