Innovative technology to provide banking facilities to marginalized people
Representative image. CNBC TV 18
The term “unbanked” refers to those without a bank account or access to financial services. Most unbanked people only use cash, and many have no insurance, pension or other safety net that is often associated with having traditional pension and savings accounts.
Various fields of financial data are required to produce credit scores. When it is not available, it is impossible to construct a complete picture of the segment’s economic behavior.
Unfortunately, this makes the “unbanked” population invisible to traditional banks. This reveals a need for innovation in financial services to disrupt the current financial system and make it more inclusive.
Until recently, market realities like this kept unbanked and underbanked people from accessing the services they need.
FinTech companies are addressing the current disparity in financial services, striving to level the playing field. They operate outside the boundaries of traditional finance and dramatically improve accessibility for the unbanked.
And since FinTech companies run on data, solving these problems for the unbanked also opens up new opportunities by providing rich data about this consumer segment’s income, spending habits, needs and wants. FinTechs are disrupting the financial sector by taking a new approach to an old problem.
Economic patterns are a powerful instrument of discovery, and by using data that was simply not available before, FinTech companies gain influential insights to help their customers succeed. This drives innovation that can deliver efficient, highly personalized services beyond banking, which facilitates a total renewal of lifestyle.
FinTech companies are able to build a complete portrait of a customer’s financial behavior. The above puts this sector in an ideal position to build an alternative to an archaic system, by creating personalized financial products based on a comprehensive account of the customer journey. This enables better, faster decision-making and more flexible pricing than established companies.
Increasing internet penetration and online banking capabilities allow fintech companies to penetrate remote areas where physical bank branches cannot be set up. By providing access to even basic products or services, such as savings instruments or financing, FinTech companies allow people in remote areas or low-income individuals to save money, grow their money, and benefit from government programs and assistance.
Unlike traditional banks, FinTech companies require minimal paperwork to lend. This makes it much easier and faster to borrow from them. FinTech companies are also using AI for risk assessment of customers with limited or no credit history; assessments based on indicators such as income and consumption patterns. This gives small-ticket borrowers and local businesses access to microfinance services for important purchases and capital investments.
FinTech companies can quickly roll out new features and products by testing new innovations in secure sandboxes while checking compliance with government regulations and data security. This enables FinTech companies to offer innovative products and services in a faster but secure way.
Fast and secure digital payment methods are also made available through FinTech innovations. The use of AI enables FinTech companies to instantly verify and transfer digital payments. Online payment methods provide more flexibility, convenience and ease of use, increasing access to important goods and services for everyone.
FinTech can solve problems related to the storage and transfer of value, as well as helping the underbanked and unbanked population become more financially included.
We believe that blockchain technology and shared ownership have solved the problem of moving stored value digitally. Property, art and commodities such as gold have an established underlying value. The ability to own and trade fractions of these types of assets has the potential to be more than just disruptive to the traditional financial industry. For the unbanked, it can be transformative.
FinTech paves the way, serving the unbanked population worldwide by providing data that gives rise to solutions that are immediate, stable, secure and sustainable. Revolutionizing the way businesses will serve these customers in the future.
The author is the CEO and co-founder of PaySprint, a Fintech venture focused on Next Gen Neo Banking Solutions, offering a Unified Open API platform
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