Fintech products offer major benefits to consumers. By providing alternatives to traditional financial services, they simply make day-to-day life more convenient.
That’s certainly a major reason why people have embraced fintech in recent years. However, it’s not the only one. Fintech can also have a positive social impact. For instance, fintech companies can provide unbanked and underbanked people with greater access to financial services. This helps people in emerging markets do everything from saving money to starting a new business. As these products continue to improve and develop, we’re likely to see them yield even greater benefits in the future.
The following examples illustrate several other ways in which fintech is changing the world for the better.
Adjusting to life in a new country is often challenging. In addition to cultural differences, there are also practical issues that must be addressed.
For instance, new immigrants in the United States often struggle to establish themselves due to a lack of credit history in the country. Everything from renting an apartment to starting a business requires a credit score.
Fintech startups are changing that. One company, Nova Credit, helps immigrants transfer their financial profiles from their home country to their new one by linking information from various global credit bureaus. The goal is to provide users with a “financial passport” that makes it easier to adjust to life in a new country.
This doesn’t simply make life more convenient for immigrants. When you have an established credit history, you have more opportunities.
It’s easy to forget that many people and organizations throughout the world lack insurance. According to one estimate, the number of uninsured people in the world may be as high as 3.8 billion.
That’s an alarming statistic. Without insurance, a single unexpected incident could ruin a person financially.
This is another problem fintech is addressing. Just as fintech startups have created banking services designed for people who lack access to traditional banks, so have numerous startups developed “insurtech” products, which serve essentially the same purpose for people who lack access to traditional insurance.
In the long run, this may give people in developing economies greater incentive to take the kinds of financial risks that result in financial growth. For example, without insurance, a person may be hesitant to start a business. When they can insure their business, however, they’ll likely feel more confident in their entrepreneurial goals. This allows them to grow their own wealth while also providing others in the area with employment opportunities. As a result, regional economies can grow more quickly.
Helping people start a business is certainly a major social benefit fintech offers. That said, it’s often difficult for a business to grow to its full potential without access to foreign customers. We live in a global economy, and business owners who don’t participate in it may find themselves faltering.
Fintech products that allow for greater efficiency and security in cross-border transactions make it easier for businesses to serve customers around the world. Reports indicate the rise of fintech has also led to a rise in the amount of money flowing into regions such as Latin America. When both businesses and customers are able to perform cross-border transactions easily, money is more likely to flow into and throughout various regions of the world, boosting economies in the process.
Many people all across the world struggle with debt, but managing it effectively can be difficult. Paying off debt when you have limited income, as well as other bills to pay, requires vigilance and planning. To some people, the tasks required to manage debt, such as remembering to make regular payments or creating a budget, can be challenging.
Fintech simplifies these tasks. Numerous fintech services allow people to better manage their debt by automating payments, monitoring their progress, and managing all their debt via a single platform. This allows everyone from recent college graduates to small business owners to take positive steps toward a better financial future.
It’s worth mentioning that the fintech revolution is just getting started. While these examples demonstrate some of the social benefits fintech is already offering, they are not an exhaustive list of the full potential of these products. It will be interesting to see how fintech continues to impact the financial wellbeing of people throughout the globe in the coming years.