transfers, quick loans, personalized financial advice from artificially
intelligent apps and managing your personal budget through a mobile phone with
zero or minimum cost – sounds like a distant bright future. But today, thousands
of startups around the world make this possible. Yet, not everyone has equal
access to finance. According to The Global Findex, a quarter of the world’s
population does not have bank accounts. Unequal access to financial services
today is one of the most important issues on the agenda of many countries.
According to various researches,
the financial inclusion of the so-called underbanked population would yield
1-3% of GDP growth. But most importantly, inaction in this situation can be
costly for both the state and its citizens. After all, the use of unofficial
and even illegal financial services makes people vulnerable. They are deprived
of legal protection and any guarantees. However, for various reasons, people
opt for such services.
At the same time,
people who do not use the financial services of banks and non-banking
organizations are not necessarily completely excluded from the financial
system. They simply for one reason or another preferred the informal sector to
solve their problems. For example,
the reason may be easier access or lower costs. Thus, the struggle for
inclusion is not only about educational projects and providing access to the
financial mainstream. It is about how legitimate players can transcend the
The financial industry
has remained quite conservative for a very long time. It was always difficult
for new players to get into this market, where large companies already established
interaction with regulators, have a large customer base, and the resources to
survive even in difficult economic conditions. But with the development of
technology today, the situation has changed dramatically. So-called disruptors
appeared. Disruptors are companies, often start-ups, that are rapidly
developing and focused on innovative technologies and processes in any field:
from mobile payments to insurance.
Making a disruption,
even in a small niche, is not easy. Moreover, disruptors are aimed at high profit
and quick market conquest. Consumer lending sector remains one of the most
profitable in the world. New players use the online-only model to cover
millennials and other segments in this market. They fulfill an important social
function, giving underbanked access to finance. A significant part of people
cannot get a loan from a bank for various reasons. In such circumstances, fintech
companies become the only way to get the necessary funds for many.
Why fintech is
capable of doing this? Thanks to new technologies, the disruptors are more
flexible and offer better customer experience and greater convenience at a
lower price. They using
innovation to create products that are more approachable for the everyday
consumer. The penetration of the
Internet and mobile phones makes finances accessible even to those who are far
from bank branches or ATMs.
processes reduces the cost of providing finance. Here, the future lies with
cloud computing, which will make the growing financial transactions fast and
seamless, as well as artificial intelligence, which analyzes Big data.
Technology is developing rapidly and people who previously did not have access
to the financial system instead of a being risk group for banks have become a
business opportunity for disruptors.