The goal of financial inclusion is to ensure equal access to essential financial services and inclusion. Financial inclusion is a critical step towards a more equitable and prosperous world. There has been progress in the last decade towards achieving this goal: as of 2021, 76% of adults across the globe own a bank account. However, gaps remain. A 2021 World Bank report highlights that globally, 74% of women had a bank account compared with 78% of men. There are also regional differences. East Asia and the Pacific have the highest rates of financial inclusion, with Sub-Saharan Africa having the lowest.
This is where financial technology – aka fintech – steps in. The use of financial technologies offers solutions to break down barriers to access, creative innovative products and services and make the global financial system truly inclusive. As a private investment company, Ghazan Global believes in the power of digital technologies for positive change. We invest in companies that advance financial inclusion through the creation of platforms and systems that change the way people define, use and move money.
A crucial component of financial inclusion is payment systems. Access to basic payment systems that are affordable and accessible are crucial for international transactions, trade and business development. We invest in companies like Ripple, whose digital payment network is transforming cross-border payments. Their blockchain technology facilitates secure, instant, and low-cost international payments. Ripple’s platform makes it easier to send remittances and for small businesses to trade globally.
Fintech also makes financial services more accessible through mobile wallets. For example, Uphold provides a platform where its users can manage a range of financial assets from traditional currencies to cryptocurrencies from their phones. This fully virtual service means there is no need for users to access physical offices to manage assets. People who may not have access to traditional banking infrastructure can still get the best of what Uphold has to offer.
Another challenge to financial inclusion is a lack of credit history for many individuals. Linqto address this problem through using alternative data sources, such as mobile phone usage patterns to assess creditworthiness. This opens doors for the unbanked to access loans and other financial products that would traditionally be out of reach. By building a credit history, Linqto empowers individuals to participate more fully in the financial system.
By leveraging technology, fintech companies are making financial services more accessible, affordable, and user-friendly. While the examples of Ripple, Uphold and Linqto show the immense potential and benefits of fintech, challenges remain. Digital literacy, data privacy, and ensuring fair lending practices need to be addressed. Collaboration between governments, financial institutions, and fintech companies is key to creating a truly inclusive financial future. As technology continues to evolve, so too will the reach and impact of fintech, paving the way for a more financially equitable world.