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Financial inclusion

Matchi Trend Report - Digital Account Origination

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.

Onboarding

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

Authentication

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

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

Microfinance – funding sources

Payments

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

Financial literacy

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






More on Matchi: Matchi is a global fintech innovation match-making firm, since 2013. Matchi has worked with over 100 leading banks and insurance companies (FIs) around the world, and has a database of over 2,500 fintech firms. Matchi provides both a highly curated portal of fintech solutions, as well as bespoke projects for FI clients to source targeted fintech solutions aimed at the FIs focus areas / pain points. The global Matchi team has run Innovation Challenges and Market Scans for multiple FIs around the world, in markets as diverse as Canada, Japan and India, as well as searches in other geographies.

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