Fintech products are convenient. They allow users to take advantage of key financial services, often through the use of a simple app. That’s much easier than traveling to a bank branch to perform certain essential financial tasks.
However, making life easier is just one of the ways that fintech is helping customers. On a larger scale, some believe that fintech also has the potential to be a powerful force in the fight against poverty worldwide. After all, this blog has already covered how fintech companies often serve traditionally unbanked and underbanked people, providing them with greater access to financial services than ever before. It’s already clear from recent developments that fintech can help those in remote and economically disadvantaged areas to overcome obstacles that once proved insurmountable.
In order to further understand how fintech products may help to reduce poverty throughout the world, we will consider the following points. They explain some of the ways that fintech products can help people to escape their current financial circumstances.
Expanding Income Opportunities
The digital age has given rise to many different ways of making extra money. For people who are struggling financially, they can represent an opportunity to build an income. Whether it’s driving for Uber, selling items online, or otherwise participating in the “gig economy,” these sources of income can be useful to people who live in remote regions where employment opportunities are scarce.
That said, until recently, it has been difficult for some of those people to take advantage of these income sources. Quite simply, a bank account is often required in order to receive payment if you work in these types of positions. As a result, this prevented people without a bank account from accessing these opportunities. Fintech has changed that. By offering mobile payment apps, fintech enables these individuals to earn more money.
Enabling People to Save for Emergencies
Having a bank account of some kind doesn’t simply make it easier to join the gig economy or open an eCommerce shop. It also makes it easier for people to save money.
That’s often key to escaping poverty. Experts have pointed out that many people who struggle to get out of poverty can reach a stage where they appear to be in a better place financially. Perhaps they get better jobs and begin earning more money. Unfortunately, if they don’t have opportunities to save money easily and wisely, a single unexpected major expense, such as a medical emergency, could send them right back into poverty.
That’s another way in which fintech products help people to improve their financial situation. By providing traditionally unbanked and underbanked individuals with access to financial services that were previously not available to them, fintech gives them an opportunity to build an emergency fund in order to deal with unforeseen expenses. In the long run, this can help them to avoid falling back into the cycle of poverty.
Making Payments Easier
Many fintech products enable unbanked and underbanked individuals to more easily accept payments for various services. Research indicates this has contributed to greater financial inclusion in key areas across the globe. The widespread adoption of mobile payment apps has already enabled people in some parts of the world, such as Kenya, to leave behind a life of farming in favor of starting their own businesses.
By enabling an increasing number of people to participate in the gig economy, fintech has allowed more of them to start their own businesses. In order to start a business, you need to be able to charge clients for your services, pay employees, purchase materials and tools, rent office space, and to create a budget. However, it is difficult to complete these tasks when you’re struggling with financial exclusion. Fintech products could significantly improve the financial lives of these individuals, as well as the overall economies of the regions in which they reside.
Improving the Lives of People around the World
It’s clear that fintech has the potential to significantly reduce poverty for many people in need. In some parts of the world, governments have been open to innovation and have passed legislation to help fintech startups to bring their services to customers. Governments should consider the way that fintech can help people in need to improve their lives. When people can escape poverty more easily, everyone benefits.