Financial inclusion has long been a lofty goal, but for billions of people worldwide, access to basic financial services remains out of reach. Traditional banks have struggled to meet the needs of underbanked populations, citing high costs, regulatory hurdles, and low profit margins. Yet, in a world where mobile phones are ubiquitous and data is abundant, fintech companies are stepping up to address these challenges with innovative solutions.
Fintech isn’t just making financial services more accessible—it’s fundamentally rethinking how inclusion can be achieved. But are these efforts enough to close the gap, or are we merely scratching the surface of a much larger problem?
Understanding the Gap
Roughly 1.4 billion adults globally remain unbanked, according to the World Bank’s 2021 Global Findex Report. The reasons vary by region but often include lack of infrastructure, distrust of traditional banks, and rigid identification requirements.
For these individuals, the consequences are significant. Without access to banking, they face barriers to saving securely, borrowing affordably, or participating in the digital economy. Informal alternatives, like loan sharks or community savings pools, can fill the gap but often come with high costs and risks.
Fintech’s Approach to Inclusion
Fintech companies are approaching financial inclusion with fresh eyes, leveraging technology to create solutions that were unimaginable a decade ago:
Mobile Money: Platforms like M-Pesa in Kenya have transformed how people send, save, and receive money. By bypassing the need for traditional bank accounts, mobile money has empowered millions to participate in the economy using nothing more than a basic phone.
Digital Lending: Companies like Tala and Branch use alternative data—such as phone usage patterns and social network activity—to assess creditworthiness, enabling small loans to people who lack traditional credit histories.
Neobanks: Digital-first banks like Chime and Nubank provide low-cost accounts with no minimum balances or monthly fees, targeting individuals who were previously excluded by legacy institutions.
Blockchain Solutions: Decentralized finance (DeFi) platforms offer an intriguing promise: global, permissionless financial services. While still in their infancy, these solutions could one day enable anyone with an internet connection to access loans, savings, and investments.
The Role of Data
Data is at the heart of fintech’s success in addressing inclusion. By analyzing alternative data sources—such as utility payments, phone records, or even GPS data—fintechs can create credit models that are more inclusive than those used by traditional banks.
For instance, a farmer in rural India might not have a formal credit history, but her mobile phone records could indicate consistent spending patterns and repayment ability. Fintechs are using this type of data to build financial products that cater to underserved populations without taking on excessive risk.
Collaboration Is Key
Fintech alone cannot solve financial inclusion. Partnerships between governments, traditional banks, and fintech innovators are essential. Governments can foster inclusion by creating supportive regulatory environments, while traditional banks can leverage fintech partnerships to reach new markets without incurring significant costs.
For example, Brazil’s Central Bank has championed Pix, a real-time payment system that has drastically improved access to financial services. Similarly, India’s Aadhaar system provides digital identification for millions, enabling fintechs to onboard customers more easily.
Beyond Access: Toward Empowerment
True financial inclusion isn’t just about opening accounts or issuing loans—it’s about empowering individuals to achieve long-term financial stability. This means creating tools for financial literacy, savings, and insurance that go beyond transactional services.
Fintechs like Kiva are pioneering this approach by combining microfinance with education, helping underserved populations make informed financial decisions.
The Bigger Picture
Financial inclusion is one of the defining challenges of our time. Fintech has already made remarkable progress, but it’s not a panacea. Bridging the gap will require coordinated efforts across technology, policy, and education.
Still, the promise is undeniable. By combining data-driven innovation with a commitment to equity, fintechs have the potential to bring billions of people into the global financial system—and change lives in the process.