What does financial inclusion look like?

What does financial inclusion look like?

And how do fintechs help more people get fair access to financial services.

I was thinking about what banks are doing, how can the financial ecosystem really serve everyone fairly, and here are some points that i thought might be interesting, breaking down each player and how they can help.

1- Neobanks and digital banks:

What Neobanks or wallets do in emerging markets that have no real access to bank accounts and deposits services is is very important, when a family that has a low monthly income has access to a mean of saving, investing, and doing remittance.

This value makes sense, and is needed in third world countries.

2- Owning the data:

The problem with the banks in general is that they are confusing building good sticky products with controlling the customer's data in a way that doesn't give the customer freedom to choose products from different financial institutions, example given:

If you're using a bank for your salary deposits, and you want to get a loan from another bank because you like their pricing, the other bank will ask you to move your salary deposits to them, so you can be eligible for financing. Another example: if you want to get a bank statement of your amounts, you have to pay the bank an amount.

This point exactly can go on for many pages, but it all comes down to the focus on customer focused products, instead of pushing the customer and forcing him to do business with one bank.

Also, PFMs and OB APIs aggregators have built a new value based on giving the customers full control of their data, love to see how this burst of PFMs is going to pan out.

3- Access to investment opportunities:

The problem with the current investment ecosystem is that customers go through a lengthy process to be verified, and checked, to be able to invest in some good funds that are usually serving people who have high degrees in financial education, high wealth, or knowledge in managing digital platforms. The average citizen wouldn't know how to invest in ETFs and funds that can be helpful to increase their chances of getting annual returns.

This can work in multiple ways: Robo advisory apps, platforms that offer access to global stocks, and platforms that have focused emphasis on saving and low risk local funds.

4- Access to loans:

This goes back to the second point, the problem with loans is that banks and financing companies are still underwriting using old methods, based only on income, employer financing contract with the bank, and direct credit score from the credit bureau, any other behavior related to spending, saving, investing, is not taken in consideration.

Second thing, is for freelancers, and low income people, these segments are not served right, because the data sets required are old fashioned and not based on behavior, if a person's salary is below 2000 dollars, or working in an unrecognized organization, the interests rate will be very high, now in KSA it averages between 20% and 50% based on the income level and current credit obligations.

For all these things to evolve and take a new shape, we need to be more open to new ideas, and promote financial inclusion as our North-Star and the beginning of a new era.