Every day we perform different money transactions including online payments, remittances, currency conversions, borrowing, investments, etc. The growth of fintech contributed to the way the population obtains financial services. Now, you do not have to bring your cash to the bank office or some remittance service to transfer them to your relatives or friends. Several clicks on a smartphone or PC and the recipient gets your money. However, not all people on the planet can enjoy these benefits of financial services. According to the World Bank’s statistics, the number of unbanked individuals of working age is a bit less than 40%. And they can be encountered not only in developing but also developed countries as well.
Africa leads the financial exclusion on the globe. But it’s already showing some great progress! Amid most countries of this region, Kenya shows decent results in expanding financial access to the population. For the last decade, the amount of financially excluded citizens dropped from 40% to 17%. This impressive achievement would not be possible without fintech startups, as well as fintech software development companies. Perhaps, technologies are the only way to build a better life for those unbanked people.
Do we actually need financial services?
There are many opponents of financial inclusion expansion due to some conspiratorial reasons or whatever, but statistics show that people experience significant growth of living conditions with easy access to financial services.
For example, Nigeriens diversified their diet and began planning their food costs with the advent of banks and mobile money in the area. The already mentioned Kenya experienced the boost of mobile money accounts that, in turn, reduced the populations’ sensibility to financial difficulties. Latin America also deserves attention – the installation of payment terminals in retail stores in Mexico induced the growth of both employment and the average population income in this area. So, fintech ventures do not complicate but simplify daily activities and bring positive changes to the world.
How fintech companies contribute to financial inclusion
Financial technologies have a huge and even boundless potential to change business models, improve financial services, and provide more comfort and usability to the population. The most common financial activities include payment, saving, borrowing, investments, and insurance. Fintech startups can be categorized in the same way. Let’s have a look at some of the most prominent examples of companies that make finance accessible to everyone.
Here is one of the major PayPal’s competitors on the market. Stripe is finance software for handling electronic payments. Both small company owners and larger corporations can use Stripe to manage their businesses. Besides, customers are free of financial complexity associated with banks, payment networks, and other monetary institutions – Stripe simplifies the process. Such famous names as Microsoft, Facebook, and Amazon are already using the benefits of Stripe to expand financial inclusion.
Online lending is one of the most in-demand solutions for financial services. With online lending services, you can borrow funds without any paperwork and strolling from one bank to another. Lenddo is a solution for the unbanked population to build their credit solvency. It provides two products – The Lenddo Score and Lenddo Verification. The first one is a tool to detect a user’s willingness to pay according to social data and online behavior. The second one is a solution to verify the customer’s information submitted on the app. Lenddo offers a progressive approach to expand financial inclusion for the population by combining local microfinance techniques and online social behavior.
Financial planning: Albo
With Albo, you get a personal assistant to manage your finances right in your mobile app. It is a powerful tool comprising a banking app, a bank account and a card. In addition to regular banking transactions like remittance, payments, and deposits, Albo contains a set of functions for effective and secure financial management. Spreadsheets and paper calculations recede into the past with the gradual expansion of financial inclusion.
Insurance keeps abreast of the times. As a result, insurtech is the most promising subfield of fintech industry attracting a plethora of investments. You can find a bunch of offers for your life and property insurance right on your smartphone. Hippo, for example, focuses on homeowners by providing them with a convenient and efficient way of insurance. It’s not necessary to drive somewhere in the office with a package of useless papers. Instead, you need to enter your home address and fill in the application form on your phone. Access to insurance services is also a vital element of financial inclusion.
Investment: Yield Street
Fintech allows you to borrow and invest money to get income. You can find investment opportunities in the online marketplace called Yield Street. In recent times, we could not dream about investing because of limitations like investment threshold amount. Yield Street removed most barriers and provided a passive income opportunity to the population. The five-point investment philosophy is a matter of special attention since it foresees a high level of security for your investments. It includes such attributes as asset-based, low stock market correlation, experienced management, short duration (up to 3 years), and at least 8% of target return.
Money transfers are usually placed within the payment subfield. However, TransferWise is a startup that we must not ignore our list. What is so special about it compared to accustomed systems like Swift or Western Union? The answer is lower costs and no currency exchange charges. The idea is quite simple – TransferWise selects users by region of remittance and matches them. For example, you want to send $500 from the US to SAR, and someone needs to make the same transfer in the opposite direction. All recipients will get their money from remittance initiators without additional charges. Simply awesome!
As you see, financial inclusion is a multi-beneficial trend that aims at not only improving the lives of citizens and residents of developed countries but also bringing digitalization to the out-of-the-way places.