It may look like a fact that is hard to believe but the world still has more than 1.5 billion people living without a bank account. While most of us will dismiss this as a poverty issue but that isn’t always the case. These billions of people around the world decide on their own to continue living in rural areas, and prefer to rely on non-banking alternatives when they can’t go to the local branch.
The Fintech industry looks to be really concerned about the situation, and wants to do something about it. The question that immediately pops up in one’s head is “Can Fintech industry really be the savior for the myriads of unbanked and underbanked in and around the whole world”?
Fintech seems to be the only solution for those who live in rural areas and cannot afford to drive for hours to reach to their nearest branches for everyday transactions.
Here’s how Fintech can shape the globe and revolutionize their offerings to the unbanked or under-banked:
- Bringing credit worthiness to the doorstep of unbanked: People living in rural areas face a lot of difficulties in building credit when they haven’t used banks for financial products. Fintech has come up with other solutions to monitor their credit worthiness. There are already platforms up and running (Uulala, for instance) that allows such users to earn credit based on their day to day transactions. The algorithms used by such platforms monitor the behavioural habits and purchase history of these users to decide their financial ability at a given time.
- Access to the online lenders: The people who do not live near the city and have their branches miles away also do not have a high speed broadband available to them. But, they still have access to the online lenders around the city. These lenders give them a chance to apply for loans with little to no paperwork and without making them go physically to the branch. These lenders will have an edge in the future for such a population. This part of the population requires advance funds just as much as the rest of the population does. Fintech does not ignore the unbanked.
- Micro loans, P2P financing, cheaper remittance services already in play: There’s a lot of people who aren’t wealthy but need financial services and products just like everyone else. Fintech realizes the fact and have already placed concepts like micro loans, P2P financing & cheaper remittance services in play for such people. These financial products are tailored to the segment that do not qualify for such services at regular banks or financial institutions.