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Banking the underbanked and unbanked
World Bank statistics show that over 2 billion people have no access to banking services, whether payments or lending. 28 percent of the US population –nearly 90 million people, are unbanked. The FDIC (Federal Deposit Insurance Corporation) states that around 17% of American’s are underbanked. The UK has two million citizens living without access to bank accounts, despite being home to the world’s biggest financial services hub.
According to KPMG, in Southeast Asia, banking numbers are even more striking: only 27 percent of the region’s 600 million people had a bank account in 2016.
According to a recent IFC note, approximately 80 percent of Africa’s 1 billion population lack access to formal banking services.
This lack of access has created major barriers for people to overcome poverty by making it almost impossible for them to borrow or save money. It’s been reported that many unbanked people that lack theses banking capabilities, have a mobile cell phone.
This is where the real opportunity for fintech lies. With the introduction of new and mobile technologies, Fintech companies can radically shift the economic foundation by creating opportunities for the unbanked to obtain the basic services they need to help improve their financial situation.
Micropreneurs, solopreneurs, and farmers, in particular, need these services to help their businesses grow and feed their families. The existing banking system in many countries has ignored them.
Fintech is disruptive on many levels. Banking the unbanked and making more efficient, less expensive financial services available to more people are just 2 ways fintech is changing traditional financial services.
With 42% of the global adult population still absent from the formal financial system, fintech industry is in a rare position to drive not only economic and innovation change, but also social change, making financial exclusion a problem of the past.
Meanwhile, regulators are carefully considering the impact of new technology on the stability of the financial system, including on money laundering. The financial technology revolution is likely still some way off, but for low-income countries the benefits are already tangible.