Driving Financial Inclusion and FinTech for Good: The Role of FinTech Companies

Dear readers, Happy end of the month!

Financial inclusion is a critical global issue, with millions of people around the world still lacking access to essential financial services. In recent years, FinTech companies have emerged as powerful agents of change, leveraging technology to overcome traditional barriers and extend financial services to underserved communities. They revolutionize the financial landscape with mobile devices, digital platforms, and innovative business models, offering open banking, mobile banking, digital payments, microfinance, and customized lending solutions. With their agility and customer-centric approach, FinTech companies drive financial inclusion at an unprecedented pace.?

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In this context, the Inclusive Fintech Forum 2023 was held with a clear objective: to promote financial inclusion and FinTech for Good in the Global South. The forum brought together regulators, policymakers, decision-makers, founders, investors, and key FinTech players to generate innovative solutions. Focusing on the Global South, including Asia, Latin America, and Africa, the forum fostered collaboration and sustainable FinTech practices.? Let's explore the major obstacles faced by the industry and how FinTech companies can contribute to achieving the goal of driving financial inclusion and FinTech for good.?

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Barriers to Financial Inclusion:?

1. Limited Access to Basic Financial Needs/Services:?

Despite the rise in smartphone usage and improved infrastructure, there are still 1.4 billion unbanked and underbanked individuals worldwide. In sub-Saharan Africa, 65% of adults lack access to basic financial services. This limited access to financial needs and services hampers economic growth and social progress for this larger demographic.?

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2. Low Financial Literacy:?

A significant portion of the population lacks basic financial literacy, which restricts their understanding and utilization of financial products and services offered by FinTech companies. This lack of knowledge creates a barrier to entry for underserved communities and inhibits the scaling of FinTech businesses.?

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3. Regulatory Environment:?

Navigating complex regulatory frameworks remains a challenge for FinTech companies, particularly startups and emerging players. The lack of collaboration between regulators hampers the ability of FinTech companies to extend their offerings across borders, limiting fast and affordable cross-border transactions.?

To overcome these barriers and drive financial inclusion, as FinTech companies, we can play a vital role through the following actions:?

1. Enabling Seamless Cross-Border Transactions:?

FinTech companies can prioritize building digital payment solutions that prioritize interoperability. BK TecHouse, for example, has developed UrubutoPay, a universal payment gateway that seamlessly integrates with client websites. This product offers easy APIs for all platforms and enables businesses, including those without technical expertise, to receive payments worldwide through popular cards, bank channels, and local wallets. By focusing on interoperability and adopting digital identity tools, FinTech companies can facilitate affordable cross-border transactions, fostering financial inclusion and economic growth.?

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2. Financial Product Simplicity and promoting financial education:?

Fintech companies can develop and promote simplified financial products tailored to individuals with limited knowledge in this area. By offering services in local languages, utilizing short USSD codes for accessibility, and presenting information in a clear and straightforward manner, fintech companies can make their offerings easier to understand and use. ?

Additionally, to drive financial education, fintech companies can form partnerships with government agencies or local non-profit organizations. These collaborations aim to empower individuals and facilitate their adoption of digital financial services, enabling them to fully participate in the financial ecosystem. An excellent example of such an initiative is the local #TwagiyeKashiresi campaign that is spearheaded by the Ministry of ICT, the ICT Chamber, and various fintech companies, including BK TecHouse. This campaign educates the masses about the advantages of transitioning to cashless transactions and embracing digital financial services.?

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3. Partnering with Financial Institutions:?

Collaboration between FinTech companies and traditional financial institutions is crucial for extending financial services to the unbanked and underbanked. BK TecHouse's SNS (Smart Nkunganire System) and SKS (Smart Kungahara System) products are prime examples. SNS has digitalized Rwanda's agriculture subsidy program, bringing transparency and efficiency to the scheme. Similarly, SKS is digitalizing the cash crop value chain, linking all value chain stakeholders, enhancing productivity, and ensuring market linkages. These platforms accept digital payments, enabling smallholder farmers to access financial services such as loans and insurance. The visibility provided by SNS and SKS enables financial institutions to assess credit eligibility and contributes to economic growth while reducing inequalities.?

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4. Collaboration and Regulatory Engagement:?

BK TecHouse's collaboration with the BNR is an example of how FinTechs and regulators can work together to create a more innovative and inclusive financial system in Rwanda. BK TecHouse collaborates with the BNR, engaging in joint research to inform regulations. The recently launched sandbox initiative for fintech experimentation with regulatory support is commendable. By expanding its operations and acquiring more licenses, BK TecHouse constantly seeks guidance from BNR. BK TecHouse values the BNR's capacity building, especially in AML/CFT. Moreover, BK TecHouse aims to integrate with RNDPS to enhance payment processing efficiency, expand reach, and reduce costs, positioning itself as a leading player in Rwanda's fintech sector, delivering secure payment solutions to meet customer demands and driving financial inclusion.?

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In conclusion, as FinTech companies, we have a significant role to play in driving financial inclusion and FinTech for good. By leveraging technology, innovation, and strategic partnerships, we can address the barriers hindering access to financial services and contribute to sustainable development. Working together with traditional financial institutions, regulators, and other stakeholders, we can strive towards a future where financial inclusion is a reality for all, ensuring that no one is left behind in the journey toward economic empowerment and social progress.?