Fintechs are key to improving global financial inclusion, especially in emerging markets and developing economies.
Fintechs use technologies such as the Internet of Things (IoT) and blockchain to offer affordable and accessible financial services. According to the World Bank, 69% of adults globally now have at least one bank account, a significant increase from 51% in 2011, driven largely by mobile services and fintechs.
Here are some key factors that make fintechs a catalyst for financial inclusion.
Global Access to and Adoption of Financial Services:
Since 2011, there has been a notable global increase in adults with at least one financial account, according to the World Bank’s latest Global Findex report.
The proportion of adults with an account increased from 51% in 2011 to 76% in 2021. This growth is especially notable in developing economies, where account ownership increased from 63% to 71% between 2017 and 2021, primarily due to the adoption of fintech technologies, such as mobile money.
Fintech in Action: M-Pesa and Beyond:
An emblematic example of fintech fostering financial inclusion is M-Pesa in Kenya. This mobile money service not only enabled a large portion of the population to access basic financial services, but also, according to studies, helped approximately 2% of the Kenyan population escape poverty, according to the World Economic Forum.
These types of platforms demonstrate how fintechs can offer practical and accessible solutions that were traditionally unavailable through conventional banks.
Impact of COVID-19 and Financial Digitalization:
The COVID-19 pandemic significantly accelerated the digitalization of financial payments. Many adults turned to digital payments for the first time as a secure alternative to cash payment methods. This shift not only demonstrated the adaptability of fintech services in times of crisis but also underscored their role in creating more resilient financial systems.
Fintechs are not just a complement to traditional financial systems; they are a vehicle for economic and social transformation.
By providing accessible and affordable financial services, fintechs are removing historical barriers and enabling more people to invest in their financial future.
Continued innovation and appropriate regulation will be key to further expanding the benefits of financial inclusion through fintech.
