COVID-19 significantly promoted financial inclusion. However, the World Bank reports that more than 1.4 billion adults worldwide remain unbanked. This is due to the presence of a level of inequality in accessing financial services now more than ever.
Why does it feel like the efforts are not paying off when banks worldwide actively work towards digital financial inclusion to help redress socio-economic challenges and ultimately accelerate economic development? You’re not wrong.
Let’s delve into understanding this better.
Despite having digital financial inclusion policies and practices in place, a whopping 44% of adults in developing countries do not have access to financial services. In the nations that have implemented mobile financial services, mobile money interoperability, native connection, human capital development, and the digitization of public services, there is no lack of challenges or barriers.
What this reveals about digital financial inclusion in underdeveloped economies is that, while being completely transparent about how it contributes to regional development, there are definite obstacles to enabling or supporting the same.
What are these barriers to digital financial inclusion we keep talking about?
To understand these barriers precisely, we need to be thorough about what financial inclusion aims at. The World Bank defines digital financial inclusion as the “deployment of cost-saving digital means to reach currently financially excluded and underserved populations with a range of formal financial services suited to their needs that are responsibly delivered at a cost affordable to customers and sustainable for providers”.
Financial inclusion benefits economies by positively influencing economic growth and reducing income inequality. Understanding that financial inclusion is not automatically driven purely by technological innovation is crucial. It would require purposeful collaboration between banks and third-party digital banking solution providers to bridge the gap.
But what is this gap exactly, and how does one go about eradicating it?
The challenge most commonly faced by banks in developing economies is the problem of reach. Either people are in areas that have weak or unreliable signals. Or their lack of financial literacy acts as a hindrance.
However, despite having internet access, some customers are hesitant to use digital financial services because their banking platforms lack easy-to-use UIs and poor user journeys. And people also worry about hacking, breaches of personal information, fraud, and hazardous access due to their ‘fear of the unknown’.
Digital banking applications do not address those in rural economies, or at least they are not trying enough. It is true that these areas consist of people with low levels of digital literacy and financial skills. But it’s about time that banks start countering this by using digital technologies.
As consumer challenges and risks to digital financial services increase, there is a pressing need to address and mitigate them to further digital financial inclusion by adopting digital technologies.
How can Clayfin help?
Now, here’s the thing: We understand that policies are tricky to influence while still being highly democratic. But what is a ‘right now’ fix that addresses barriers that are stopping you from achieving financial inclusion?
This is where our expertise comes in. Clayfin has been helping young and established banks deliver seamless customer experiences by providing cutting-edge digital banking solutions that makes banking an easy task for your end users. Our interface is understandable to say the least, which enables people from different age groups to go from one page to another seamlessly. We proudly craft hyper-personalised banking journeys that allow customers, even from low financial literacy backgrounds, to own and operate a digital banking account proudly.
From a single mother in India to a startup business in a remote region of Nepal, financial inclusion is made possible when everyone gets a reliable banking experience that goes the extra mile. And Clayfin is your partner!
We have been helping banks take their digital transformation to the next level for years. In Bangladesh, we enabled one of the leading banks to unlock interoperability by building a digital wallet. We delivered API-based solutions for a growing bank in Kuwait to help transform their offerings.
Now, the choice is yours to make. You could either take solace in the fact that we have a long way to go before we achieve complete digital financial inclusion. Or we could take action and collaborate with industry experts to take you a step closer to financial inclusion.
Let’s connect.
