{"id":124314,"date":"2025-11-05T06:10:39","date_gmt":"2025-11-05T06:10:39","guid":{"rendered":"https:\/\/alj.com\/?post_type=perspective&p=124314"},"modified":"2025-12-19T05:58:02","modified_gmt":"2025-12-19T05:58:02","slug":"can-tech-strengthen-financial-inclusion","status":"publish","type":"perspective","link":"https:\/\/alj.com\/en\/perspective\/can-tech-strengthen-financial-inclusion\/","title":{"rendered":"Can tech strengthen financial inclusion?"},"content":{"rendered":"

Imagine being unable to get a loan, pay an urgent medical bill or secure your new family home with a rental down-payment. \u00a0Why? \u00a0All because you lack access to the kind of modern-day financial tools which much of the developed world takes for granted.<\/p>\n

You are, to use that quietly damning word, unbanked<\/em>.<\/p>\n

Financial exclusion isn\u2019t confined to the world\u2019s poorest people. \u00a0It is widespread. \u00a0It is overlooked. \u00a0And it is a notoriously difficult trap from which to escape.<\/p>\n

Altogether, around a quarter of the world\u2019s adult population \u2013 an estimated 1.4 billion people \u2013 do not have access to a bank account or appropriate alternative such as a building society or credit union.[1]<\/a>\u00a0 A further half of adults qualify as \u2018underbanked\u2019, relying solely on cash and lacking any avenues of credit.[2]<\/a><\/p>\n

In today\u2019s hyper-connected world, breaking out of the poverty cycle means having digital access to your finances. \u00a0Likewise, it demands access to the suite of systems many of us in mature markets already use to receive wages, pay invoices, source credit cards, earn interest, and insure our homes and businesses.<\/p>\n

In the absence of these facilities, those affected are likely to endure a form of second-class citizenhood.<\/p>\n

Financial exclusion is particularly pernicious because it often leads to inequality and injustice. \u00a0Of those 1.4 billion financially excluded adults, around 80% live in emerging markets on the frontline of the existential battle against climate change<\/a>.[3]<\/a> \u00a0Already these societies are facing an uncertain future and struggling to implement long-term plans as climate disasters<\/a> such as floods, droughts<\/a> and heatwaves<\/a> derail economic development. \u00a0Green energy<\/a>, climate-proof infrastructure and sustainable farming are the solutions \u2013 yet all remain beyond the reach of communities marooned in an era of physical currency and 20th<\/sup> Century technology.<\/p>\n

Financial inclusion is not simply about convenience \u2013 it is about livelihoods and lives. \u00a0Indeed, financial inclusion is deemed necessary for satisfying at least seven of the United Nations\u2019 17 Sustainable Development Goals<\/a> to ensure \u2018peace and prosperity for people and the planet\u2019.[4]<\/a><\/p>\n

Only a fairer and more equitable system of financial access can narrow the opportunity gap worldwide.<\/p>\n

How is technology turning the tide for world\u2019s unbanked?<\/h2>\n

The financial symptoms of a digitally-divided world are detectable everywhere. \u00a0While savings have increased globally over the past decade, the gap between prosperous and struggling economies is as profound as ever. \u00a0Mature markets have an average savings rate (the proportion of disposable income set aside rather than instantly spent) of 58% compared to just 25% in developing markets.[5]<\/a><\/p>\n

In lower and middle income countries (LMICs), there is ample evidence that financial exclusion is limiting business growth. \u00a0Globally, it remains far easier to borrow money in an advanced economy (where 56% of enterprises are eligible for a loan) compared to emerging economies (23%).[6]<\/a> \u00a0Of the approximately 400 million micro-enterprises in developing regions, up to 345 million are classed as informal: Having no employees other than the owner, generating only subsistence-level incomes, and unlikely to be registered for tax therefore failing to elevate national GDPs.[7]<\/a><\/p>\n

These pen-and-paper businesses cannot grow, advertise or diversify in the way their rivals might in developed markets.\u00a0 Nor can they strengthen their resilience by saving funds to survive fallow periods. \u00a0In particular, research has highlighted a US$ 173 billion finance shortfall for female-led micro-enterprises in LMICs.<\/p>\n

However, other indicators are suggesting a gradual change in momentum. \u00a0While it is little comfort to the 1.4 billion worldwide who remain unbanked, fewer people are excluded from the financial apparatus with each passing year. \u00a0In 2011, some 2.5 million adults were forced to live hand-to-mouth, day-to-day, without a bank account \u2013 far exceeding the number who find themselves in a similar predicament today.[8]<\/a><\/p>\n

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Similarly, the gender gap between the banked and unbanked is slowly narrowing. \u00a0In developing countries, around 9% more men than women possessed a bank account in 2017. \u00a0By 2021 this gulf had narrowed to 6%, indicating positive steps towards female independence.<\/p>\n

Forward-thinking governments are taking a more proactive approach to increasing financial inclusion. \u00a0More than 60 countries have launched national financial inclusion strategies with input from multiple stakeholders spanning telecoms, the environment, education and financial regulation.<\/p>\n

In India, for instance, the Aadhaar scheme has equipped 1.2 billion workers with Universal Digital Identification, allowing salaries to be paid into formal bank accounts. \u00a0In Mexico, the National Council for Financial Inclusion is encouraging digital adoption by increasing the number of ATMs and point-of-sale terminals throughout the country.<\/p>\n

As a major intergovernmental organization the World Bank<\/a> also runs more than 100 schemes worldwide to promote financial inclusion.\u00a0 These funnel cash towards agricultural resilience, social security, energy access and climate mitigation.\u00a0 In 2024 the World Bank contributed to 6.8 million small businesses (around half of them women-led) needing financial services.\u00a0 One project in Africa, for example, mobilized green private capital to help SMEs on their clean energy journey.<\/p>\n

By bolstering economic growth and boosting productivity, financial inclusion is a goal worth striving for. \u00a0Progress in the sector is chiefly credited to our ubiquitous modern-day savior: Technology.<\/p>\n

How are smartphones leading the fintech revolution?<\/h2>\n

Why have the numbers of unbanked individuals fallen, and why are we optimistic that the world will continue welcoming new members into the global financial community? \u00a0One of the most significant reasons is probably nestled right now in your hand or pocket.<\/p>\n

As of 2023 the number of cellphone owners worldwide reached 4.3 billion, or over half of the global population.[9]<\/a> \u00a0This trajectory is set to continue so that by the end of the decade the number of cellphone owners could top six billion.<\/p>\n

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Mobile technology is critical because modern smartphones are about so much more than texts and calls. \u00a0Smartphones mean access to the worldwide web. \u00a0Access to banks, both domestic and foreign. \u00a0Access to apps allowing users to pay for products with a simple swipe or accept payments for services rendered. \u00a0A cellphone opens the door to economic inclusion by introducing newcomers into the fundamentals of finance, helping them establish a verifiable credit record which can in turn be used to secure loans or make profitable investments. \u00a0Increasingly, cellphones are the keys which can unlock the door to financial liberty.<\/p>\n

Yet this represents just the tip of the iceberg of the financial technology (fintech) revolution helping democratize access to money.<\/p>\n

Research shows that over the past 10 years fintech, in its various forms, has helped more than a billion unbanked people access financial services for the first time \u2013 notably across emerging markets in Sub-Saharan Africa and Asia.[10]<\/a><\/p>\n

Cellphones are enabling a new concept in personal finance for developing nations \u2013 the mobile money service.<\/p>\n

Accessible through any app-equipped smartphone, a mobile money service allows users to send, store and receive payments without need for a conventional bank account. \u00a0For convenience, it also permits cash withdrawals at authorized agents. \u00a0Deposits\u00a0are protected by local financial regulations, and a record is kept of every transaction so that money is safe if a SIM card is lost or stolen. \u00a0A trial scheme in Kenya among rural populations managed to lift around 2% of participating families out of poverty.[11]<\/a><\/p>\n

With increasing numbers of people working in the gig economy, or being paid by the hour, the era of the monthly pay slip is waning. \u00a0How to settle that urgent bill, or buy the supermarket shopping, if you have worked for multiple employers during the week each with different payment terms? \u00a0Real Time Payment technology is emerging to fill the gap, allowing workers to quickly access pay accrued via an \u2018earned-wage\u2019 platform. \u00a0It is proving a vital lifeline for those on insecure incomes even in developed countries like the USA, where more than a quarter of workers report having zero savings.[12]<\/a><\/p>\n

Liberating finance in emerging markets begins with a robust network infrastructure. \u00a0Tech firms are at the forefront of plans to invest billions of dollars<\/a> in affordable connectivity and digital services across 16 Middle East, African and Asian countries between now and 2026. \u00a0The money will be spent on improving network speeds and driving fiber adoption.\u00a0 A million households in Pakistan have already been introduced to the digital economy, with millions more set to follow.<\/p>\n

Technology can help improve financial inclusion for female entrepreneurs too, who often have to fight to make their voices heard in many parts of the world.\u00a0 Digital bookkeeping apps are helping small- and medium-sized enterprises (SMEs) to accurately record cash flow and inventory \u2013 vital financial records which in the absence of collateral can be used to secure a loan.\u00a0 Similarly, electronic Know Your Customer (e-KYC) technology is helping female business owners in emerging markets access loans of up to US$ 20,000 by verifying their identities digitally.[13]<\/a><\/p>\n

Fintech innovations can help protect customer assets while assuring compliance with state legislation, essential for any functioning system of financial inclusion.\u00a0 Regulatory technology (regtech) and supervisory technology (suptech) tools are helping formalize the oversight of new finance platforms.\u00a0 Regtech incorporates cutting-edge technologies such as AI, machine learning and blockchain to help companies abide by finance regulations within a given territory.\u00a0 Suptech tools allow regulators to scrutinize mass volumes of data from financial institutions to expose violations or risk.\u00a0 Together, regtech and suptech technology automates compliance processes for real-time monitoring, ultimately helping financial inclusion to flourish.<\/p>\n

Embedded finance technologies (direct payment or loan tools accessible through non-banking websites) are proliferating, offering anyone with internet access faster and more versatile transaction choices.<\/p>\n

New Fast Payment Systems are also hastening the spread of fintech across developing markets.\u00a0 They permit the near-instantaneous transfer of funds between accounts far quicker than traditional electronic payments.\u00a0 The technology is increasingly available to everyone and covers every type of transaction, whether person-to-person or business-to-business, either domestic or cross-border. \u00a0International initiatives such as the Payment Systems Development Group (PSDG<\/a>) have so far helped more than 120 countries modernize their payment systems, with Brazil\u2019s Pix<\/a> and Costa Rica\u2019s SINPE M\u00f3vil<\/a> serving as key templates.<\/p>\n

The private sector is enthusiastically pursuing the digitization of financial services to improve access to money.\u00a0 Abdul Latif Jameel is leading from the front in global efforts to deploy fintech and widen inclusivity.<\/p>\n

Bab Rizq Jameel Microfinance<\/a>, part of Abdul Latif Jameel Finance Saudi Arabia, offers Sharia-compliant loans to long-neglected markets, helping nurture entrepreneurialism among innovators and SMEs.\u00a0 Elsewhere in Saudi Arabia Cash Jameel<\/a> allows customers to apply for a 10,000 to 300,000 Saudi riyals loan, without guarantor, through a phone app, with approval granted in minutes.<\/p>\n

The Abdul Latif Jameel Investment Management Company (JIMCO<\/a>), meanwhile, is investing in numerous businesses that enable individuals and corporates to access the finance they need, when they need it most. Investments include:<\/p>\n