The concept of financial inclusion emerged in response to global poverty and flawed financial institutions particularly within the Global South.
Many adults in emerging markets have little access to formal financial services and even if they do, the cost of these services tends to be expensive. Hence, financial inclusion has been profoundly supported by governments, NGOs as well as, international financial institutions.
Several fintech companies have taken advantage of technology advancement to accommodate those financially excluded. Take for example, Quod, a Brazil-based fintech start-up which seeks to help Brazilian adults with access to credit. The firm’s attempts appear to be progressive in solving issues surrounding financial inclusion. Just over half of the Brazilian adult population own a bank account however, access to credit remains limited for many. Quod intends to transform Brazil’s financial system by improving how credit analysis is performed. In terms of financial inclusion, having a bank account is one thing and access to credit is another. In an emerging market, access to credit can certainly boost small businesses leading to job creation and, eliminating poverty.
Mobile phone-based money transfer and financing service, M-Pesa has transformed the mobile payments market in Africa. It was first launched in Kenya by mobile network operator, Safaricom in 2007. Since its launch, M-Pesa has expanded to the rest of East Africa and West Africa. As of late 2018, it is estimated that M-Pesa has over 28 million users in East Africa alone. M-Pesa allows users to transfer and withdraw money as well as, pay for goods without the need of a bank account. It has also partnered with retailers and service providers across Africa where users can access funds.
Africa’s fintech and mobile payments sector has experienced growth and significant capital inflow over the years. However, for the sector to continue flourishing issues regarding regulation and reliable internet need to be addressed.