Digital financial services are expanding and evolving at an unprecedented rate. It’s almost as if every day a new app or product is hitting the market. But, moving towards a completely digital world can have its pitfalls, especially for those who are still having a hard time accessing financial services. Today, we take a look at how digital financial services can help boost financial inclusion.
But first things first.
How can we achieve financial inclusion?
Having access to financial services enables people to save money, invest, run their own business, send and receive money, and apply for loans. Without this access, no amount of financial literacy can truly help individuals get ahead or even make ends meet.
Examples of financial inclusion include being able to apply for a mortgage or set up a business account. Having access to financial services also means being able to receive government aid in times of crisis, a need that has become more latent than ever with the ongoing pandemic.
But how do we achieve financial inclusion? It’s easy, straight-forward even, but it depends on several key players to make it work. Mostly, governments and financial service providers are at the helm of driving positive change. If governments can help individuals obtain proper identification and financial service providers can continue to create humane products that are simple to use and accessible to those currently underbanked and underserved, then financial inclusion can be achieved through digital financial services.
You can read more about financial inclusion here.
Why is digital financial inclusion important?
At Ria, we believe in sustainable technology. That means developing hybrid products that can help customers make the leap from traditional money transfer to its digital counterparts. Slowly but surely, financial technology is advancing towards full digital experiences, leaving behind the likes of cash and retail locations. While this won’t be an overnight change, it is often vulnerable groups, such as migrants and people living in remote areas, that suffer the most with the changes in financial services.
Barriers to identification often keep whole communities from gaining access to bank accounts. When financial service providers downsize, perhaps closing the only physical location in a given city, whole populations are left to their own devices. Advances in fintech are helping, but digital solutions are not a one-size-fits-all. While new digital solutions such as mobile wallets can take the place of closing bank branches, barriers to identification remain a big challenge for close to one billion people.
As we continue to innovate in the sector of financial technology, it’s imperative that we don’t create an even bigger gap between the financially savvy and the financially excluded.
How digital financial services can boost financial inclusion
Mobile wallets, bank deposit networks, and money transfer apps can help individuals send, receive, save, and spend money without needing travel to their nearest point of sale. That means that if we can get the underbanked onto these platforms, we could solve one of the key issues keeping people in rural areas financially excluded: distances.
It can be both unsafe and costly to travel to your nearest bank branch if it’s five towns over. Many banks are teaming up with money transfer operators (like Ria) to develop apps or improve their network so that customers can receive money from abroad straight to their phones. Mobile payments are becoming increasingly popular in rural Africa and Asia, where people can pay for goods and services without needing to get cash.
Digital services can also help people apply for government identification, or even carry a digitized version of their ID information. However, this depends on government policies, but can be a good option to help promote financial inclusion.
When it comes technology, the world is our oyster. Let’s make sure we use it for good!