Has technology made an impact on financial inclusion?

Across the world, advances in financial technology in the form of internet banking, for example, has provided countries with a large percentage of unbanked people who have relied solely on cash for a long time to witness improvements in financial inclusion.

Technology has become such an integral part of our lives, impacting the way we interact with the world and improving the human experience in many cases. This transformation has, inevitably, also had an impact on the financial sector. Between 2014 and 2017, more than 500 million people got access to financial services for the first time, according to the World Bank’s Global Findex Database 2017.

If you are not familiar with the financial sector and are not actively tracking how technology has impacted financial inclusion, you may be wondering why this is even an important subject to talk about.

Mobile Banking and Digital Wallets

Mobile banking and digital wallets are examples of the significant advancements that financial technology has brought about. These game-changing solutions now make it easier than ever for individuals, even those who live in rural and underserved areas, to access financial services. These advancements have been enabled by innovations around mobile phone and internet technology and now enable people everywhere to open bank accounts, make payments, transfer funds and access credit and insurance products.

Across the world, mobile money services like M-Pesa in Kenya and bKash in Bangladesh have helped in transforming and deepening financial inclusion, enabling millions of unbanked individuals to participate in the formal financial sector.

Blockchain & Cryptocurrencies

Blockchain technology and cryptocurrencies are also playing a role in improving financial inclusion. By providing a decentralized, transparent, and secure platform for financial transactions, blockchain-based solutions can help the unbanked and underbanked access financial services without the need for traditional banking infrastructure.

Across Africa today, companies like Cenoa are helping hundreds of thousands of people to protect their income from inflation by providing them with minimum-risk digital dollar savings opportunities on blockchain-powered platforms.

Financial Education and Literacy

While improving access to financial services is crucial, it's also important to address the issue of financial literacy. Many people, particularly in underserved communities, lack the knowledge and skills to effectively manage their finances, which can limit their ability to take full advantage of the financial tools available to them.

Technology is playing a key role in addressing this challenge. Online educational platforms, mobile apps, and interactive digital tools are making it easier for people to learn about budgeting, saving, investing, and other essential financial concepts. By empowering individuals with the knowledge and confidence to make informed financial decisions, these digital solutions are helping to bridge the financial literacy gap and further promote financial inclusion.

Crowdfunding and Peer-to-Peer Lending

Crowdfunding and peer-to-peer (P2P) lending platforms have also played a significant role in improving financial inclusion. These innovative solutions connect individual investors or lenders directly with borrowers, bypassing traditional financial institutions. This has opened up new avenues for individuals and small businesses to access credit and funding, particularly those who may have been overlooked or underserved by traditional banks.

Crowdfunding platforms, such as Kickstarter and Indiegogo, have empowered entrepreneurs and individuals to raise funds for their projects or ideas, regardless of their location or financial background. Similarly, P2P lending platforms, like Lending Club and Prosper, have democratized access to credit, providing borrowers with alternative financing options and investors with new investment opportunities.

Final Words

The intersection of technology and financial inclusion has opened up a world of possibilities, empowering individuals and communities to achieve their financial goals and participate more fully in the formal economy. From mobile banking and digital wallets to biometric authentication and AI-powered credit scoring, the innovations in financial technology have been instrumental in driving greater financial inclusion worldwide.

As we continue to navigate the digital age, it is essential to recognize the transformative power of technology and its potential to create a more equitable and inclusive financial system. By embracing these advancements and ensuring that they reach the underserved and unbanked populations, we can unlock the true potential of financial inclusion and create a more prosperous and inclusive future for all.