Financial service for the poor
A report prepared for ACBE100 Academic Communication in Business
and Economics
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Executive SummaryThis report investigate the possible solution
to reduce financial exclusions. The primary discussion tool in this
report is microfinance, which is regarded as an effective tool for
poor people to become financial independent. Also, this report
provides some practical recommendations for the government to
improve financial service for the poor in Australia.
IntroductionFinancial exclusion is defined as the
inaccessibility to several financial services including banking,
transferring, savings and credits (ANZ, 2004). Financial exclusion
is a social and economic issue in developing economies as well as
developed countries. According to the research by NAB and Roy
Morgan Research in 2013, there are 15.6 percent of population who
are severely excluded in Australia
Figure 1Financial Exclusion in Australia, Roy Morgan Research,
2013Reasons of exclusion1. Cost ExclusionThe root cause of
financial exclusion is the high cost of financial service products.
The financial service package in Australia is expensive. The
average cost for a fundamental financial service including basic
transactions, credits and insurance can cost as much as $1,801
(Connolly, 2014). The income level is a dominant factor for
financial exclusion.
Figure 2 Cost Exclusion in Australia, Roy Morgan Research, 2012.
2. Communication reasons Education level Language Migrants 3. Poor
infrastructure in rural areas.4. Issue OutcomesWhile the issue
causes have been identified, the outcomes of financial exclusion
are as follow:a. Financial Exclusionb. Long-term financial
hardshipc. Social impacts5. RecommendationsMicrofinance for
AustraliansMicrofinance offers poor people access to financial
services such as loans, savings, money transfer services, and
microinsuranceMicrofinance has different marketing channels to help
poor people become financial inclusive and achieve poverty
reduction
Microfinance offers poor people access to basic
financialservices, such as loans, savings, money transfer services,
and microinsurance.
