Digital banking platforms are stepping in and filling the
gap as they provide millions of unbanked people with access to financial
services.
As digital financial services develop, banks and non-banks
have the prospect of reaching millions of new customers among previously
excluded and underserved populations. Digital financial channels are growing
and now include mobile phones, smartphone apps, and digital assets—with some
projects already scaling significantly.
This digital move is benefitting millions of poorer
customers who are now moving from cash-based economies over to formalised
financial services, such as payments, transfers, and savings. This trend is set
to increase as more technologies and innovations roll out over the coming
years.
Unbanked: the global picture
About 31 per cent of adults globally are unbanked according
to the World Bank. These 1.7 billion people lack access to a bank account via a
financial institution or mobile money service. In the United States, around
17.2 million adults are unbanked and 46m are underbanked according to the
Federal Reserve. This has increased the need for alternative financial
providers such as challenger banks and neobanks.
Innovative payment platforms and services are seeking to
serve the unbanked and underbanked by delivering safe and easy access to
financial services. This is made possible by combining technologies including
virtual payment cards, mobile phone payments, and digital assets to make
payments services, banking platforms, and secure transactions more accessible.
As a result, these services are reaching a wider audience and fostering
financial inclusivity as well as creating seamless banking services.
Benefits of digital banking services for the unbanked
The essential components of digital banking that foster
financial inclusion for the unbanked are digital banking platforms, smartphone
banking apps, and POS payments services. Together, they enable customers to
make and receive payments, view and manage their finances, and make seamless
payments to merchants.
The benefits of gaining digital financial inclusion for the
unbanked include access to financial services, cheaper transactions,
personalised financial services, and greater security especially from loss and
theft. Financial inclusion can also enable people to begin saving and planning
for their long-term financial well-being, increasing their economic
participation and economically empowering them.
Indeed, some digital banking services have already
incorporated digital assets into their existing services with more planning to
add them to promote financial inclusivity through the benefits they provide.
For example, many people who don’t have access to traditional financial
services can readily create a digital asset wallet and begin transferring funds
and typically at lower fees than at a brick and mortar institution. As access
to digital banking services grows it’s set to fuel economic growth and improve
unemployment rates by creating the means to seamlessly and securely pay people
for work and services.
Stay ahead of the curve
Digital assets are gradually being incorporated into
mainstream finance around the world. Therefore, it’s essential that ambitious
organisations carefully consider the financial toolkit and infrastructure they
require to continue serving their staff and reaching customers including the
unbanked.
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