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Can FinTech Become a Reason For Financial Inclusion?

Surprisingly, the global FinTech market by 2022 is projected to reach $310 billion.

Read more to find out how Fin Tech is helping people globally in gaining financial access.

Can FinTech Become a Reason For Financial Inclusion?

Financial inclusion means making banking services available and affordable to everyone around the world. 

Consider this or not, but the unavailability of financial access has become a grave problem around the globe. Having a bank account and being able to transfer money and withdraw cash at any time anywhere is one of the things we all take for granted like clean water, electricity, or internet connection. Yet in many regions of the world, shockingly the access to basic financial services is unavailable to huge swathes of people. As evident from the World Bank’s stats that almost 1.7 billion people worldwide are still unbanked.

Lack of financial exclusion means having no savings or checking account – which not only undermines the quality of life but also excludes the individual from the formal economy of the country that holds the nation’s economy back. For the last few years, the integration of technology especially in the finance sector has propelled innovation to “bank the unbanked” making the daily financial operations attainable and user-friendly for almost everyone. Especially for the people who had no access to banks and other financial services before. 

But questions stand here: is fintech able to make the world more inclusive?

The answer to this is yes.

Fintech has great potential for introducing financial inclusion all around the world. The latest report by McKinsey Global Institute stated that widespread adoption and utilization of digital finance can increase the GDPs of all emerging economies up to 6% or a total of $3.7 trillion by 2025. Additionally, providing access to 1.6 billion unbanked people thus allowing an additional $2.1 trillion in loans to small businesses. Subsequently, adding more to the government tax revenue and increasing the balance sheets of financial services of the firms approximately up to $4.2 trillion.

Other than this, the fintech services have great potential of initiating new opportunities for budding businesses and startups that are often overlooked by governments. This is one of the main reasons that start-ups and small businesses are moving towards fintech services. According to stats, nearly 56% of small and medium-sized enterprises use technology-based banking and payments services, and 46% use financing fintech. services. This has also increased the demand for the development of fintech mobile apps as well as fintech software.

In the end, the role of financial inclusion in reigniting the world’s economy especially in the post-pandemic world should not be underestimated. Ensuring universal availability of financial utilities and products is also present in the UN’s seventeen Sustainable Goals. for mitigating hunger, and poverty. In addition to this, financial inclusion has been a persistent theme of financial sector reforms that the IMF and the World Bank have endorsed in the financial assistance and macroeconomics consultations.

Fintech encompasses a macro concept in which access to financial services at affordable costs can amplify economic growth and welfare. Especially emerging markets like Africa, Asia, and South America and often for those small/mid-sized businesses with no or limited access to financial services.

The bottom line is, Fintechs are growing at an exponential rate. The range of advantages like cost-effectiveness, efficiency, and accessibility offered by fintech apps and software are the reasons the fintech market will keep on expanding. As recent stats suggest that the Fintech market by 2022 is projected to reach $310 billion.

A digital finance transformation is a holistic approach to financial management that depends upon innovative technology and the digital landscape. Indubitably, fintech is rapidly changing the financial sector thus making financial services more common and widely available to people. 

It seems that anytime soon the traditional banks will diminish on the global stage as emerging economies continue to shift towards financial inclusion fueled by fintech.