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Serving the underserved: The role of fintech in bridging financial gaps

Addressing the affordability challenge faced by providers is paramount in combating financial exclusion

Leveraging the pervasive ubiquity of mobile phones, fintech solutions have democratically extended the mantle of financial services directly into the palms of users’ hands. The challenge of financial exclusion often originates from the cost concerns faced by traditional financial service providers.

While it’s commonly perceived that underserved populations cannot access services, it’s crucial to recognise that providers may struggle to offer affordable solutions. Profitability is central to any enterprise, and when the cost of extending services outweighs potential returns, exclusion occurs. This dilemma leads to a paradox where providers find it economically unviable to cater to certain demographics. Affordability becomes the cornerstone; if services cannot be delivered profitably, exclusion is the outcome.

Consequently, businesses opt not to serve these populations, perpetuating the cycle of exclusion. Thus, addressing the affordability challenge faced by providers is paramount in combating financial exclusion effectively. By leveraging mobile phones as a primary channel for financial transactions, mobile money providers have extended the reach of financial services to previously unreachable populations. This shift has enabled individuals in remote areas to access mobile money conveniently and affordably, bypassing the limitations imposed by traditional banking infrastructure. As a result, mobile money has become a catalyst for financial inclusion, empowering underserved communities and driving economic growth.

Among the transformative fintech innovations, the emphasis on leveraging mobile technology stands out significantly. The ubiquity and sophistication of mobile devices, coupled with advancements in telecommunication, have revolutionized access to financial services. Smartphones, equipped with facial recognition and robust security features, enable seamless banking transactions. Moreover, telecom advancements ensure efficient and secure communication channels, facilitating the proliferation of mobile-based financial solutions. Mobile platforms democratize access to banking by circumventing the need for physical branches and extensive documentation. Furthermore, innovative know-your-customer (KYC) processes, such as eKYC, streamline user verification, making onboarding seamless. These innovations empower underserved communities by providing convenient, affordable, and secure avenues for financial inclusion.

Key features of mobile money platforms that make them accessible and attractive to unbanked and underbanked communities include their simplicity, convenience, and affordability. Designed for everyone, these solutions ensure no biases amongst a diverse range of users. Mobile money services typically require simpler documentation that can easily be done online through eKYC, making them more accessible. Moreover, the ability to conduct transactions using a mobile phone eliminates the need for physically going to conduct transactions, reducing barriers to access. Features tailored to local needs add daily value to users’ lives.

Mobile money platforms empower users to autonomously manage bill payments and top-ups not only for themselves but also for their families, even across borders, fostering familial financial autonomy and connectivity. Furthermore, even individuals devoid of access to basic banking infrastructure can seamlessly add funds to their mobile money wallets. This immediacy of service provides instant gratification that transcends the traditional barriers imposed by physical banking infrastructure, empowering underserved populations with unprecedented access to banking services.

Mobile money services have introduced micro-financing products, such as small loans and insurance, seamlessly accessible via mobile devices. This democratisation of financial products not only facilitates capital infusion into underserved communities but also nurtures entrepreneurship and fosters economic resilience among individuals previously excluded from formal financial systems. Furthermore, mobile money unlocks a plethora of opportunities for individuals engaged in diverse pursuits such as hobbies, home businesses, or freelancing endeavours.

The ability to seamlessly accept payments into mobile wallets enables entrepreneurs to expand their geographical reach and customer base. Importantly, this autonomy extends to financial management, as individuals can independently manage funds directly from their mobile devices, liberating them from reliance on somebody else’s bank accounts. Moreover, the inherent simplicity and unparalleled convenience of mobile money transactions have ignited a palpable surge in usage rates among populations erstwhile reliant on cash-based transactions. This shift towards digital financial interactions not only enhances efficiency and transparency but also cultivates a culture of financial literacy and empowerment among users.

The writer is CEO of Whizmo