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.