FINANCIAL INCLUSION
“ In short , a lot of developing countries still have a lot of people – frequently the majority of the population – who are unbanked or underbanked . Fintech has helped plug that gap and will continue to do so ,” says James Cope from Crown Agents Bank .
Karen Jordaan adds : “ Through the use of emerging technologies , the unbanked can build financial security for themselves . Remittance platforms , like those within [ WorldRemit ’ s parent company ] Zepz Group , have already established a strong relationship of trust with migrants , playing an indispensable role in onboarding the unbanked and underbanked , building trust towards fintech and facilitating financial prosperity through innovation .”
Despite improvements in smartphone adoption and financial participation , one of the challenges that persists is that payments into and out of emerging markets are still dependent on traditional correspondent banking , which is generally dominated by dollars .
“ This penalises countries with volatile local currencies and restricted access to dollars ,” explains James Cope . “ Over time , improved cross-border payments technology , based on DLT , and the availability of digital currencies should break down these payment barriers .”
Cultural factors at play around fintech adoption For each region , there are also cultural considerations that affect what fintech solution might be appropriate for the market , or what obstacles exist to greater adoption .
“ Developing countries face many challenges , perhaps the most pertinent of which is the development of robust regulation to support services which must be secure and efficient to be trusted by users ,” Karen Jordaan elaborates .
“ Africa , for instance – a hotbed for fintech innovation – is faced with a fragmented financial regulatory framework that is particularly problematic for a region with high levels of migration . A functional regulatory framework requires stability and clarity , which can help accelerate the direction and growth of fintech companies .
“ When it comes to the appetite of the people to use digital services to manage their money , remittance companies play a pivotal role as , for many , it ’ s their first experience of using financial technology . The responsibility to build trust falls on these companies ’ shoulders , and failing at this task can have far wider consequences when it comes to advancing the uptake of digital financial services .”
James Cope concurs that sub-Saharan Africa is one of the most exciting and rapidly growing fintech hotspots globally : “ In a region where the vast majority of people do not have a bank account , fintech – and particularly mobile payments technology – has allowed a lot of African consumers to ‘ double jump ’ to mobile payments .”
Brazil has also seen a massive surge in fintech participation , which initially served as a response to the country ’ s outdated banking system before becoming a fullyfledged acceleration of financial technology . In the last year , six of the world ’ s most downloaded mobile banking apps originated in Brazil – including Nubank , C6 Bank , and Inter – accounting for more than 130mn downloads in the space of just 12 months . Again , the way the Brazilian government administered COVID-19 relief packages may have something to do with that resurgence , as those apps were already doing well beforehand .
120 May 2023