Fintech, financial inclusion and the global fight against poverty.

There is a strong, positive correlation between financial inclusion and more and more people getting out of poverty. Financial inclusion refers to the availability and accessibility of financial services, such as banking, credit or insurance to individuals and businesses, regardless of their income level. When people have access to such services they can more easily save, borrow and invest in their businesses and communities, which is an essential first step towards lifting them out of poverty. In addition, financial inclusion can help reduce inequality by providing access to financial services to those who may have previously been excluded due to lack of collateral, documentation or other barriers.

There's evidence that a positive progress in society's financial inclusion leads to significant reductions in poverty. As an example, a study conducted by the World Bank found out that a 10 percentage point increase in financial inclusion is associated with a 1.5 percentage point reduction in #extremepoverty (i.e. living on less than $1.90 per day, such individual is unable to meet their basic needs for food, shelter, and other necessities). Other research has also found that financial inclusion is positively correlated with economic growth and development, consequently another contributing factor to poverty reduction.

Financial inclusion refers to the availability and accessibility of financial services to individuals and businesses, regardless of their income level.

Fintech companies have made significant strides in promoting #financialinclusion through innovative solutions that address the barriers of access to financial services. As we discussed in the previous article in more details, these companies use technology to provide a range of financial products and services, including mobile banking, peer-to-peer lending and online payment platforms to individuals and businesses that may have previously been underserved or excluded from the formal financial sector.

One notable way in which fintech companies have facilitated financial inclusion is by offering alternative lending options to individuals who may not qualify for traditional bank loans. P2P lending platforms, such as Lending Club and Prosper, enable individuals to borrow and lend money directly to one another, bypassing the need for traditional financial intermediaries and offering a viable option for those who may have been previously denied access to credit. Lending Club has facilitated over $50 billion in personal loans since its founding in 2006, making it a leading player in the lending space.

Furthermore, fintech companies have made financial products and services more accessible through the use of online platforms. Online payment platforms(such as Venmo) have significantly reduced the cost of transferring funds and are now being crucial challengers in the banking space(with Venmo processing over $230 billion in total payment volume in 2021). Additionally, many fintech companies offer competitive fees for financial products such as payment card processing or foreign exchange, which can be especially beneficial for small businesses that may not have the bargaining power to negotiate lower fees with traditional financial institutions.

In addition to providing access to financial services and products, fintech companies have also played important role in promoting financial literacy and education, particularly in underserved communities. Financial literacy apps, such as Mint or Acorns, provide individuals with the tools and resources to better manage their finances and make informed financial decisions, filling a gap in financial education and advising that may not otherwise be available. For example Acorns is being used by over 10 million users, many of whom are younger individuals seeking to improve their financial literacy and planning skills.

Overall, financial inclusion plays a critical role in helping to reduce poverty and promote economic development by providing individuals and businesses with the tools and resources they need to succeed. The emergence of fintech companies has had a significant impact on financial inclusion, breaking down barriers of access and empowering individuals and businesses to participate in the financial sector. By providing alternative lending options, making financial products and services more affordable and accessible and promoting financial literacy, #fintech companies have contributed to the democratization of financial services and have helped to bridge the financial divide.