Fintech Companies Have the Power to Advance Financial Inclusivity

Fintech companies have a leg up over the traditional banking industry when it comes to assisting the financially disadvantaged, but there are also pitfalls they must avoid.

learn more about Chidike Samuelson

By Chidike Samuelson

Opinions expressed by Entrepreneur contributors are their own.

Since financial technology entered the mainstream, the sector has been plagued by complaints of inaccessibility and discrimination. Fintech companies now have one unwritten responsibility: to bridge the gap and provide easy access to financial services that are useful and affordable for individuals and businesses alike.

According to the World Bank, there are 1.7 billion unbanked people worldwide. The lack of a bank account effectively limits how much credit a person or a business can access and hinders development in the small- and medium-scale enterprise sectors.

Financial technology is a tool that can encourage inclusion across the board: Wherever there is a mobile phone, banking and financial service are possible. While fintech companies are mainly involved in mobile payments, they encompass many other activities, including savings, loans, investments and insurance.

Related: How Hong Kong Stands Out as a Top Fintech Hub

A decade of change for fintech

In 2010, the G-20 and the World Bank started the initiative for increased financial inclusion to help reduce poverty levels in emerging economies (GPFI, 2010). To a large extent, however, the responsibility for this advancement has fallen on the shoulders of these developing countries. At the time, the Middle East and North Africa (MENA) region had only a handful of fintech companies with limited access to capital. This has contributed to a slow implementation of the goals of the UN and the G-20 until recently. Over the last decade, the investment landscape in the MENA region has seen a breakthrough, especially for early-stage companies and tech start-ups, which attracted significant interest from both regional and global VCs.

The MENA region is home to the largest youth population in the world (with over 200 million people under the age of 25). According to USAID, 43% of adults in the MENA region do not have bank accounts or are underserved when it comes to accessing financial services, making for a significant untapped potential market for fintechs. Some governments in the region have been actively improving the regulatory environment, pushing its agenda towards a cashless society.

Fintech stands out because it provides the financially disadvantaged with easy access. Technology gives them the leverage to push for inclusion at a faster rate. The wide range of services, better opportunities and lower operating costs also contribute to fintech's irresistable package. However, these advantages also come with some challenges and risks, and if they're not handled properly, they can sabotage the drive for inclusion.

Related: How Fintech Is Changing the Face of the Stock Market

Fintech isn't without its challenges

Because of a lack of proper industry regulation, many fintech companies, especially in the loan sector, offer loans to customers at exorbitant interest rates. In many cases where these loans result in defaults, the customers are blacklisted without warning. These practices serve to further disenfranchise a large swath of the population and decry the urgent need for a common-sense approach to fintech services. Other challenges include cyber security, data breaches, overpricing and fraud.

Balancing the challenges and benefits of fintech should be our focus going forward. In a bid to get the structures running, many fintech companies lose touch with the customer base. These companies must prioritize customer service, affordability and accessibility. Fintech companies should redirect their attention towards becoming more instrumental in helping the underbanked build a credit identity.

Additionally, fintech companies should provide their users with productive liquidity intervention so they have a safety net in case they're confronted with financial uncertainties. Access to liquidity stops the vulnerable from having to sell passive-income assets and assists against a spiral into poverty. Fintechs providing some sort of embedded insurance cover that protects users from accidental and natural death and disability also tend to attract more patronage from those in the financially disadvantaged bracket.

There has also been some argument against the compound-interest payment pattern of most loan-issuing fintech companies. If people are financially disadvantaged enough to require small to medium loans, they will probably struggle with compound-interest repayment plans, and it may only lead to a vicious circle of borrowing and increasing debt. To fight this reality, some fintech companies have introduced a fee-based model, where users have a stated fee per loan and not a compound-interest repayment package. This model makes it easier to reward recurring users with lower fees and higher loan limits while guarding against exorbitant debt.

Related: How Fintech Is Transforming the Middle East, Africa and South Asia's Financial Service Industry

It's clear that fintech has a leg up over the traditional banking industry when it comes to direct access to users, especially the financially disadvantaged. Still, unless financial inclusion rises to the forefront of their mission statements, perhaps with the help of government regulation, fintech companies will likely become profiteering institutions like those before them.

Chidike Samuelson

Entrepreneur, Lawyer, Author and Freelance writer

Chidike Samuelson is a serial entrepreneur and professional freelance writer specialized in developing content for businesses and websites. He offers general freelance writing services and business consulting at

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

Business News

Meta Employees Interrogate Mark Zuckerberg in Town Hall Meeting

The CEO fielded tough questions from rattled staffers at an all-hands meeting.

Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Business News

American Airlines Sued After Teen Dies of Heart Attack Onboard Flight to Miami

Kevin Greenridge was traveling from Honduras to Miami on June 4, 2022, on AA Flight 614 when he went into cardiac arrest and became unconscious mid-flight.

Business News

TikTok Influencer Reveals She Makes $350,000 a Month on OnlyFans. 'Absolutely Unreal.'

When Tara Lynn promoted her OnlyFans page on TikTok, she saw her income more than double.