Aban Haq, Head, Project Management Office & Member Engagement, Alliance for Financial Inclusion

For years, those working to advance financial inclusion have focused on particular outcomes: to grow micro and small businesses, create jobs, enable access to education, help people build assets, and in doing so, improve lives. But recently, a new term has begun to dominate conversations: financial well-being. Is this merely a semantic change, or does it reflect something deeper, signaling an evolution in the way we understand the purpose of financial inclusion?

What Is financial well-being?

Financial well-being refers to a person’s ability to meet their short- and long-term financial goals, to weather unexpected shocks, and to feel confident about their financial future.

It is shaped by a wide constellation of factors. Some are external, such as the macroeconomic environment, inflation, or climate-related shocks, and some internal to the financial sector, such as access to appropriate financial products, fair pricing, trust in providers, and the availability of support systems.

Why has it become so relevant now?

It’s mainly because many countries have achieved high levels of financial access, with the vast majority of adults now having accounts. This has largely been driven by digitization: mobile wallets, instant payments, and digital lending platforms are enabling more people, including low-income, rural, and vulnerable populations, to transact, save, borrow, and invest.

But this increased access brings increased risk, such as digital fraud and over-indebtedness, which are often related to low financial literacy. As financial services reach further into people’s lives, ensuring that they genuinely empower users rather than harm them has become a critical policy priority.

Who has a stake in financial well-being?

The simple answer: everyone in the financial ecosystem.

Regulators care about financial well-being because consumer protection is a core mandate. A financially distressed population represents not only a human development issue, but also a financial stability risk.

Financial institutions are also increasingly attuned to these concerns. On one hand, they depend on clients with healthy financial lives who can save, borrow responsibly, and stay engaged. On the other, they are under growing public scrutiny. In today’s information-rich environment, they cannot afford to be perceived as exploiting customers. Their “license to operate” is as much social as it is regulatory.

Fintechs and social finance actors also have a role to play. As innovators, they can design tools and services that support behavioural change, build buffers, and guide users toward healthy financial choices.

How can regulators and policymakers drive financial well-being?

One lever that is gaining growing attention is the development of financial capabilities. This goes beyond just financial literacy, referring to a combination of knowledge, skills, attitudes, and behaviours that enable individuals and businesses to make sound financial decisions, use financial services confidently, and plan for both expected and unexpected events.

It is about knowing what to do, being able to do it, and wanting to do it.

Being financially capable lets people navigate a complex digital landscape, distinguishing between safe and risky financial offers. It helps them manage daily financial decisions effectively, build buffers against shocks, such as job loss or health emergencies, and plan for the long-term, such as saving for education, retirement, or growing a small business. For microenterprises and informal sector actors, financial capabilities play a critical role in managing working capital, understanding loan terms, and making investment decisions.

Regulators are increasingly embedding financial capability-building into their inclusion strategies not just as an add-on, but as a core enabler of inclusive and resilient financial systems. Initiatives range from getting better data (Malaysia’s Financial Capability and Demand Side Survey), digital literacy campaigns (Pakistan’s National Financial Literacy Week) and behavioural nudges to encourage positive financial outcomes (examples from Alliance for Financial Inclusion members).

The need for collective action

While increasing access to financial services has been foundational, access alone is not enough. Building financial capabilities at scale will be vital if we want to ensure a meaningful lived experience of financial inclusion for all. That will require regulators, providers, educators, and communities to align, to equip people and businesses with the tools they need to turn financial access into lasting resilience and opportunity