Roughly half of the world’s population are financial nomads; those who aren’t part of the institutional finance system. In my previous blog, I wrote down three main barriers to financial inclusion, which were: cost, culture and distance. In this post, I sum three ways on how financial technology (fintech) companies can alleviate financial exclusion by removing, or at least lowering, the obstacles.
Fintech companies can charge little or no access fees
Banks normally require you to have money when you start to use their services. For example, if you want to open an account in CIMB Niaga bank in Indonesia, you’ll need an opening balance of 1,000,000 IDR (= approx. 75 USD) and pay 30,000 IDR for administration fees. If you need a checkbook, it costs an additional 100,000. [i] In CitiBank Vietnam, in turn, you’ll need an opening balance of 1,000,000 VND (= approx. 50 USD).[ii]
If you earn only a few dollars per day, these sums are a fortune.
Fintech companies can lower, or completely remove, the barrier to their services by not charging access fees. For example, famous Kenyan mobile money company M-pesa doesn’t charge any opening or administration fees. Instead, you’re charged when you transact or withdraw money. Tapp Commerce’s Tapp Market works the same way: Tapp takes a razor thin slice whenever someone does a transaction, for instance, pays an electricity bill.
Community member can use fintech tools
People at the bottom of the economic pyramid are uncomfortable with banks. Fintech tools, in turn, can be used by someone in the community. For example, every agent in Tapp Commerce’s network have Tapp’s mobile point of sale (mPOS) tool. These agents are located at the very same corner shops and street food kiosks people in the neighborhood use every day. The agent is part of the same trusted community.
Fintech company can operate around the corner
Take The Philippines for example: it’s an archipelago nation with over 7000 islands. Over 40 % of the Filipino population lives with two dollars or less per day. This is a huge challenge for traditional banking. To establish a branch on every small island is impossible. This has led to a situation where bank branches are simply too far away for so many people.
Companies, such as, M-Pesa don’t spend money on walls: mPOS tools offer the same utility but with lower costs. At the moment, for example, Tapp Commerce has over 50 000 agents in Southeast Asia. Anybody with an Android phone can become our agent.
Fintech companies have the potential to be just around the corner.
Join the revolution!
In sum, with the help of mobile technology, fintech companies can overcome barriers to financial inclusion by being affordable, trustworthy and local. Potentially billions of people can now be pulled into the digital economy.
If you are in Indonesia or The Philippines, why not give Tapp Market a try? Tapp Market is an award winning multisided marketplace platform catering to the needs of cash consumers? With Tapp Market, everyone can buy and sell online.
Join the ranks of our over 50 000 agents and 3,000,000+ satisfied customers. Start buying and selling today. Go to: www.tappmarket.com
The writer, Elia Elenius, is a Community Manager at Tapp Commerce. Follow Elia on Twitter.
[i] Realini, C, Mehta K. (2015) Financial Inclusion at the Bottom of the Pyramid / FriesenPress: Victoria, BC, Canada. Pp. 12-13.
[ii] Ibid. 16-17.
[iii] Plafox M.F. (2016) in The Fintech Book. / Chisti S., Barberis J. (eds). Wiley: Chichester, United Kingdom. P. 69.