What Is Financial Exclusion?

In recent years, the term “financial inclusion” has become more prevalent in our everyday vocabulary. Around the world, countries and organizations are homing in on how they can foster a culture of financial inclusion. However, with all of the focus on financial inclusion, fewer people really talk about or define financial exclusion. And given that you can’t have one without the other, we at FINCA decided to explicitly define financial exclusion and highlight its impact.

Defining Financial Exclusion

Financial exclusion refers to individuals and populations without access to common financial services. These can include savings accounts, loans, cashless transactions, credit, and other traditional banking services. People are excluded because of their socio-economic status and because they can’t meet the requirements of a formal banking institution. This poses a huge challenge to populations, as whole groups of people are unable to participate in the financial sector. Ultimately, financial exclusion prevents these groups from accessing the resources they need to expand a business, pay for higher education, or any number of other actions that could help them work their way up and achieve a better quality of life.

How FINCA Helps to Alleviate Financial Exclusion

At the core of FINCA’s mission is alleviating poverty through financial inclusion. We work to aid those individuals and small businesses who are excluded by the formal financial sector. With a network of 20 community-based microfinance institutions and banks around the world, we provide access to financial services for previously excluded or “unbanked” clients. These unique opportunities include offering small loans to people with little to no credit history, combining traditional branches with agency banking, using alternative credit scoring and analytics, providing mobile wallets, using point-of-service biometrics and the use of mobile technology to reach people in remote locations. We take pride in witnessing our clients utilize our financial tools to catalyze their own economic growth.

Below are two examples of FINCA clients who were able to improve their lives through access to financial services.

Growing Her Business and Providing For Her Family

In Latin America, Guatemala has one of the highest disparities in distribution of income and land ownership. With over half of the population living below the poverty line and 56% of citizens financially excluded, many people do not have access to basic financial services. However, for over three decades, FINCA has been working to decrease those numbers, helping hundreds of thousands of Guatemalans achieve financial inclusion and improve their quality of life.


When Lucia Margarita Pacajoj Ticum received her first FINCA loan to support her small business, she had no idea how much it would impact her family. Lucia began her business selling hand-made trinkets and souvenirs thirteen years ago. Though she was making a small profit, the income from her business was not sustainable. However, with her first FINCA loan, Lucia expanded her business, adding backpacks, quilts and pants to her product line. Slowly, she built her business into what it is today—a bustling market stall with two employees supporting her production. Lucia has since used her increased income to add electricity and running water in her home and pay for her children’s school transportation costs. Lucia is the perfect example of someone with the determination to grow her business and improve her family’s lives. All she needed was access to financial services.

Brightening the Lives of Her Grandchildren

Over the last 20 years, the economy in Uganda has grown substantially due to wider access to basic resources. These resources include energy, water, health services, and education. However, with 41% of the population financially excluded, there is still much work to be done. Without access to proper financial resources, small business owners and entrepreneurs face obstacles in growing their businesses and increasing incomes. Knowing that financial exclusion is harmful to both excluded individuals as well as the greater economy, FINCA has helped many Ugandans access financial services. Furthermore, through our BrightLife and FINCA Ventures programs, we are bridging the gap between access to financial services and access to a range of other life-enhancing products.


Jane Nakintu’s life changed forever when her daughter and son-in-law tragically died, leaving Jane as the sole provider for her four grandchildren. In this new role, Jane’s main priority was ensuring the health and safety of her grandchildren. Now cooking for five, she spent hours every day bent over the traditional three-stone fire she used to cook meals. Cooking this much, Jane’s kitchen would become consumed with black smoke that was unbearable to stand in let alone breathe. Fearing for her grandchildren’s health, Jane decided to take out a small loan from FINCA to purchase a BrightLife cookstove. The new cookstove reduces toxic smoke, keeps her grandchildren safe and saves her money on charcoal. Jane now uses these savings to buy books for her grandchildren. She is extremely happy with her new cookstove, which was enabled through FINCA’s connection between financial services and life-changing products.

The Need for Increasing Awareness About Financial Exclusion

Financial exclusion is a difficulty that millions of people face every day. In the absence of financial resources, low-income individuals confront hardships progressing towards living a healthier, more sustainable and better life. After over 30 years of working to help these poor communities, we can say confidently that access to basic financial resources can transform lives, strengthen communities and alleviate poverty.