Fintech Can Be The Unbanked’s Best Hope For Financial Inclusion
TECHINASIA: If you had asked anyone in the region about fintech just a couple of years ago, you would have been met with blank stares – and not the eyes-glazing-over kind that some people get when someone mentions finance. Today, it’s the fancy, shiny sports car that just pulled up in the town square; it’s all everyone seems to be talking about, and they’re all wondering if they can hitch a ride.
There’s a lot to be said about fintech’s different applications; from peer-to-peer lending, to micropayments, to Bitcoin and blockchain wallets and marketplaces, the possibilities are as diverse as the average person’s financial needs. To put it simply, there’s something for everyone. Or is there?
Fintech is well placed to give the current financial system a good shake up, that much is true. However, there is a large number of people around the globe that are not even part of that system. These are the so-called unbanked. Their number is about two billion adults in 2015, according to the World Bank’s estimates.
The unbanked have no access to banking services and institutions that developed countries take for granted. They don’t have bank accounts, they can’t apply for loans. They use cash for their everyday transactions and their savings account is their mattress. A credit card is little more than a colorful piece of plastic, as far as their immediate needs are concerned. But the whole point of fintech is that it works differently than traditional financial institutions. Being smaller, nimbler, and innovative, fintech startups can reach those people in ways that banks never can.
Read also:
TECHCRUNCH: Financial inclusion — expanding access to financial services to those on the margins — is often advocated as a priority for the developing world. And rightly so: It can increase economic security for the people who need it most and promote economic development where those people live. But financial inclusion isn’t just a developing-world issue. To be sure, the challenge in developing countries dwarfs this challenge at home. Read more
TECHCRUNCH: A decade ago, Matt Flannery changed the world of lending in developing countries when he co-founded Kiva, a peer-to-peer lending model that allowed consumers to support women and micro-entrepreneurs in emerging markets with loans in increments as small as $25. Now, he’s looking more broadly at commercial lending space in Sub-Saharan Africa and how data science can be applied to make small business lending smarter and more accurate. He stepped back from an operational role at Kiva and started Branch with $1.6 million from Khosla Impact and Formation 8, the fund from Palantir co-founder Joe Lonsdale. Read more
