FRAMEWORK : Social Enterprise
Fintech Needs More Than Tech to Serve Worldwide Unbanked
With a current world population of over 7.5 billion, more than 2 billion people go without banking services.
In “Fintech Companies Could Give Billions of People More Banking Options,” Jake Kendall, Director of Digital Financial Services Innovation Lab, discusses the challenges that financial technology (fintech) companies face in the developing world.
Challenges are immense and progress slow. Kendall explains while fintech’s “innovative products have been a boon to consumers in mature economies, the resulting efficiency and security benefits have largely bypassed the 2 billion consumers in the developing world who lack formal banking services altogether.”
Today, Kendall believes there are “signs this is changing,” and examines three major challenges that fintech companies must overcome:
- Lack of infrastructure and efficient cloud services
- Users who don’t have a digital footprint
- Consumers who lead chaotic and cash-based lives
From the examples Kendall cites, SERV’D is addressing these challenges most comprehensively. In India, SERV’D provides an app that “helps households and the informal workers they employ create simple formal work contracts and pay them online.” The data capture from this service – wages and other payments – could enable more than 400 million informal workers in India to demonstrate their financial history and lead them to financial inclusion in banking products and services.
Yet the biggest challenge to the underbanked and unbanked in developing countries may be overlooked. Of the four core capabilities demanded in successful banking applications – data, analytics, talent and technology – the domain expertise of banking talent seems to be lacking emphasis in fintech. Bringing financial services to more than 2 billion unbanked people worldwide will take more than a technology play: talented people with banking and data analytics expertise need to also play key roles.
If Fintech can combine banking’s core set of capabilities with the creativity, innovation, lack of traditional constraints, and disruption it’s known for, then progress in financial inclusion and economic development in developing countries can find traction in improving lives all over the world!