Exploring how technology is democratizing access to financial services, contributing to global financial inclusion.
Financial inclusion is an increasingly discussed topic worldwide. It refers to universal access to financial services such as bank accounts, credit, insurance, and investments. Currently, there are 1.4 billion unbanked individuals globally. This access should not be a privilege but a basic right for all citizens, regardless of their socioeconomic status.
Including this large segment of the population in the financial system is crucial for the economic and social development of any country. There are numerous benefits that financial inclusion can bring to the entire financial ecosystem, and in this article, we will explore the main ones and the role of technology in this context.
Financial Inclusion for the Economy
Economic Growth: When more people have access to financial services, more money circulates in the economy. This results in increased consumption and investment, driving economic growth. Small and medium-sized enterprises (SMEs) also benefit as they can obtain credit to expand their businesses.
Financial Stability: Financial inclusion helps create a more stable economy. With more people using formal financial services, there is greater capacity to absorb economic shocks and manage financial crises.
Reduction of Informality: Many people in developing countries work in the informal economy. By gaining access to financial services, they can formalize their businesses, pay taxes, and contribute to the economic development of their country.
Financial Inclusion for the Citizen
Poverty Reduction: Financial inclusion allows individuals to access credit and insurance, which can protect them against personal financial crises and help them escape poverty. With a bank account, it is easier to save and plan for the future.
Empowerment of Women: In many countries, women have less access to financial services than men. Financial inclusion promotes gender equality by empowering women to make economic decisions and contribute more actively to the economy.
Access to Credit and Loans: Individuals and small businesses gain access to credit and loans, enabling them to invest in education, health, housing, and businesses. This can significantly improve quality of life and economic opportunities.
Security and Convenience: Formal financial services, such as bank accounts, debit and credit cards, and mobile payments, offer a secure and convenient way to store and transfer money, reducing the risks associated with cash handling.
Planning and Saving: Financial inclusion allows individuals to better plan their financial futures. Savings tools, insurance, and investment help manage risks and accumulate resources for long-term goals.
The Role of Technology in Financial Inclusion
Technology plays a crucial role in promoting financial inclusion. With the advancement of fintechs and the widespread use of smartphones, it is increasingly possible to create accessible and innovative solutions. Mobile payment apps, digital wallets, and online loan platforms are just a few examples of how these technologies are democratizing access to credit and facilitating financial transactions.
However, it is not only fintechs that have contributed to this scenario. Traditional financial institutions are also adopting new technologies to expand their services and reach underserved populations. Some notable innovations include:
Digital Banks: Many traditional banks are launching their own digital platforms. These platforms allow customers to open accounts, make transfers, and apply for loans entirely online, eliminating the need to visit a physical branch.
Artificial Intelligence and Data Analysis: The use of AI and data analytics allows traditional banks to offer more personalized services and better assess credit risks. This is especially useful for granting loans to people without a formal credit history.
Mobile Banking Units: In regions with limited infrastructure, some banks are implementing mobile branches that visit communities regularly, providing basic banking services.
Digital Financial Education: Banks are investing in online financial education programs, helping people better understand how to manage their money, save, and invest. This is essential for promoting sustainable financial inclusion.
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