The impact of digital banking innovation on financial inclusion
Financial inclusion is crucial for economic growth and poverty alleviation. Despite this, an estimated 2 billion people remain unbanked worldwide. In recent years, however, there has been a proliferation of digital banking innovations that hold the potential to bring financial services to more people.
Digital banking innovations are providing people with new ways to manage their money and access credit. These advances include mobile money platforms, peer-to-peer lending, and big data analytics. They are making it easier for people to transfer money, borrow money, and make payments. As a result, more people are gaining access to essential financial services such as savings accounts, credit cards, insurance policies…etc
This blog post will explore the impact of digital banking innovation on financial inclusion and discuss some of the benefits that come with increased access to financial services.
1. Provide quicker financial services
Digital banking innovation can provide faster financial services with a seamless process, making it easier for low-income individuals to manage their financial obligations on a daily basis.
2. Reduce operational costs and improve the quality
Digital banking innovation can collaborate with traditional lending institutions to reduce operational costs and improve the quality of their intermediation activities. Partnering with traditional lending institutions can help Fintech providers become more sustainable over time, and Fintech providers’ financial technology can add value to the activities of the traditional lending institutions with whom they partner, particularly in ‘process improvement’ for their online lending business.
3. Provide instant emergency funds or loans
When compared to banks and other lending institutions, some digital banking innovations have a superior ability to provide instant emergency funds or small loans to individuals with low and low incomes.
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This is due to the fact that conventional banks and other lending institutions are not required to provide emergency funds to anyone, and any request for emergency funding at a conventional bank or lending institution must go through the standard credit risk assessment process, which may be too lengthy for individuals who require immediate emergency funds.
This enables some Fintech providers to provide emergency funds in small amounts at higher interest rates to people with middle and low incomes.
4. Provide convenience
Technology has the potential to make life easier. Digital banking that operates through online platforms can provide increased convenience to users by providing access to such services and making them available at all times from any location where the user or consumer has Internet access. This allows Fintech providers to assist customers in avoiding the need to travel to a banking hall to conduct financial transactions.
5. Improve the welfare of individuals and businesses
Individuals and businesses who have a reliable digital platform to access funds in their bank accounts to conduct financial transactions can benefit from digital financial inclusion. The anticipated benefits of digital financial inclusion can be fully realized if the cost of obtaining a digital transactional platform, which refers to mobile phones, personal computers, and related devices, is negligible or low for poor individuals.
Conclusion
Banks are investing in digital banking solutions to offer innovative services that can be used by a larger number of people, including those who have traditionally been excluded from the financial system. This is leading to increased financial inclusion and access to banking products and services for all.
If you work in the banking sector, it’s important to stay up-to-date with the latest trends and developments in digital banking so that you can provide your customers with the best possible experience.
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