There are currently four devices connected to the Internet per inhabitant, that is, 22 billion devices connected globally.
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Financial inclusion means that individuals and businesses have access to useful and affordable financial products that meet their needs, as established by the World Bank (WB).
In that sense, the degree of knowledge and use of different financial instruments gives us an idea of how developed a society is. According to WB figures, around 2.5 billion people worldwide do not use formal financial services and 75% of the poor population does not have bank accounts.
Technology is a vital ally to promote inclusion and financial competitiveness, as it favors greater reach. Only the increase in smartphones has allowed expanding access to low-cost financial services for small businesses and encourages financial inclusion of populations in rural areas.
There are currently four devices connected to the Internet per inhabitant, that is, 22 billion devices connected globally, according to a report by the HelpNetSecurity website. In Mexico, eight out of 10 people use the internet on their cell phone, according to the Federal Telecommunications Institute.
“The services offered by banks worldwide have been transformed thanks to digitalization, which has changed the way consumers are served and how they interact with companies. Technology has allowed financial institutions to increase their flexibility and allow certain banking services to be performed by a third party, ”says Sebastián Medrano, director of. “Likewise, digitalization has been driving the creation of new operators in the value chain, such as fintech and neobanks,” he adds.
It is clear that digitalization is the most profitable way to expand access to financial services and improve financial inclusion, but how is technology helping to improve it? According to the Mexican startup specializing in financial services, these three technologies are helping to improve inclusion:
Financial technology companies have managed to position themselves as an alternative to meet the needs of the most vulnerable population, thanks to the fact that they have been able to integrate new technologies with people's needs. In addition, fintech facilitates loan applications and attracts individuals and small businesses that previously had little or no relationship with the traditional banking system.
“Fintech competes with traditional methods in the provision of services, because in addition to providing specialized services, venturing into the cryptocurrency market and targeting a population unattended by traditional banking, these companies democratize the way in which financing circulates by using technology and innovation to improve the activities of the sector, ”explains Medrano.
Today fintech companies in Mexico report annual revenues of 157 million dollars, while promoting a growth of digital banking in the country of 200%, according to data from the consulting firm KPMG.
The neobanks are those entities that offer banking intermediation services under a 100% digital business model, in order to meet the basic financial needs of the population that does not require sophisticated services.
With this approach they hope to achieve greater customer loyalty, as well as obtaining data and feedback that allow them to improve their services and adapt them to the needs of the users. In addition, they promote financial inclusion by making intensive use of technology that allows them to leverage their operation in the use of tools such as artificial intelligence.
Although they took a while to reach the region, the neobanks are already making great strides in the industry. Brazilian entities such as Nubank, GuiaBolso and Creditas managed to report investments of more than 150 billion dollars between the three, while the Mexican Bankaool was valued at 133 million pesos.
Digital payments / payments
One of the great challenges that banks and government have is the decrease in the use of cash. At the national level, 87% of people still use it to make purchases over 500 pesos; while only 10% of adults make payments through their bank account and only 2.7% use smartphones, despite the fact that 93% of the total population in Mexico connects to the internet through their cell phone, according to data from the National Survey of Financial Inclusion (ENIF 2018).
One of the initiatives that the Mexican government has launched to promote financial inclusion is the Digital Collection System (CoDi), a platform of the Bank of Mexico that facilitates payments and money transfer from mobile devices through the use of QR codes .
This tool allows the simple and fast opening of a bank account for consumers and businesses. In addition, there are other platforms, such as Wallets, that are helping to make more and more use of electronic money.