Fintech: The Solution to Inclusion
Fintech is fusing finance and technology to drive financial inclusion. The fintech industry has grown by more than $60 billion in the last six years. Some fintech companies even take on billion-dollar valuations. According to The World Bank: “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.” This article will explore 5 ways fintech drives financial inclusion for businesses, including:
1. Accessibility of Financial Services
The IPA defines Access to Finance as “the availability and affordability of financial services for individuals and firms.” Banking, credit opportunities, insurance, and investment possibilities are just a few examples of these services. In the financial sector, accessibility is not as universal as it should be.
This is especially true in developing countries where financial services are limited and expensive due to a lack of infrastructure or regulation. Fintech has made financial services more accessible by lowering costs, increasing convenience/efficiency for users, and providing financial opportunities that were previously unavailable. Thanks to innovation in fintech, The World Bank has stated that 1.2 billion previously unbanked adults gained access to financial services in the previous ten years. The unbanked population has also decreased by 35%, largely owing to the growing popularity of mobile money accounts.
2. Security and Fraud Prevention
Fintech has also made financial services safer and more secure.
All financial transactions carry inherent risks of security breaches, fraud or theft by users themselves and hackers/online criminals. Consequently, fintech tries to mitigate these dangers with new technologies that are revolutionising the financial sector. For example, some fintech companies offer biometric security through the use of facial recognition and fingerprint sensors. These technologies provide quick and safe access to fintech software on desktop and mobile devices. In effect, this eases the burden on the user having to remember complex passwords.
Every time a user logs on to a fintech platform, he leaves his digital footprint behind. This digital footprint can identify when and what the user did on the platform, thus ensuring a digital paper trail. This results in a substantial reduction in fraud.
3. Innovation in Delivery Processes
Fintech has also altered financial services by developing better delivery methods.
The fintech industry was built on the idea that financial institutions could be disrupted by smaller, more nimble competitors operating online with less overhead and fewer compliance requirements. Fintech companies typically employ lean teams of specialised experts to deliver an innovative product or service quickly. For example, AI and machine learning power Fennech’s F³ platform. These are revolutionary technologies that contribute to innovation in delivery processes. Our low-code intelligent automation platform allows for rapid deployment and can scale depending on your organisation size and demands. Moreover, our cloud-based technology migrates effortlessly within your existing IT infrastructure.
4. Alternative Lending Solutions
Fintech has also provided financial access to businesses that would not have otherwise had it.
Alternative lending solutions are an extremely popular fintech offering for small business owners across the globe. Alternative financial service providers offer loans, credit facilities, and payment services to SMEs in developing countries that large financial institutions overlook. These smaller players, such as financial technology companies, offer the opportunity for those with limited financial history or assets to gain access to financial services. Moreover, it provides an interest rate competitive with larger financial institutions but more attractive than local moneylenders who charge higher interest rates.
As fintech continues its rapid expansion globally and becomes better established, financial inclusion will continue to rise. As a result, the availability of financial services will increase for all.
5. Mobile Banking Solutions
The ubiquity of mobile phones has created financial opportunities for historically unbanked or underbanked populations. Mobile banking solutions allow financial institutions to reach millions everywhere with simple, convenient, and accessible technology. Hence, executing financial transactions has never been easier through mobile applications downloaded directly from financial institutions’ websites or app stores. As a result, financial institutions can communicate with their clients no matter where they are.
Customers use financial solutions on mobile devices for many transactions, including money transfers and payments to merchants or peer-to-peer (P-2-P). Mobile financial services have expanded the scope of financial institutions’ product offerings by providing users easy access from any location.
Financial institutions can reach a more extensive client base by offering financial solutions on smartphones, in addition to physical banking centres.
Fennech's contribution to Financial Inclusion
Below we explore how our technology was able to foster financial inclusion.
Rural communities in France are under threat of being disenfranchised as banks close their regional branch offices. Payment in cash is simple, secure, and definitive. To meet this need, Brinks Payment Services (BPS) decided to create a new locally accessible cash network –”Point Cash Services”- for the French market by virtually connecting all the cash tills of over 6500 Tabacs in France. This network allows Brinks’ Corporate clients to offer their customers a local cash network with national coverage for cash deposits and payments of goods and services.
BPS chose Fennech’s F3 platform as the core infrastructure to connect multiple EPOS systems, BPS core systems, and Banks to create a new virtual network. Advanced reconciliation – we match the e-commerce merchant’s product code to the payment received at the retailer to match and reconcile the cash to the transaction. Payment and Collection factory – we automate the payment out to the e-commerce merchant, having calculated and deducted any commission due, based on the cleared, reconciled amounts coming in from the retail network. Digital Cash Ledgers – we maintain individual ledger positions for each e-commerce merchant. The French regulator recognises the Fennech F³ platform as a system of systemic importance.
End-users can now benefit from a new payment method, available at scale using a wide range of retail outlets. Thus, allowing consumers without credit cards to access e-commerce services and merchants. The network can process millions of transactions each month and more than €1 billion in its first year of operation. Brinks themselves have been able to launch that new service without any significant headcount growth in their finance and operations department. This demonstrates how new products can be deployed at scale, quickly and cost-efficiently, and all within 6 months.
Fennech in motion
Fintech has made financial services accessible to all types of businesses. This includes small and medium enterprises (SMEs), large corporations, sole proprietorships, partnerships and even charities. Fennech is committed to expanding financial access and financial inclusion wherever we do business. We believe that every person deserves the opportunity for financial empowerment no matter where they live or their background. For a more in-depth discussion on how Fennech can assist your business with financial process automation, get in touch with one of our executives here.