Research finds financial inclusion to be crucial for achieving SDGs

The Hindu

4 days ago

A recent study by researchers from the Indian Institute of Technology Madras and the University of Connecticut has found that financial inclusion significantly improves chances of achieving sustainable development goals.
The researchers call for including fintech and financial inclusion policies in development agendas based on their study. They have suggested that policymakers prioritise education and integrate financial education to foster fintech and financial inclusion growth, and help to achieve SDGs.
The researchers, including Priya Choudhary and M. Thenmozhi, Head of the Department of Management Studies and CAMS-IITM Fintech Innovation Lab at the Indian Institute of Technology Madras and Chinmoy Ghosh, Department Head and Gladstein Professor, University of Connecticut, U.S., investigated the influence of financial inclusion on sustainable development goals 2, 3,4, 8 and 9, based on data from 86 countries.
A one-of-its-kind attempt, the researchers used access and usage indicators of traditional financial services to develop a financial index.
Their research findings were published as an article 'Impact of fintech and financial inclusion on sustainable development goals: Evidence from cross country analysis,' in the journal Finance Research Letters.
Ms. Thenmozhi said India had shown consistent growth in its financial inclusion index (FII) from 2011 to 2021, reflecting the impact of major policy initiatives and digital infrastructure expansion.
'Government programmes such as the Jan Dhan Yojana, Aadhaar, and UPI have significantly boosted account ownership and digital transaction volumes. India's fintech sector has expanded rapidly, driven by increasing smartphone usage, digital literacy, and a supportive regulatory environment,' she added.
Rural areas, low-income groups, and older populations, however, still face barriers to usage, such as lack of trust, digital skills, and financial awareness, she pointed out.
India must strengthen digital literacy campaigns by targeting semi-urban and rural populations with localised and practical education programmes to build trust and awareness around mobile banking and digital finance, she averred.
Banks and fintech firms must be encouraged to develop intuitive, multilingual, and accessible mobile apps for low-tech users. She called for expanding reliable mobile and internet networks, especially in remote areas, to support seamless digital transactions.
'Robust cybersecurity frameworks and grievance redress mechanisms to reduce digital fraud and build confidence in mobile banking systems are necessary,' Ms. Thenmozhi said.
She suggests developing financial products tailored for underserved groups, such as women, small farmers, and informal workers — integrating credit, savings, and insurance through mobile platforms.
The country must support public-private partnerships to combine the reach of banks with the innovation and agility of fintech companies, particularly for credit delivery and last-mile service, she added.
The researchers used the global findex survey data from 2011, 2014, 2017 and 2021 and examined the key SDGs - 2 (zero hunger); 3 (good health); 4 (quality education); 8 (decent work); and 9 (industry, innovation).
Financial inclusion enhanced savings, employment and investment in education impacting some of the SDGs directly.
Access to financial services helps farmers invest in technology, boosts crop yields, smooths medical costs and mitigates health emergencies. Financial inclusion enables investment in quality education and promotes entrepreneurial activity, leading to economic growth. Such moves ultimately significantly impacted gross domestic product and internet access as well, the researchers pointed out.