Michael Zetser, a prominent figure in the world of fintech, believes that fintech solutions could have a positive impact on underserved communities. It’s common knowledge that having access to financial services is a crucial aspect of gaining economic growth and social development. But for a large chunk of the global population, especially in emerging markets, communities are excluded or underserved. Therefore, they don’t receive the same quality of formal financial services.
Major Chunks of the Population Are Underbanked
He mentions that it’s quite common for them to be disqualified for having low-income levels, lack of financial literacy, and limited access to physical banking infrastructure. One region that’s experiencing these problems on a major scale is Southeast Asia, where it also affects people’s quality of life. Because many people don’t have bank accounts, most of their transactions are in cash.
This makes it challenging to build a steady credit history that allows them to access better financial tools and make bigger purchases like a car or house. Thanks to the rise in FinTech, companies are coming up with solutions to such problems.
In addition to making it easier for companies to offer adequate financial services, fintech is also paving the way for increased transparency and accessibility in the financial system. This specifically applies to underserved segments of society in regions like Southeast Asia.
Fintech Increases Opportunities For Small Businesses
According to Michael Zetser, fintech products such as microcredit and mobile banking facilities build new opportunities for micro, small, and medium-sized enterprises. In fact, these solutions are a great idea for the underserved population because of their convenience, affordability, and accessibility compared to traditional banking services. Thus, they enable many people to access financial services for the very first time.
He quotes the example of Boost Connect, a regional cross-border payment and customer growth platform ecosystem provider. So far, Boost has rolled out direct carrier billing through various mobile carriers across Asia. Hence, it offers a convenient, accessible, and secure payment option that helps more than a billion users. It allows them to make purchases by adding the cost to their phone bill.
Global Initiatives To Increase Financial Inclusion
Many other solutions have rolled out thanks to programs like the World Bank’s Financial Inclusion Global Initiative. The purpose of the program is to increase universal financial access in countries such as Mexico, Egypt, and China via electronic payments, security measures, and financial ID. Moreover, the Financial Inclusion Program by Innovations for Poverty Action aims to improve the financial wellness of vulnerable communities with global research projects. So far, it has conducted research in 44 countries.
And in the United States, the Economic Inclusion Strategic Plan by the FDIC will increase access to affordable financial products and services. These are provided by insured depository institutions to millions of underbanked and unbanked Americans.
Based on his research, Michael Zetser predicts fintech to be a global driver of financial inclusion in the US and across the world. In recent years, the use of fintech among underserved populations has been at the same level as traditional banking use, and in some cases, it even surpasses it.
Underbanked Communities in the US Lean Towards Fintech
Surveys show that although over 87 percent of Hispanic respondents had a bank account, 95 percent said that they used technology for finance management. That’s because fintech addresses the biggest challenges for these groups, such as budgeting for expenses and paying off their dues.
Similarly, 32 percent of Hispanic respondents rely on fintech solutions for early access to paychecks, which offer an alternative to high-interest payday loans. In fact, 24 percent of Hispanic respondents and 28 percent of Black respondents didn’t keep track of their credit scores until they started relying on fintech applications.
Fintech Empowers People To Discuss Finances
Michael Zetser the entrepreneur, also explains that using fintech solutions helps people from financially vulnerable communities feel more empowered to take control of their financial lives. Consequently, more people are starting to engage with their finances. Primarily, they’re doing this by speaking about their finances more openly.
The same 2021 survey shows that 7 in 10 find it easier to talk about finances since they started using fintech solutions. In fact, 54 percent of respondents now say that finances have become a common dinner table topic.
Fintech is leading the way for financial inclusion through changes like worldwide bank account adoption and encouraging people to discuss their finances. No other solution has been able to increase people’s access to finance management so quickly and improve their financial freedom.
With so many developments on the way, fintech entrepreneur Michael Zetser expects fintech to have a major impact on the financial futures of people across the globe. These solutions are already having a global impact on increasing accessibility to financial services, creating a more level playing field for people looking to access credit.
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