Technology is winning the fight for financial inclusion around the world. It has gained real ground over the past few years.
Countries are gradually taking the necessary steps to boost financial inclusion, allowing those long-term unbanked and underbanked populations typically found in remote locations and/or in developing economies to have access to financial services.
In Nigeria, the financial inclusion rate in the year 2016 was 56.8% and increased to 63.2% in 2018 and is currently at 64%.
This growth shows that more than half of the country’s population is making use of one or more forms of formal financial services, from banks to microfinance banks, mobile money, insurance and even pension accounts.
Although studies have shown that women are more financially excluded in the country than men, there is no doubt that effort has been made in recent times to bridge the gap of financial inequality by bodies like the Central Bank of Nigeria (CBN) and many Fintech companies.
What is Financial Inclusion?
The World Bank defines financial Inclusion as the access individuals and businesses have to useful and affordable financial products and services that meet their needs, and are delivered in a responsible and sustainable way.
Financial inclusion empowers people to build their wealth and allows banks to extend their customer base. Governments also benefit from inclusive finance since a more connected society can increase the velocity of money and economic growth.
Why Is It Important?
Knowledge ultimately creates great power. Without a good understanding of the financial sector, it’s impossible for countries and individuals to thrive.
The last decade however, has seen technology play a significant role in closing the gap, both in developed and emerging countries, with fintech (financial technology) taking the lead.
The significance of physical bank branches has gradually begun to diminish, due to the rise of the internet and mobile phones.Today, two thirds of the global unbanked population own a mobile phone therefore making the sending and receiving of money digitally more pronounced.
Financial inclusion matters because it enables everyone to participate in the economy and improve their well-being by incorporating digital technology into daily money operations. Thus, creating a favorable environment for small businesses, allows individuals to reach their life and financial goals, and also contribute to the country’s welfare.
With increased income and the ability to save and take on credit, financial inclusion provide the means for poor families to acquire land, construct or improve their households and obtain many assets which improves their livelihood.
So therefore, financial flexibility helps families meet unexpected economic setbacks and allows entrepreneurs to invest in their businesses and create jobs.
It also increases financial security and reduces vulnerability by large percentages.
The Role of Fintech in Financial Inclusion
Many fintech startups emerge today with a mission to make personal financial management easier. As a result, we can see more and more startups that offer fintech solutions and services encouraging more mindful spending, saving, and wealth creation.
Fintech drives financial inclusion in different ways which include accelerating the access and usage of financial services with a special focus on closing the gender gap,reducing the financing gap for small businesses and lowering costs for cross-border remittances while simultaneously promoting financial stability and integrity.
Nigeria’s financial inclusion landscape is laced on both hope and challenges. As Africa’s largest economy, Nigeria has the potential to drive consumers toward financial inclusion completely in a few years time.