How Fintech is Reaching the Base of the Pyramid in Emerging Economies
Fintech businesses are aggressively transforming the financial services industry and enhancing people’s quality of life. But what’s going on in emerging economies? In emerging economies, “inclusive fintech,” or fintech goods and services that benefit the underserved, is a thriving industry in and of itself.
The How of Inclusive Fintech
Accessibility
In traditional finance, access to stable sources of income or ownership of sizable assets have historically been used to determine a person’s creditworthiness. However, inclusive fintech businesses can leverage non-conventional sources of data, including social networking or mobile phone data, to broaden their reach. As a result, emerging market fintech firms can reach new clients and provide services to people who have previously been excluded from the financial system. They achieve this either by partnering with financial service providers to improve their capabilities or by altogether developing products specifically made for low-income consumer segments. To aid in the democratization of finance, inclusive fintech firms are introducing potent technologies into the financial services ecosystem. For instance, Gigmile is bridging the credit gap for gig workers in Africa by giving them access to assets that generate income, a digital credit profile that can be verified, comprehensive social protection packages, and opportunities for future growth. Gigmile has helped several gig workers in Ghana and Nigeria, who would have otherwise not had access to credit and support.
Affordability and Flexibility
With the use of Pay-As-You-Go (PAYGo) models in particular, fintech has been able to provide more reasonable prices and flexible payment options. Instead of paying for goods and services in big lump sums upfront, PAYGo solutions let clients pay daily, weekly, or even monthly. For instance, credit is given to the bottom of the pyramid for necessities like solar home systems, agricultural inputs, cookstoves, and water pumps, courtesy Solaris’s main finance program PaygOps. By using mobile money and a PAYGO paradigm, this solution enables end users to make incremental payments. Energy and payment methods (Pay-as-you-go, mobile money) are connected to a collection of enterprise applications by Solaris’ reasonably priced, modular, and interoperable solution. This enables the efficient management of financing and field operations while providing investors with important financial data and metrics.
Client-Centric Design
Customers of traditional financial services have long complained about complicated user interfaces, protracted contracts, and hidden fees and clauses. However, we’ve observed that quicker pilots, iterations, and pivots can help financial companies become more user-centered. Most fintech businesses have embraced design concepts that enable them to put themselves in the user’s shoes and create solutions that are straightforward and simple to use, from activation to consumption. Proto for example, is a leader in the developing financial services markets of Asia and Africa for inclusive chatbots and multilingual contact center automation. Since there are a lot of first-time buyers who need assistance in their native tongue and via SMS and messaging apps, central banks and financial institutions are deploying Proto chatbots for customer engagement and protection from Ghana to the Philippines. By advancing machine understanding of regional languages like Kinyarwanda, Twi, and Tagalog, Proto’s Natural Language Processing technology also collects vast amounts of data from national financial ecosystems.
Data-First, Mobile-First for All
Fintech companies, both newcomers and established players, benefit from modern tech approaches and lean business practices to “supercharge” finance and make it even more inclusive. Today’s fintech businesses use mobile platforms and non-traditional data sources to learn more about low-income consumers and customize services and products to meet their needs and satisfy unmet demand. Additionally, effective analytics enable organizations to find profitable opportunities in the low-income long tail.
Conclusion
Fintech is making a positive statement and screaming “inclusion” in emerging economies as it reaches the unbanked or the base of the pyramid. Gigmile for example continues to play a solid role in the gig economy space in Africa, leaning heavily into inclusive fintech principles, by building the much-needed resilient infrastructure, democratizing access, and offering comprehensive services and inclusive financial solutions. Without even taking into account the unmet financing needs that have been estimated to be in the trillions of dollars in previous International Finance Cooperation studies, data from the World Bank and International Monetary Fund for six significant emerging markets in Africa, Asia, and Latin America show that those six markets alone represent a $741 billion market. Due to their dynamic growth, fintech companies are likewise expanding more quickly than traditional financial services divisions and are raising the interest of more investors. All these show that fintech is taking deep roots in emerging economies in a way that serves the base of the demographic and is an improvement to traditional finance systems.
