How can fintech be (more) inclusive?

Digital technology is transforming the financial industry, changing the way payments, savings, borrowing, and investment services are provided and who provides them. Fintech and Big Tech companies now compete with banks and other incumbents across a range of markets. Meanwhile, digital currencies promise to transform the heart of finance: money itself.

But just how much has technology advanced financial inclusion? For sure, in the past year alone, digital finance has helped households and businesses meet the challenges posed by the COVID-19 pandemic. It has also given governments new ways of reaching those who need support.

Progress to date has been impressive. Yet if it is to realize its full potential in bolstering financial inclusion, private sector innovation must be supported by the appropriate public goods, as innovation has large spillovers to all aspects of economic activity. Public goods provide the underpinnings of financial inclusion.

Disruptive inclusion?

Financial inclusion can be understood as universal access to, and use of, a wide range of reasonably priced financial services. Inclusion made great strides in the decade between the global financial crisis and the pandemic. Despite a volatile global economy, World Bank data show that 1.2 billion adults gained access to a transaction account between 2011 and 2017. Much of this progress came directly from new digital technologies.

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