"Financial Services for the PoorTable of ContentsExecutive Summary………………………………………………………………………………………………………………………1Unequal distribution of income and wealth…………………………………………………………………………………. 1Digital Finance is the New Source of Economic Development………………………………………………………. 3Microfinance……………………………………………………………………………………………………………………………….. 5Conclusions…………………………………………………………………………………………………………………………………. 5References…………………………………………………………………………………………………………………………………… 6Executive SummaryAustralian economy is known for its Stable economic growth. Thanks to Australian governance andsheer resourcefulness. Banks of Australia were well capitalized during the crisis. But Australia also sufferits own share if financial issues. There exists an inequality in terms of income and wealth globally.Australia also suffers inequality in terms of economy. From various reports, it is observed that globallythe major concern is lack of proper financial management. This research report attempts to investigatethe challenges Australia’s Economy is facing and the measures to be taken to bridge the gap betweenthe rich and poor. Unequal distribution of income and wealth prevailing in the country has an negativeeffect on the economy. Developing countries like India, Bangladesh and Africa have implementedstrategies like Cashless economy and Microfinance. Digitalization of money and Microloans are themeasures to be introduced to provide financial services to the poor all over the world. 1 Unequal distribution of income and wealthThere are various reasons for an economy to boom, like new technology, techniques, businessopportunities and new job creating sector. Likewise, end of a market boom, global financial crisis, Globalmarket infidelity, war threats can cause an economy to slow down. As a result of this economicslowdown, many people would lose their jobs and money. This economic effect would result in rise inthe number of people who fall under the category of poor residents. This financial setback wouldeventually increase a gap between the rich and poor in terms of accumulated wealth, which in turnaffects the efficiency of the country. In terms of Australian economy the mining sector boom is nearingits end and the next sector which would see its share of growth is said to be agriculture technologies andeducation. This transition would also result in job loss and slow economic growth. The recent issuewhich Australia is facing is low wage growth. The graph below clearly shows the decline in the wageprice index and average earning per hour (Source: ABS,RBA). 2 Another report also suggests that there is a steep decrease in the creation of new jobs every month. Thegraph below depicts the unemployment rate edging up (Source: Australian Bureau of Statistics). 3 A report published by Focus Economics based on the data published by Australian Bureau of Statisticsstates that, “Seasonally-adjusted employment decreased by 6,400 jobs in February compared to theprevious month, which contrasted the 13,500 new jobs created in January. February’s figure contrastedanalysts’ expectations of 16,000 new jobs. The fall in employment reflects a decrease in full-timepositions of 33,500 in February (January: +57,500)”. These reports just confirm that the future financialstatus of the country is not going to be stable and it will be affecting the poor drastically. Hence, it ishigh time we think about the measures to be taken to control this growing inequality existing betweenpeople in terms of money and wealth is discussed in the following paragraphs. Digital Finance is the New Source of Economic DevelopmentIndian Economy has had its share of ups and downs in the last decade. Last year, they have decided toconvert their economy into a cashless economy. Cashless economy is making transactions withoutphysical form of money in form of notes or coins. “Digital Payment 2020 – The making of a $500 BillionEcosystem in India”, The Boston Consulting Group research report explains the effect of this Digitalmoney and Online Transaction on the Economy. It foresees how this trend the National economy in thenear future. Technology has made the digital payment simpler. The main objective of this digitalizationmovement is to make the technology available to the rural sector of the country. Online banktransaction would make it convenient for the old and non-commutable people to take care of theirfinancial transaction at the comfort of their home.Experts believe that the Digital payments will driveconsumption and every individual would have access to the deals, discounts and coupons provided bythe merchants. Now let’s see how this trend can help the Australian economy. Every country has itsshare of citizens who do not have a financial identity, to be precise; they do not have an account inanyfinancial institution. Creating a Digital Identity and connecting it with their financial accounts wouldmake them eligible to all the benefits the government provides. Indian government also encourages4 people to invest their money in financial instruments. For instance, the government urges the people todeposit their physical holding of money in the banks; this makes them eligible to the various benefitschemes and motivates them to invest. By these measures, the financial institutions of the country arewell-funded, which in turn has a positive effect on the Economy. People also benefit from investing theirmoney and also from the various benefit schemes the government offers. Cashless Transaction wouldserve as an effective tool for saving effectively, spending efficiently and investing smartly. These movesbenefit more women as their daily wages would be in a secured bank account. The major financial instruments which are best investing options in India are listed below:1. Equity Market: Though stock market has had its setback in the past due to global financial crisisand other political issues, Equities has out-performed other investment options in the long term.Better regulations have also aided in making stocks the best financial instrument to invest in. 2. Mutual FundsThe key features of mutual fund which makes it best investment options are:? Portfolio Diversification? Professional Management? Affordability? Liquidity? Transparency? Regulatory Framework3. GoldGold is known to be the most robust mode of investment for both experts and layman. And Goldhasn’t disappointed the investors in the past. Only in 2017, the gold prices witnessed a stumble,but experts believe that this is only transitory. In the past, investing in Gold meant buying5 physical gold in the form of jewels and coins. But in the recent years things have changed andInvestment in gold can be done in three forms. ? Physical Gold? Gold ETF’s (Gold Exchange Traded Funds) Online? Gold Mutual FundsGold Exchange traded fund is similar to buying proportionate ownership in gold withoutpossessing in physical, which makes it convenient to investors. Gold Mutual funds is investing inthe Companies engaged in gold mining.4. Fixed DepositThe Security of the capital and surety of profits in the form of interest are the characteristicswhich makes this Investment option the most reliable. The major characteristics of thisinvestment options which makes it more appealing to investments are given below;High interestrate, Special rates for senior citizens and women and Attractive schemes Other investment options available for people are:? Real Estate? Post office monthly income account schemes? Bonds? Insurance ? Public Provident FundsMicrofinance:Microloans or Microfinance has been a huge hit in India and Africa. Microfinance has helped manypeople around the world beat poverty, thus becomes a proven formula. It also helps in promoting6 gender equality as many women becomefinancially independent through Micro financing. The majoradvantage of Microfinance success in India and Africa was its accessibility. Accessibility of financialservices to the poor would result in sustainable development and has an impact on the National andGlobal economy. In parts of Bangladesh and India, Financial institution have tie ups with Non-profitorganizations and provide hand on training to ultra-poor people which would aid them in improvingtheir livelihood. Microfinance also helps farmers to sell their products profitably. Most of the poorpeople of the country come from agricultural background, this Microloans scheme boost agriculture andpromotes food security. Microfinance also helps women and young girls to save money for their futureneeds. Many young girls save the money which they earn with the help of Microloans for theireducation needs. This scheme also promotes self-employment. In total, Microfinance promoteseconomic growth and stimulates employment for the poor. Conclusion:After detailed analysis of the financial services provided to the poor in various parts of the world, wewould like to suggest that Expanding access to the financial services to the poor is the main strategy tobe followed to improve the condition of the poor. Promoting Cashless economy, creating financialidentity to the poor, making financial resources available to the poor, providing Microloans are thestrategies to be taken into consideration to improve the livelihood of the poor in Australia. Motivatingpeople to invest will also aid in economic condition of the poor. For this, proper regulatory frameworkshould be designed and people should be made aware of the various investment options available in thecountry. Special schemes for the poor can also be introduced to promote the above measures.Expanding the accessibility to financial resources would definitely promote business growth andgenerate more jobs.Small business growth is crucial for helping the poor and improving their livelihoods.7 And Microfinance would aid in this small business growth. Thus, the above measures would help inimproving the livelihood of the poor, would help in creating in new jobs, enhance gender equality. References:1. Christopher Mc Innes, 2017, ‘Australia: Unemployment rate edges up in February, FocusEconomics, viewed 18 May, 2017http://www.focus-economics.com/countries/australia/news/unemployment/unemployment-rate- edges-up-in-february2. Dr Cassandra Goldie, 2015, ‘Inequality in Australia’, ACROSS, viewed 18May 2017,http://www.acoss.org.au/wp-content/uploads/2015/06/Inequality_in_Australia_FINAL.pdf3. Alpesh Shah, PrateekRoongta, Chilman Jain, Vibha Kaushik, Abhishek Awadhiya, 2016, ‘Digitalpayments 2020 – The Making of a $500 Billion Ecosystem in India’, Boston Consulting Group andGoogle, viewed 18 May 2017. http://image-src.bcg.com/BCG_COM/BCG-Google%20Digital%20Payments%202020- July%202016_tcm21-39245.pdf4. William Jack, Michael King, 2016, ‘Flexible Loans and Locked Savings for Female Market Vendors inIndia’, viewed 18 May, 2017 http://www.poverty-action.org/study/flexible-loans-and-locked-savings-female-market-vendors-india5. Shameran Abed, 2015,‘5 reasons why we need financial services for the poor’, viewed 18 May2017https://www.weforum.org/agenda/2015/09/5-reasons-why-we-need-financial-services-for-the-poor/8 6. David jacobs, Alexandra Rush, 2015, ‘Why is wage growth so low?’, viewed 18 May 2017https://www.rba.gov.au/publications/bulletin/2015/jun/pdf/bu-0615-2.pdf9 "