Financial inclusion

Fintechs have combined several existing technologies to bring financial services to a broader underserved population at low cost, offering more sophisticated financial products and simpler processes. In particular, it has created multiple mobile payments systems that enable allow remittances and transaction capabilities from remote locations

Financial inclusion generally refers to the provision of financial services at an affordable cost to either low cost segments or disadvantaged sectors of society (e.g. rural populations). Apart from the social welfare benefits of inclusion, which includes contributing to the eradication of poverty, it also protects the vulnerable by providing secure deposits and payment facilitation. Despite this, it still represents a significant untapped market and the challenges of low cost, remote populations and micro transactions lends itself to broad financial innovation. Many of these innovations have appeared in emerging markets which represents the largest portion of the unbanked population. However, technological solutions have found fertile ground in these economies. As an example, only 2% of adults have money accounts on their cellphone globally but in Sub-Saharan Africa, this rises to 12% - further, half of this have only a mobile wallet and no other banking account

It is clear that mobile technology represents the lowest cost method of customer acquisition, particularly since cellphone penetration has been drastically increasing. Although not all financial innovations require smartphone access, the advent of low cost smartphones is changing the landscape significantly.

One of the greatest challenges of financial inclusion through the use of technology has been the associated regulatory regime, e.g. it is simple to use smartphones to authenticate identification but not many countries allow it at present.

The financial needs of the unbanked population includes:

• Public grant beneficiaries - opening accounts for receiving government grants
• Primary account – deposit of salaries or wages
• Microloans – typically for agricultural financing but also include micro enterprises
• Remittances – the transfer of money cross border from emigrants, e.g. $60bn annually sent to Africa

Scanning technologies

This technology allows the photographing of images, typically using a mobile phone and uploading onto a secure website. An additional feature is the extraction of data from images and populating information into online forms. Some technologies are also able to enhance original images to extract information, especially where the original images have poor clarity.

• Optical character recognition for scanning bills, credit cards etc
• Mobile scanning of documents and bills and allows instant payment

Onboarding

These solutions aid the sign up of clients remotely, using embedded technologies like biometrics in its own user interface

• Devices to enable account opening and KYC document collection especially in remote areas
• Integrated tablet device with biometrics etc. to enable banking services in especially rural areas

Authentication

Verification of authentication usually had to be conducted in person at a branch – but there are other solutions Innovator Description Link

• Mobile solution for loan acquisition, management and collections
• Software to automate the identity verification process for financial KYC / AML and other compliance systems

Microfinance - credit scoring

Many individuals and SMEs are unable to access finance due to lack of acceptable collateral. Some technologies have been developed to assess credit in a non-traditional manner to reduce credit risk

• Solution to allow banks to make real-time credit decisions for micro enterprises, based on their sales history
• Alternative credit scoring system based on non-financial data like social
• Alternative credit assessment for farmers using data from their value chain

Microfinance – funding sources

• Equity raising crowdfunding Solution for Small and Middle sized Enterprises
• SME trade financing via a network of funders at lower cost
• P2P lending platform in India

Payments

Mobile enabled payment offerings have been designed for multiple applications using mobile phones as a wallet.

• Mobile cloud based service that allows merchants to accept payments a low-cost mobile payment terminal
• Empowers micro-merchants by enabling them to accept payments from any consumer owning a smartphone
• Payment system especially in remote areas using fingerprint authorisation through a device
• Photographs bills and digitally processes payment through smartphone

Financial literacy

It is recognised that financial literacy contributes to the management of money and the concept of saving and budgeting.

• Financial literacy and saving game for youth clients linked to a bank account
• Online financial education to increase financial literacy
• Savings app that makes saving and learning about saving, fun - teaches the value of compound interest and small savings

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