Financial inclusion refers to the expansion of financial services to people with low or no access to traditional banking systems. In order to achieve this, governments must find ways to bring down tax collection leakages, and the technology industry must expand its reach to the underbanked. Among the key factors in this effort, Fintech has emerged as an important means for extending financial services to underbanked populations.
Women make up the majority of the world’s unbanked population
The Global Findex Database shows that nearly two billion people worldwide do not have a bank account. Women make up the majority of these unbanked adults.
Financial inclusion helps women become economically empowered. It gives them the tools they need to build their assets, and also helps them to manage their finances and mitigate risk. However, women are still not able to access all of the financial services they need to be financially independent.
Despite these challenges, governments and private companies are working to increase the availability of financial products and services. By increasing the number of people who have access to accounts, the financial system will allow for more stable and prosperous lives for everyone.
Gender-inclusive product innovations and digital payment systems can improve gender equality by encouraging economic participation. They can help women become entrepreneurs and leaders.
Fintech can extend financial services to the underbanked
Fintech has the power to democratize the financial services industry and expand access to basic banking to the underbanked. This technology enables more tailored financial services, including digital payments, direct deposit and early paycheck access.
Although the financial technology industry is thriving, it still faces regulatory challenges. Traditional banks have been slow to adapt to the changing landscape of the finance sector. Banks are often hesitant to lend, due to strict regulatory standards, and are saddled with outdated systems. As a result, many unbanked citizens face significant financial barriers.
To bridge the divide, many fintech startups are offering products to help the underbanked. These include low-cost alternatives to payday loans and interest-free cash advances. They also offer alternative bank accounts, including subscription-based accounts, which are FDIC-insured. The accounts enable consumers to take advantage of the advantages of traditional bank accounts while avoiding the high costs of checking, ATM and other fees.
Impact of Fintech on the economies of Kenya and Tanzania
FinTech is emerging as a technological enabler that can lead to financial inclusion and deepen the financial sector. In addition, it has the potential to create efficiency gains by opening up the financial services value chain.
In Sub-Saharan Africa, where the financial sector is less competitive, FinTech has the potential to boost the sector and provide opportunities to incumbents. However, FinTech is also creating new risks.
FinTech is a term that refers to companies that use artificial intelligence (AI) and encrypted blockchain technology to streamline the financial transaction process and offer products to low-income households and small and medium-sized enterprises. It can improve access to credit and investment in human capital, and increase the availability of funds for investment.
While mobile money has been adopted around the world, it has been particularly successful in sub-Saharan Africa. Mobile money has enabled the rapid inclusion of users into the formal financial system.
Impact of tech-savvy consumers on the financial services industry
Tech-savvy consumers are changing the financial services industry. They have high expectations, and want a relationship built on trust. These consumers expect to receive relevant, timely information on their financial well-being.
Financial services organizations have an opportunity to deliver this type of information to their customers in a way that is relevant to them, reducing customer service costs. One example is chatbots, which are virtual agents that can perform basic tasks, such as delivering transactional documents.
There are several ways in which the financial services industry can leverage new technology. For instance, artificial intelligence has been a game-changer in helping organizations boost their revenues. Another is wearable devices that encourage prudent risk management.
While technology has revolutionized the financial industry, it has also been a hindrance. For instance, the banking industry has long struggled to meet its clients’ unique needs. However, with new developments and a changing regulatory framework, fintech startups have begun to disrupt the sector.