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The disruption of consumer lending market and financial inclusion


Cross-border transfers, quick loans, personalised financial advice from AI-powered apps and managing your personal budget through a mobile phone with zero or minimum cost – this all sounds like a bright but distant future. The reality is that thousands of startups around the world are making this possible today. However, not everyone has equal access to finance. According to The Global Findex, a quarter of the world’s population does not have a bank account. Unequal access to financial services is one of the most pressing issues on the agenda of many countries today.

According to various studies, the financial inclusion of the so-called underbanked population would yield 1–3% GDP growth. Most importantly, however, inaction on this issue can be costly for both the government and its citizens. After all, the use of unofficial and even illegal financial services makes people vulnerable. They are deprived of legal protection and guarantees. Nonetheless, for various reasons, people opt to use such services.

It is important to note that people who do not use the financial services of banks and non-banking organisations are not necessarily completely excluded from the financial system. They simply prefer to turn to the informal sector to solve their problems, for example because of considerations linked to easier access or lower costs. Thus, the struggle for inclusion is not only an issue of educational projects and providing access to the financial mainstream. It is also about how legitimate players can transcend the informal sector.

The financial industry has long remained quite conservative. It was always difficult for new players to enter this market, where large companies have already established relationships with regulators, have a large customer base and possess the resources to survive even in difficult economic conditions. But thanks to the state of development of technology today, the situation has changed dramatically. So-called disruptors have appeared – companies, often startups, that are rapidly developing and focused on innovative technologies and processes in a specific field, from mobile payments to insurance.

Disrupting, even in a small niche, is not easy. Moreover, disruptors aim at high profits and quick conquest of the market. The consumer lending sector remains one of the most profitable in the world. New players use the online-only model to cover millennials and other segments of this market. They fulfill an important social function, giving the underbanked access to finance. A significant portion of the population cannot get a loan from a bank for various reasons. In such circumstances, fintech companies become the only way for many people to get access to the necessary funds.

Why is fintech capable of doing this? Thanks to new technologies, the disruptors are more flexible and offer a better customer experience and greater convenience at a lower price. They make use of innovation to create products that are more approachable for the everyday consumer. The penetration of the Internet and mobile phones makes finance accessible even to those who are far from bank branches or ATMs, while automating processes reduces the cost of providing financial services. Here, the future lies with cloud computing, which will make the increasing number of financial transactions fast and seamless, as well as artificial intelligence, which enables the analysis of big data. Technology is developing rapidly and people who previously did not have access to the financial system have gone from being a risk group for banks to a business opportunity for disruptors.


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