Financial Inclusion: Bridging The Gap With Technology

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Globally, the issue of financial inclusion is a dilemma that continues to affect billions of people, particularly in countries that are still in the process of developing. The term "accessibility" refers to the availability of financial services that are both affordable and accessible to all persons and enterprises, irrespective of their socioeconomic standing.

Even though tremendous progress has been made in recent years, a sizeable segment of the world's population continues to be unbanked or underbanked. This means that they do not have access to fundamental financial services such as savings accounts, credit, insurance, and payment systems.

To address this problem, technology has emerged as a powerful instrument that offers creative solutions to bridge the gap in both financial inclusion and financial inclusion. Within the scope of this article, we will investigate the numerous ways in which technology is reshaping the global financial scene, as well as the role that technology plays in expanding financial inclusion.

Digital banking and mobile payments

There has been a growth of digital banking and mobile payment solutions, which is one of the most significant technological developments in the field of financial inclusion.

Financial Inclusion Bridging The Gap With Technology

Don Evans, CEO of Crewe Foundation Services says, "People are now able to access their financial services without the need for physical branches or traditional banking infrastructure because of the proliferation of mobile phones, which have become so widespread that they are even found in distant places.

Mobile banking applications and digital wallets have made it simpler for individuals to make payments, transfer money, and securely check their account balances, all from the convenience of their smartphones. People who live in rural or underdeveloped areas, where traditional banks may be sparse, are especially in need of this accessibility since it is very important for them."

Fintech startups

One of the most important factors that has contributed to the expansion of financial inclusion is the growth of fintech businesses. "To provide underserved and unbanked communities with new financial products and services, these forward-thinking companies are utilizing technology to develop new financial products and services.

Fintech businesses can evaluate the creditworthiness of individuals who were previously barred from the formal financial system. They are also able to provide microloans and insurance products to these persons by utilizing big data, artificial intelligence, and blockchain technology" says, Michael Clarke, Director at Watermans.

Fintech

This not only gives people the ability to better manage their finances, but it also stimulates economic growth in areas where there is limited access to credit.

Financial literacy and education

The advancement of technology is not only making it easier to obtain financial services, but it is also enhancing financial literacy and education.

According to Mark Buskuhl, Owner of NineBird Properties Denton, "There is a multitude of mobile applications and internet platforms that provide individual users with free materials and tools that assist them in comprehending fundamental financial ideas, developing budgets, and planning for their future.

In addition, chatbots and virtual assistants are being utilized to provide answers to inquiries regarding finances and to offer direction, making financial information more accessible to a larger audience. Education in financial matters is an essential component of financial inclusion since it enables individuals to possess the ability to make well-informed choices regarding their finances and assets."

Biometric identification

Mark McShane, Manager at CPR Training says, "In a great number of nations, the absence of official identification documents has been a substantial obstacle to the accessibility of financial services. On the other hand, biometric technology, which includes facial recognition and fingerprint recognition, has emerged as a potential answer to this issue.

Biometric Identification

The ability to create bank accounts and gain access to services without the requirement for traditional identity documents is made possible for individuals through the linkage of their financial accounts to their biometric data.

The implementation of this technology not only streamlines the onboarding procedure but also improves safety and cuts down on fraudulent activity, rendering financial services more trustworthy and accessible."

Blockchain and cryptocurrency

"Blockchain technology and cryptocurrencies have the potential to transform financial inclusion by enabling a decentralized and borderless means of conducting financial transactions. This might be accomplished through the widespread use of these technologies.

Cryptocurrencies such as Bitcoin have the potential to provide a stable store of value and a means of transferring money worldwide without the need for traditional banks in regions where the currencies are unstable or experiencing hyperinflation.

Crypto landscape

Because of its transparency and security qualities, blockchain technology is also suited for a variety of financial applications, including remittances and cross-border payments, which can be of assistance to populations that do not have bank accounts or who have inadequate bank accounts" says, Derek Bruce, Director at AED Training

Agent banking and correspondent models

"In places that have limited access to traditional banking infrastructure, agent banking, and correspondent banking models have gained appeal as effective banking alternatives.

These models feature partnerships between local businesses or individuals who operate as agents and financial institutions to provide financial services" says, Timothy Allen, Director at Corporate Investigation Consulting.

He adds, "Through the use of these agents, customers can make deposits, withdrawals, and transfers of money, essentially expanding the availability of formal financial services into additional locations.

Providing fundamental banking services is made possible by the utilization of mobile devices and point-of-sale terminals, which are examples of the significant role that technology plays in the facilitation of these transactions."

Regulatory sandboxes

"The term "regulatory sandbox" refers to a controlled environment in which financial technology businesses can test and innovate with new financial goods and services without being subject to all of the typical regulatory constraints.

The quick development and deployment of technology-driven financial solutions are made possible by these sandboxes, which are frequently developed in partnership with well-established financial institutions.

By encouraging innovation and lowering regulatory hurdles, these sandboxes make it possible for new projects to arise and flourish in the realm of financial inclusion" says, Cindi Keller,  Head of Communications at The Criminal Defense Firm

Data analytics for financial inclusion

According to Tim Parker, Director at Syntax Integration, "The evaluation of credit risk and the expansion of credit access for underprivileged communities are both accomplished through the utilization of data analytics and machine learning.

Data analytics

The development of alternative credit scoring models that provide a more accurate assessment of creditworthiness is something that financial institutions can accomplish through the analysis of non-traditional data sources, such as the utilization of mobile phones and activity on social media.

Through this, persons who have a low or nonexistent credit history are allowed to have access to loans and other financial services, which ultimately leads to increased financial inclusion."

Conclusion

Previously underserved and unbanked groups now have access to financial services thanks to the great force that technology has become in the advancement of financial inclusion. Technology has broken down barriers and provided access to financial services.

The global financial environment is transforming as a result of the digital revolution, which is encompassed by mobile banking applications, blockchain technology, and novel fintech solutions.

To ensure that financial inclusion becomes a reality for all people and to encourage economic growth and prosperity on a global scale, governments, financial institutions, and fintech businesses must collaborate to fully harness the potential of technology as it continues to advance.

At the end of the day, bridging the gap with technology is a huge step towards a global financial system that is more inclusive and equal.

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