The role of fintech in financial inclusion
Name– Vanshika khillare
1. The Role of Fintech in Driving Financial Inclusion: A Review of Literature,
It article shows relationship between fintech’s and financial inclusion. To carry out the research work, we will initially focus on theoretical analysis, consisting of a literature review, to closely follow published articles that belong to our research area. The literature will be selected from both national and international sources to identify varied, comprehensive views and we will have a much wider spectrum of research to identify the main directions, samples, periods, limitations, authors’ results. Given the fact that the topic on FinTech is at an early stage, we consider it of interest to document the trends analyzed by other established authors and take the research further, thus contributing to studies on the same topic and providing opinions on the potential implications within the financial system.( Mina-Madalina,2024)
2. Empowering financial inclusion through fintech
The document discusses the role of Financial Technology (FinTech) in promoting financial inclusion by addressing the needs of unbanked and underbanked populations worldwide. It highlights how FinTech innovations, such as blockchain technology, mobile payments, digital identity systems, and decentralized digital currencies, are transforming access to financial services. By leveraging tools like mobile devices, blockchain-based solutions, and financial literacy programs, FinTech enables secure, transparent, and affordable financial services for low-income households and small businesses. The article emphasizes the importance of providing innovative financial products, empowering marginalized groups, and fostering economic development by bridging the gap between rapid economic advancements and growing income inequality. It also stresses the potential for FinTech startups to work alongside traditional banks to create inclusive and scalable solutions, ultimately enhancing the global financial ecosystem.( Andrei-DragoÅŸ,2019)
3. Fintech financial inclusion or exclusion
document explores the impact of Fintech on financial inclusion, particularly in narrowing divides across different societal groups. Using innovative indices and empirical data, it finds that Fintech significantly enhances digital financial inclusion compared to traditional metrics. It effectively reduces the rural and class divides but does not address the gender gap, highlighting the need for targeted policies to improve women’s access to financial services. The study underscores Fintech’s potential to benefit underserved populations while cautioning against exclusion risks like digital illiteracy, infrastructure deficits, and socio-cultural barriers. Recommendations include combining Fintech advancements with infrastructure development, education, and tailored strategies to ensure inclusivity, thus fostering equitable economic growth.(yoke &dyna,2022)
4. determinants of fintech and bigtech lending
The study examines the factors driving FinTech and BigTech lending, focusing on financial inclusion and financial development across 18 countries from 2013 to 2019. It finds that both financial inclusion and financial development are significant determinants of such lending. Financial development positively impacts the growth of FinTech and BigTech credit markets, while financial inclusion also plays a critical role. Additionally, the research highlights that this type of lending enhances banking stability but also introduces the risk of rising nonperforming loans. The findings underscore the need for policies to enhance financial inclusion, support financial sector development, and mitigate potential risks associated with digital credit markets. The study contributes to understanding how these digital innovations are reshaping financial intermediation and credit supply globally.( Peterson,2023)
5. The role of financial inclusion and financial development
The study investigates the determinants of FinTech and BigTech lending, emphasizing the roles of financial inclusion and financial development. Analyzing data from 18 countries (2013–2019), it identifies that financial inclusion (e.g., access to ATMs) and financial development (e.g., private sector credit availability) are significant enablers of FinTech and BigTech lending. The findings reveal that such lending contributes to greater banking stability but also introduces risks like rising nonperforming loans. Policymakers are encouraged to enhance financial inclusion, support financial sector development, and implement measures to mitigate risks from digital lending, ensuring a stable and inclusive financial ecosystem. The study highlights the evolving influence of FinTech and BigTech on credit markets and financial intermediation.( Peterson,2023)
6.Fintech as a mean for digital and financial inclusion
The document emphasizes the transformative role of FinTech in advancing both financial literacy and inclusion. FinTech leverages innovative technologies like artificial intelligence, blockchain, and mobile apps to make financial services accessible to underserved populations. Studies demonstrate that financial literacy is a key factor in achieving financial inclusion, as seen in improvements like having bank accounts or managing finances digitally. Projects such as “FinTech for Good” and “FinTech for Impact” highlight FinTech’s potential to address global issues like social exclusion and climate responsibility. However, challenges remain, including digital literacy gaps and resistance to new technologies, especially among older individuals. The document calls for targeted
policies and educational interventions to maximize FinTech’s inclusivity while addressing risks and limitations.( Heike Et al ,2020)
7. Monetary Policy Effectiveness and Financial Inclusion in Nigeria
The document investigates the impact of monetary policy on financial inclusion in Nigeria and examines the role of FinTech in this relationship. Using data from 2009 to 2019, the study reveals that monetary policy, through indicators like lending rates and inflation, significantly affects financial inclusion. It highlights that higher lending rates encourage savings and increase financial inclusion, while inflation negatively impacts it. The inclusion of FinTech, such as mobile money platforms, enhances the effectiveness of monetary policy in promoting financial inclusion, contrary to perceptions that FinTech disrupts this process. FinTech enables access to financial services for underserved populations, fostering transparency and reducing corruption. The study concludes that FinTech and monetary policy together can drive financial inclusion and economic development in Nigeria, with policy recommendations focused on FinTech regulation and strategic partnerships to improve network reliability and trust.( Tonuchi Et al,2021)
The study examines the causal relationship between FinTech, financial inclusion, and income inequality in 29 African countries from 2011 to 2017. It highlights that FinTech significantly boosts financial inclusion by enabling easier access to financial services, but its impact on income inequality is complex. While FinTech indirectly reduces income inequality through improved financial inclusion, it also directly increases income inequality due to barriers like limited access to technology, knowledge, and infrastructure among disadvantaged groups. Financial inclusion plays a vital role, with activities like borrowing and having accounts reducing income inequality, whereas saving shows the opposite effect, potentially due to inflationary pressures. The study calls for policies that enhance financial inclusion and FinTech access while addressing socio-economic disparities to promote equitable economic development.( Abebe & Huseynov)
9. Fintechs and the financial inclusion gender gap in Sub-Saharan African countries
The study analyzes the role of FinTechs in addressing the financial inclusion gender gap in Sub-Saharan Africa (SSA) from 2011 to 2017. Using a multilevel Tobit regression model, it finds that FinTechs significantly reduce gender disparities in access to and usage of financial services by offering innovative solutions like mobile banking and digital financial inclusion tools. However, the study also emphasizes that FinTech development alone is insufficient to entirely bridge this gap. Complementary policies, such as targeted initiatives to address socio-cultural and structural barriers, are crucial for effectively closing the gender gap. These findings highlight the need for a combined approach leveraging both FinTech advancements and inclusive policies to enhance women’s economic empowerment and sustainable development in SSA.( Aurelien,2022)
10. Defeating the Dark Sides of FinTech: A Regression-Based Analysis of Digitalization’s Role in Fostering Consumers’
The study explores how digitalization fosters financial inclusion through FinTech in Central and Eastern European (CEE) countries. Using regression and cluster analysis, it examines variables like internet usage, online shopping, and digital payments to understand their influence on financial inclusion. The findings reveal significant regional variations in FinTech adoption, with Russia leading, followed by Austria, Poland, and Turkey, while other CEE countries exhibit lower levels of inclusion. Key factors influencing financial inclusion include accessing bank accounts online, digital payments, and debit card ownership. Despite the potential of FinTech to promote inclusion, challenges like digital literacy gaps, trust issues, and regional disparities persist. The study recommends enhancing financial literacy, improving digital accessibility, and ensuring data security to maximize the benefits of FinTech while addressing its risks. These efforts can contribute to greater financial inclusion, social stability, and sustainable development in the CEE region.( Mirela Et al,2024)
SUMMARY
It provides insights into the role of FinTech in driving financial inclusion across various regions and demographics. It highlights FinTech’s ability to enhance financial access for underserved populations through innovations like blockchain, mobile payments, and digital identity systems. Studies showcase its potential to address challenges such as rural-urban and class divides, though issues like gender gaps, digital illiteracy, and infrastructural deficits remain. FinTech is also shown to bolster banking stability and economic development but introduces risks like nonperforming loans and income inequality due to technological barriers. Policymakers are urged to combine FinTech advancements with supportive strategies, including education, infrastructure improvements, and tailored initiatives, to maximize inclusivity while addressing socio-economic disparities. Overall, the document underscores FinTech’s transformative potential to reshape global financial systems and foster equitable growth.
References;-
Abebe Gule Girma & Huseynov, 2023. “The Causal Relationship between FinTech, Financial Inclusion, and Income Inequality in African Economies,” JRFM, MDPI, vol. 17(1), pages 1-15, December.
Andrei-DragoÅŸ POPESCU, 2019. “Empowering Financial Inclusion Through Fintech,” Social Sciences and Education Research Review, Department of Communication, Journalism and Education Sciences, University of Craiova, vol. 6(2), pages 198-215, November.
Aurelien K. Yeyouomo & Simplice A. Asongu & Peter Agyemang-Mintah, 2022. “Fintechs and the financial inclusion gender gap in Sub-Saharan African countries,” Working Papers of the African Governance and Development Institute. 22/083, African Governance and Development Institute..
Heike Bähre & Giovanni Buono & Valerie Isabel Elss, 2020. “Fintech as a Mean for Digital and Financial Inclusion,” Book chapters-LUMEN Proceedings, in: Marcin Waldemar STANIEWSKI & Valentina VASILE & Adriana Grigorescu (ed.), International Conference Innovative Business Management & Global Entrepreneurship (IBMAGE 2020), edition 1, volume 14, chapter 15, pages 205-211, Editura Lumen.
Mina-Madalina Toma, 2024. “The Role of Fintech in Driving Financial Inclusion: A Review of Literature,” Economics and Applied Informatics, “Dunarea de Jos” University of Galati, Faculty of Economics and Business Administration, issue 3, pages 334-343.
Mirela Clementina Panait & Simona Andreea Apostu & Iza Gigauri & Maria Giovanna Confetto & Maria Palazzo, 2024. “Defeating the Dark Sides of FinTech: A Regression-Based Analysis of Digitalization’s Role in Fostering Consumers’ Financial Inclusion in Central and Eastern Europe,” Risks, MDPI, vol. 12(11), pages 1-18, November.
Ozili, Peterson K, 2023. “Determinants of Fintech and Bigtech lending: the role of financial inclusion and financial development,” MPRA Paper 117465, University Library of Munich, Germany
Peterson K. Ozili, 2023. “Determinants of FinTech and BigTech lending: the role of financial inclusion and financial development,” Journal of Economic Analysis, Anser Press, vol. 2(3), pages 66-79, May.
Yoke Wang Tok & Dyna Heng, 2022. “Fintech: Financial Inclusion or Exclusion?,” IMF Working Papers 2022/080, International Monetary Fund.
Tonuchi E. Joseph & Nwolisa U. Chinyere & Obikaonu C. Pauline & Alase, A. Gbenga, 2021. “Monetary Policy Effectiveness and Financial Inclusion in Nigeria: FinTech, ‘the Disrupter’ or ‘Enabler’,” International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 9(1), pages 19-27.