Financial service for the poor

A report prepared for ACBE100 Academic Communication in

Business and Economics

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Executive Summary

This 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.

Introduction
Financial 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, 2013

Reasons of exclusion
1. Cost Exclusion
The 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 Outcomes
While the issue causes have been identified, the outcomes of financial exclusion
are as follow:

a. Financial Exclusion
b. Long-term financial hardship
c. Social impacts

5. Recommendations
Microfinance for Australians
Microfinance offers poor people access to financial services such as loans,
savings, money transfer services, and microinsurance
Microfinance has different marketing channels to help poor people become
financial inclusive and achieve poverty reduction

Microfinance
offers
people
poor
access
basic
to and
financial
loans,
such
money
savings,
services,
transfer
ce. as
microinsuran