November 21, 2019
When we speak about the origins of FinTech, quite often, one will connect it to financial inclusion in the early days. FinTech was meant to be a crucial instrument in increasing financial inclusion, and over the last decade, we have seen FinTech’s positive impact on achieving it.
One of the first use cases of financial inclusion through FinTech and a prominent use case for FinTech overall has been M-Pesa in Africa, which was started by Vodafone’s Safaricom in Kenya. M-Pesa uses the phone as a wallet, and in effect, a phone number becomes an account number for financial transactions. One can do multiple things with M-Pesa, from paying bills to transferring money across the country via the 120,000 M-Pesa agents in Kenya alone – and all this can be done through a feature phone. It is estimated that transactions over M-Pesa amount to 35% of Kenya’s GDP, with mobile money transactions amounting to 50% of Kenya’s GDP and that M-Pesa has brought 2% of the population out of poverty. M-Pesa is a pioneer in this area, and since 2007, we have seen a growth in mobile money players across developing markets, playing a crucial role in financial inclusion. From less than a third of the population having access to banking in 2007, over 93% of Kenyans now have access to banking services through mobile money.
Mobile technology and advancements in the field have had a significant role to play over the last few years. M-Pesa’s case highlights how mobile phones have played a crucial role in increasing financial inclusion in emerging and developing economies for populations to leapfrog ahead.
Before we look at further use cases of how FinTech has helped increase financial inclusion, we n ...