Financial Inclusion: A catalyst for a Sustainable Growth

What Does Financial Inclusion Mean?

Financial inclusion refers to the accessibility and availability of financial services to all individuals and businesses, including a movement that is working towards better catering to the financial needs of SMEs that were previously underserved or excluded from the formal banking system.

It aims to provide affordable and convenient financial products and services to promote economic participation and improve the overall well-being of individuals and communities. 

Financial inclusion encompasses various aspects, such as access to basic banking services (such as savings accounts and payment systems), lending opportunities, insurance, and investment opportunities. It also involves promoting financial literacy and education to empower individuals to make informed financial decisions. 

By enabling individuals and businesses to access and utilize financial services, financial inclusion can help reduce poverty, inequality, and social exclusion. It fosters economic growth and financial stability by promoting entrepreneurship, employment, enabling savings and investments, facilitating transactions, and providing a safety net against unforeseen events. 

Governments, financial institutions, and organizations work together to develop and update policies, infrastructure, and innovative solutions to expand financial inclusion and ensure that everyone has the opportunity to participate in, and benefit from the formal financial system.

 

The SMEs landscape

 

The World Economic Forum has highlighted a significant funding gap of over $5 trillion for small and medium-sized enterprises (SMEs) globally. Despite being crucial for job creation and value addition, SMEs face challenges in accessing finance due to their lack of a reliable formal bank-compliant credit history.

This limitation hampers their growth and development, despite the fact that the SME sector generates 4 out of 5 new jobs and produces 57 cents of added value.

 

How iFactor contributes to SMEs financial inclusion?

 

iFactor contributes to the financial inclusion of SMEs in several ways. Firstly, it offers Semantic models for KYC and Credit Risk Underwriting processes, as well as Business Intelligence under an Embedded SaaS model. This means that it provides advanced tools and technology to help banks improve their credit risk assessment of their corporate and SME clients. 

Our objective is to turn “Thin files” (limited credit history) into “strengthened files” by enhancing their portfolio while identifying potential default or fraud risks. This is achieved by leveraging alternative data sources, which enhances, reduces fraud and default risks, and automates the entire process from sales to risk assessment to loan approval and monitoring. 

In summary, iFactor contributes to the financial inclusion of SMEs by providing advanced tools for credit risk assessment, leveraging alternative data sources, and connecting SMEs with investors and banks for financing opportunities.

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