Over a billion additional adults gained banking access in the last decade. As financial activity continues to become more digital via cashless applications and digital wallets, governments are leveraging new systems to enhance service delivery and financial transparency.
The shift in the financial services industry has enabled businesses and customers to utilise new technologies that provide more access to critical financial services and payment options. Digitisation of the finance industry has enabled finance markets to individuals in remote areas and developing economies. After the economic impacts of the pandemic, the demand for digital and contactless payment systems only increased. A PricewaterhouseCoopers (PwC) study believes that global cashless volumes are expected to increase by 80% between 2020 and 2025.
In the last decade, over 1 billion previously unbanked individuals have secured access to vital financial services, reducing the total unbanked population by 35%, according to the World Bank. The increased demand for digital banking services means fintech businesses and startups are applying their services and knowledge to more conventional financial systems to transform services to people in less advantaged and under-represented areas.
After the pandemic, governments recognised the requirement for digital infrastructure is needed to support accessibility for communities in rural and less-advantaged areas. Access to infrastructure has ensured that governments could offer reliable, transparent, faster and reliable cashless payments to communities. Financial inclusion may not be the core solution for the issues experienced by economically challenged families worldwide, but recent transformations provide broader access to payments and financial activities to more economically disadvantaged individuals and communities.
Over the last few years, fintech platforms have transformed how people access and make transactions. The increase in these platforms means more people have access to vital financial services and access to relevant monetary systems and investment markets.
One reason why fintech is the future of finance is how it can provide customers with more access to user-friendly financial services. With the increase in mobile banking and digital payments, fintech has made it easier for small companies and individuals.
The collaboration of fintech solutions and the accelerated growth of eCommerce has made it easier for adults and younger users to leverage technologies to enable access to money more appropriately and utilise digital payment options. Digital infrastructure has allowed governments and businesses to leverage digital databases and data sharing. A recent study found that 85 countries utilised digital systems during the pandemic, and digital government payments provided vital support for many people. This only enhanced the path of financial inclusion for millions of people.
A study by Global Findex stated that 865 million account owners in developing countries, including over 400 million women, opened their first financial account during the pandemic for the main reason to secure payments from the government. This figure highlights the importance of digital infrastructure and the ongoing usage of digital financial services in the wider economy.
Continued development and changes in national policy have enabled equal access opportunities to financial services, enabling further developments with digital payment infrastructures.
Promoting financial inclusion and empowerment
Fintech platforms have helped increase the scope of financial inclusion and economic empowerment for economically disadvantaged communities and more for marginalised groups and people with disabilities. Continued development enables more people in these communities to feel empowered by financial services. With digital solutions, the potential for people to participate in the ever-changing digital economy can improve financial well-being and long-term financial success.
Fintech businesses and government groups combined can deliver accessible, trusted and affordable digital financial services. This is critical with the rise of a digital economy, creating an economic divide between people from developed and developing nations.
Collaboration between fintech businesses, traditional banks and government can promote the need for additional digital infrastructure, security and, importantly, financial and economic inclusion. The transition from traditional systems to more digital systems ensures that people can use digital services to pay for products and leverage these tools within the wider economy.
Aside from payments and transactions, fintech platforms provide additional opportunities for people to access foreign markets and investment opportunities. These platforms provide more clarity on how money can be used and offer an opportunity for better financial education and literacy. While discussions concerning digital finance systems are growing, the opportunity for governments worldwide suggests that fintech services provide valuable solutions that empower people to become actively involved in the broader digital economy. While systems are constantly changing and businesses are launching new innovative solutions, the governments that take action and offer financial support for these processes are levelling the playing field and creating more opportunities for financial inclusion.
