The drive towards universal financial inclusion is high on the agenda for many at both national and global levels. it has deep impactful, that is access to previously out-of-reach banking services, built explicitly for the specific and very different needs of customers in those markets.
Global orientation towards fintech and financial inclusion
Jim Yong Kim, The World Bank’s president sent a call to action to bring half of the world’s two billion unbanked population access to banking services by 2020.
From 13th to 17th of November, Singapore hosted its second Fintech Festival, that has brought more than 25,000 people to the EXPO Convention Center in Singapore. Corporates, startups, experts, regulators, and investors were invited to share and build the future of finance and technology. Many topics were covered during the week, ranging from the blockchain opportunity to financial inclusion and open-banking. financial inclusion has deep impactful, that is access to previously out-of-reach banking services, built explicitly for the specific and very different needs of customers in those markets.
The Global Findex database showed that between 2014 and 2017, the share of adults who have an account with a financial institution or through a mobile money service rose globally from 62% to 69%. In developing economies, the increase was more pronounced, from 54% to 63%.
The convergence of finance and technology to provide financial services by non-financial institutions, popularly known as “Fintech” has come to dominate the financial landscape. Taking stock of this development, its impact and implications for new products, processes, services, and financial inclusion are examined.
Opportunity for financial inclusion is huge
According to the world bank, there are still 2 billion people without access to financial services in the world today and while we think regions like Europe may be spared, there are an estimated 186 million people without a bank account in Europe. These figures are definitely making the Fintech players drool over the huge opportunity. But when it comes to the unbanked, the challenges are not the same. First of all, there must be an efficient and secure infrastructure to allow onboarding as well as services. Justo Ortiz, CEO of Union Bank and invited to the panel, pointed out the “need to build enabling infrastructures such as regulations, identification, and technology, for customers and merchants”. Ann Cairns from MasterCard followed by praising the use of biometrics as a mean of inclusion.
with referring to the “Indian Aadhaar” system that has enrolled more than a billion citizens into its database. This giant database has enabled Indians to have facilitated access to financial services (KYC) and even biometric payment. In fact, this kind of government initiative, even if it raises privacy concerns, is one of the examples that show how technology can enable inclusion in a secure and scalable manner.
Various FinTech roles
- Blockchain technology and its potential application to increase the transparency and efficiency of payments, its ability to reinforce the security of transactions and the overall potential to disrupt banking models.
- Adoption of cloud computing technology in the financial sector.
- Big data analytics including a potential application for innovative credit scoring.
- Biometric technologies to enhance and increase the efficiency of KYC and client on-boarding processes.
- RegTech to enhance compliance with global standards for financial stability and integrity and domestic supervisory efficiency.
- Proportionate regulatory approaches to FinTech including Sandbox or RegLab approaches.
Finally, the combination of the rapid pace of innovation in financial services technology and the commitment to financial inclusion of an unprecedented number of leading policymaking institutions in developing and emerging countries is a unique opportunity to resolve some of the most intractable challenges for financial inclusion and reach consumers with high-quality financial services.