The Financial Institution Role

The Financial Institution Role

What is the role of financial institutions and their impact on the socioeconomic status of entities and households? A study by Harvard University identified the financial institutions and the services they offer as essential in affording a higher level of economic activity within the various social structures. According to Brookings Institute, bank-issued credit helps drive economic expansion. It allows businesses to undertake ventures without saving up the requisite amount of cash. This affords the economic ‘players’ to take advantage of opportunities as they arise, rather than miss out on potential profits.

It has also been an enabler of equality, as with a new lending product, such as the installment loan, a credit provisioning vehicle in the mid-1800s. It impacted households, especially low to mid-income families, leveling the lifetime income of a family, enabling them to make purchases that would have been too expensive for them, at a point in time. With access to credit, it created an equal economic opportunity for low and mid-income families.

Currently financial institutions provide trillions of dollars of credit to the economy, however, the role of these institutions in credit provision goes considerably beyond this. Financial institutions are the major originators of loans to businesses and families.

Some financial institutions provide key elements of the infrastructure for the credit, allowing these markets to provide credit smoothly to the wider economy. In essence, financing is about creating human economic activity. As such, financial institutions play an important role in the socioeconomic status of humanity, playing a critical role for society at large, serving individuals, families, businesses, governments and institutions.

If financial institutions are to be a catalyst through their credit provisioning and financial services, for the raising up of the under-developed areas, empowering of local communities, creating the resource for things imagined becoming realities, they must then be capable of offering tools for the distribution of their services. While recommendations for; education, government investments, job training, etc., are needed resources and these various tactical ideas are valued, they haven’t really changed the effects of the generations of poverty. The financial, educational and opportunity deficiencies have long ingrained a mindset of hopelessness.

The catalyst for change is not regulations and policies alone, there is a need for transformational motivation, a metamorphosis of a kind. A conversion of sorts from hopelessness to hope, the journey from mental imprisonment to enlightenment. The reality of the impossible becoming possible. Most individuals want to succeed but more often than not they are presented opportunities that typically deal with the pathway to success not the actual moment of success. What is motivating and transforming is success. While poverty is multi-dimensional; financial, educational and opportunities, it is not void of desire, energy and hard work, all which can be stimulated through the opportunistic moment of success. What people need are the tools to be successful and once success becomes a reality, so will education, finances and more opportunities.

So, what are the services a financial institution can convey to society? The practical tools that enable; payments, accurate and secure payments between counterparties for the exchange of goods and services, broad access to financial services products and services, smoothing of cash flows and consumption over time, these are essential in affording a higher level of economic growth within the various social structures. What is the requisite vehicle by which these services are distributed to support the individual processes required to receive that moment of success?

Institutions’ need technology – online environments that deliver:

• Access to financial services to populations across the world, including disadvantaged and low income segments
• Ways to educate the public on financial management
• Appropriate and affordable savings and credit products
• Payment and money transfer services (Remittance processing)
• Ways to balance spending and saving during the different phases of life (Online lifecycle financial analysis)
• Non-cash payment methods to support economic activity (e-commerce)
• Access to markets through distributive networks (dynamically creating new markets)
• Key elements of infrastructure for the credit, providing credit to markets (Online 24/7 decisions)
• Services to the wider economy (expanding economic opportunity)
• Promotions (creating more opportunities)
• Increased business opportunities, with ecommerce portals (creating moments of success)

Conclusion

In essence, financing is about creating human economic activity. The opportunity for economic activity, ecommerce, is what the vehicle filled with financial services must deliver. The ability to create and deliver markets, promote products and services, process financial transactions, facilitate loans and the opportunity of success. RiskCALM₄® is the vehicle which is available to everyone you choose. Its not there for only the SME or corporate clients, but also the individual, from a corporate building or an apartment, with a variety of products and services: Hot sauces, Jams, Window washing, Healthcare services, Consulting, Accounting and Legal, etc. Opportunities for all socioeconomic levels and structures. This delivery comes with the following instructions:

• Desire, energy and hard work, load the vehicle and go!

Remember, commerce creates economic activity, economic activity creates buying cycles and buying cycles create loans and loans create income.

Let’s create economic activity together! RiskCALM₄® is the vehicle! Together we can be the energy!

Send me your thoughts; this is important to your institution, your country, your region and globally. Create a dialogue! If we don’t communicate, we can’t grow in our understanding.