As this blog has often pointed out in the past, fintech products have successfully helped unbanked and underbanked people to gain access to financial services. This has been a defining trend of the fintech revolution.
That’s why it’s important to focus on some specific examples of fintech helping those who otherwise wouldn’t have access to banks, loans, and more. The following examples do not by any means represent all the ways in which fintech has served underbanked people. They merely illustrate why so many believe that these products and services will dramatically change the financial circumstances of people around the globe.
Bringing Banking to Refugees
It’s no secret that making a living in a new country or region isa major struggle for refugees. However, people often overlook the practical financial challenges that refugees face.
For instance, they often lack basic identification, which can make it difficult for them to open a bank account or take out a loan. Fintech is addressing this predicament. In a refugee camp in Malawi, Africa, a fintech company has opened a branch of its bank subsidiary. Along with traditional banking and loan services, the company will provide refugees with a financial education. This is particularly important for those who would have remained unbanked due to a lack of financial knowledge.
The goal is not simply to offer the basics. The bank has also focused on providing refugees with the skills they need to start their own small businesses. This is extremely helpful in a refugee camp setting, where people typically have limited access to resources. Instead of focusing on survival,they can thrive. As a result, they can turn the camp into a financially healthy community.
Helping Immigrant Families
Moreover, immigrants who come to the United States from Mexico often have families whom they need to support back home. Thus, they send them money whenever possible. This can be a challenge, as approximately 65% of Mexican citizens do not have a bank account. The vast majority of their transactions involve cash. Obviously, this limits how their funds can be invested and saved.
A fintech company has addressed this situation by creating secure kiosks designed specifically for unbanked communities. These self-service kiosks allow users to safely perform basic financial transactions. Users can also access money sent to their accounts via a mobile app. Although the primary focus has been on establishing kiosks in Mexico to facilitate cross-border transactions between immigrants and their families, the company has also begun to install kiosks in California to meet the needs of unbanked and underbanked individuals.
Helping Laborers to Support Parents
A similar situation to the one described above has also been developing in India, where it’s not uncommon for young laborers to take on work in rural parts of the country. Like the immigrants, they regularly send money back to their parents. Moreover, the people to whom they send money often don’t have bank accounts.
That’s why another fintech company provided laborers with a mobile app that allows them to securely send money to their parents. Instead of depositing the funds in a self-service kiosk, the money is deposited into a rural bank, where their parents can withdraw the funds.
The people involved in this project believe they can improve the economic situation of lower-class families in India and other parts of the world by boosting the efficiency of key financial processes. As more users embrace the product, experts can monitor the impact that it has on the lives of Indian families to determine if the service achieves this goal.
Linking Banking Systems
There are many reasons why some people go unbanked or underbanked. Even geography can limit people’s access to financial services. Quite simply, some live in remote areas where they don’t have access to a bank. Fintech has helped them in the form of mobile banking. You don’t need to visit a branch or kiosk if you can perform basic banking tasks on your mobile phone.
However, the problem is that many of these mobile banking solutions are not compatible with international financial institutions, which limits their capabilities to a degree. In addition, it prevents other banks from reaching potential customers.
That’s why, in cooperation with the Bill and Melinda Gates Foundation, fintech innovators are developing a unique code that will make mobile payment solutions compatible with traditional financial institutions. It’s worth noting that, while users do need access to a mobile device to take advantage of these solutions, trends indicate that the adoption of mobile devices is occurring at a fast pace around the globe. Even those who lack access to a bank may still have a smartphone.
Again, these changes will undoubtedly have an impact on the world’s economy. Many people who previously did not have access to basic financial services will now have an opportunity to send money, make investments, apply for loans, and more. Fintech is making all of that possible.