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Innovation in the financial industry is mainly associated with payments, lending and online capital formation. Yet this is far too limited to understand the full potential of innovative developments across the industry sectors. The real matter of things is such that it is the underbanked individuals, those deprived of sophisticated financial products, who will be the ones leveraging FinTech services the to the fullest.
No matter which country of the world we take as an example, there will sure be segments of the population that do not have access to a modern financial services range. It even concerns such basic concepts as a savings account. This is especially evident when looking at the differences between higher and lower income individuals.
It is obvious that in richer and more developed regions such as Europe and the US more people enjoy the seamless use of a variety of financial services. However, the rapid growth of FinTech and the mass spread of smartphone use are erasing the conventions that existed for years.
According to Alfonso Garcia Mora, Global Director Finance, Competitiveness and Innovation GP The World Bank Group, financial inclusion has been subject to impressive improvements worldwide. At the moment, circa 1.7 billion adults, which constitutes about 31% of the population remain completely unbanked, more than half of them being women. In 2017, the percentage of adults that had opened a financial account was at 69%.
There is an entire sea of opportunities for FinTech to step in and substitute the slow, expensive and non-transparent service providers, offering seamless and innovation-backed solutions to customers worldwide. This is particularly true when we are talking about such services as mobile payments and transfers and savings. Besides, robo-advisors and AI and machine-learning based wealth management solutions can grant access to services that were prior reserved only for the rich to a higher number of individuals, looking to make smart investment decisions.
There is no doubt that opportunities bring along new challenges, mainly in the regulatory and compliance sectors, creating the necessity to update the existing legislation. The fundamental problem is that digital financial services network goes beyond the concept of national boarders, which can have serious implications. Nevertheless, FinTech developments should be perceived as an opportunity, as opposed to threat. Modern technologies can serve as a long-searched catalyst for the economic development of poorer regions and this should be the principal cause to remove all barriers that withhold innovation from spreading wider.