“ DEVELOPING COUNTRIES FACE MANY CHALLENGES , PERHAPS MOST PERTINENT OF WHICH IS THE DEVELOPMENT OF ROBUST REGULATION TO SUPPORT SERVICES THAT MUST BE SECURE AND EFFICIENT ”
KAREN JORDAAN UK HEAD , WORLDREMIT
There ’ s renewed focus on using fintech to reduce financial inequality in emerging markets – and projections show it will pay off in the next few decades
WRITTEN BY : ALEX CLERE
There is no doubt that the rise of fintech has helped bring people into the financial ecosystem who would have previously been excluded . This is especially true of developing countries – regions of the world that face greater financial inequities and often require more inward investment , two problems that fintech can help address .
According to Jon Frost , Head of Economics for the Americas at the Bank for International Settlements , “ fintech adoption , especially in the developing world , is being driven by an unmet demand for financial services ”. So how successful has fintech been in reaching underserved markets , and what does current penetration look like ?
What impact has fintech had on developing countries ? “ Fintech has , relatively speaking , improved the financial fortunes of developing countries ,” says James Cope , SVP – Head of Product Management at Crown Agents Bank . “ Fintech gives less affluent people in emerging markets access to financial services they wouldn ’ t get from traditional banks . From a payments ’ perspective , it makes it easier and cheaper to send development sector payments , remittances , and trade payments , all of which benefit emerging market economies .”
This has largely been sparked by an uptick in the number of smartphones used in developing markets , which has enabled new opportunities for financial prosperity . According to GSMA Intelligence , smartphone adoption in sub-saharan Africa was already 49 % in 2021 but is expected to reach 61 % by 2025 . Likewise , in Latin America , smartphone adoption stood at 76 % in 2021 and could reach 83 % – more than four in five people – over the same period .
116 May 2023