FinTech solutions are poised for a brilliant year in 2019, specifically with new solutions designed to assist the unbanked and underbanked populations. Which technologies are best positioned for disruption? Let’s find out.
Around 1.7 billion adults across the globe do not have access to traditional financial services. This equates to 31% of the adult population who are not presently leveraging financial services, products, and benefits from a conventional bank account.
This means that 31% of the world’s adult population cannot borrow money, officially save funds, or invest finances. They are simply not able to gain access to the global money system that allows for economic liberation. What’s worse is, because of their limited means to financial services, their current options are very predatory in nature when they do need access to cash or funds.
Financial Empowerment Globally
Financial services are vital to empowering certain groups of people, age groups, and specific populations, such as women. Financial services pave the way toward evading poverty, as well as offering economic independence, growth and balancing inequality. With greater financial options, women gain economic freedom and stronger financial decision-making, as well as important tools to invest in personal or family livelihood.
Unbanked and underbanked usually pay their bills in cash. If they need to borrow money, it is generally from a local money lender at an elevated interest rate, and the majority of this population pay steep interest when they are able to secure a line of credit, especially from a retailer.
Unbanked and underbanked does not mean that they are poor, yet they do not meet the minimum requirement for opening an account, nor do they have any credit history and assets to support a loan. Traditionally, these individuals have been serviced through financial products such as microfinance, vouchers, prepaid or stored-value cards, and rechargeable cards â€“ none of which offer the same opportunities for a full financial experience.
Challenges FinTech May Cause
Innovative FinTech solutions in 2019 may help. Contributors of FinTech solutions are dignified to offer a complete SAAS-based financial ecosystem that delivers virtual bank-like services to the unbanked and underbanked of the world without the need for a traditional bank account.
These providers can even build these contributions around digital wallet apps that are accessible through either a mobile phone or a computer, and allow users to make online purchases, as well as to transfer money, pay bills, and deposit money, all without requiring a traditional bank account or credit check.
These can also be linked directly to a prepaid Mastercard credit card, allowing customers the ability to spend their money online, or at retailers worldwide.
The Implications of Technology
Technology and mobile communications will continue to play leading roles in FinTech solutions for unbanked and underbanked populations in 2019. The continued proliferation of mobile usage is a leading reason why. Estimates show that roughly 66% of the global population of unbanked adults have access to a mobile device.
This is key since many of today’s financial tools and offerings for this population are driven by mobile technology and advanced apps that deliver new financial ecosystems to these individuals, enabling even more adoption of broader services. Today’s innovative providers are developing financial ecosystems that will help lead the cashless revolution, and aid people who have been unable to get a traditional bank account.
This innovation of financial service offerings means these populations will no longer have limitations when in need for financial services, securing loans, transferring funds or making purchases, and they will be able to relish the same financial freedoms offered by traditional financial service providers.