financial inclusion and fintech in 2021

financial inclusion and fintech:

According to the World Bank’s universal report on financial access by 2021, more than 2 billion adults will be excluded from the formal financial system fintech.

The challenge is to ensure that by 20201 adults around the world have access to a checking account or electronic service to save money and send and receive payments. This goal is at the root of the boom in financial inclusion strategies, which are increasingly leveraging technology and services provided by so-called technology finance (fintech).

Gradually, the first steps are being taken towards wider financial inclusion, where individuals and businesses can safely use a wide range of appropriate financial services, including savings, payments, loans, and insurance.

Here are the seven keys to achieving it:

1. Develop an engaging and meaningful customer experience.

The key is to simplify everything so that users feel like they are not wasting time. And this is achieved by designing simple and elegant financial services.

One of the inclusion systems that benefit from the use of technology is the so-called “rescue circles”, otherwise known as ARAC in the United States. This is a popular alternative aimed at people who do not have access to a checking account. This allows them to receive and lend money to a group of people they know and trust. The idea behind this concept is that each member of the circle contributes a monthly amount and in turn, another member receives a full monthly amount.

Advances in technology have opened up new channels for the future of this system, and many companies in the US and Latin America, such as Clearstreet, are digitizing these circles to make them more accessible to more people.

2. Socialize financial products and services.

Many customers want to participate socially with their savings. Evidence of this is the proliferation of peer-to-peer (P2P) funding sites like Prosper.

3. Commitment between financial institutions and their customers

It must be a commitment in both directions. In other words, they should not only require banks to create an engaging customer experience, but they should also be able to communicate with their customers.

In this way, more loyal relationships with customers can be built to involve them in certain financial services.

The financial tool Juntos is an example of these practices, as it provides customers with a communication platform via SMS.

4. Increase access to banking resources and improve financial health

Creating new product lines that help people build their financial capabilities in innovative ways so they can better manage their savings.

Worth mentioning in this regard is CreditMantri in India, a ‘credit coach’ that helps users improve their creditworthiness.

5. Blockchain Use Outside of Cryptocurrencies

This technology offers many opportunities for financial institutions. It can be used, among other things, to optimize, process, and audit internal processes or to streamline data management.

Another blockchain application is BitLand, which uses technology to register a book that registers property titles in Ghana and Honduras.

For example, Coinbase uses this technology to promote P2P transactions. It has its origins in the United States, where the culture of bank checks is still deeply ingrained, to encourage other forms of financial services.

6. Generate alternatives to break with financial inclusion

The use of information and knowledge through the application of Big Data enables financial institutions to offer more tailor-made banking services.

7. Biometrics

Make the most of alternative user identification and authentication methods, such as iris recognition and self-portraits. An example of the use of this technology is BehavioSec, a provider of biometric solutions that uses machine learning to identify users depending on how they interact with their devices.

Financial Inclusion at BBVA

At FPA, financial inclusion is based on a sustainable business model characterized by:

1. The use of new technologies and digital platforms.

2. Innovative and cost-effective financial solutions specifically designed for this segment of the population.

Big Data and non-traditional methodologies, for example, to measure risks.

Deliver the same customer experience across all channels.

BBVA has been working on a global strategy since 2008 to give people with low incomes in emerging countries access to financial services through alternative solutions to the traditional agency model. That is why BBVA develops low-cost digital.

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