Personal banking has come a long way over the hundreds of years since it first emerged. With the rise of contactless cards and mobile phone payments, it could be said that access to financial services is easier than ever. However, the unfortunate reality is that a staggering 24% of the world remains unbanked.
This could be due to a variety of reasons, but the primary one tends to be the inability to meet the requirements in order to open a personal bank account. Whether this is due to a lack of formal identification or residing in a country where banks are few and far between, financial exclusion can have a significant impact on people’s lives.
Fortunately, the importance of making financial services more accessible is now becoming recognized, and FinTech is stepping up to fill the gap. In this article, we look at three different ways that new technologies can impact financial inclusion.
Personal banking is becoming more easily accessible
Online banking is becoming an integral part of our lives. Access to these tools allows users to easily monitor their balance, make payments and even open accounts. This is quite the change from having to visit a traditional brick-and-mortar bank in order to process a simple transaction, and can instead be done right from a smartphone.
Without the need to travel in order to access a bank account, a much wider range of the public will be able to take advantage of the convenience that regular account monitoring brings. What’s more, those that cannot visit a physical bank location would have been unable to open an account in the first place. This lack of access is a common barrier to financial inclusion, so removing it is a huge step in the right direction.
The shift towards online banking and the increasing accessibility of personal banking through digital platforms are transformative developments that carry far-reaching implications. In addition to the convenience of monitoring balances, making payments, and opening accounts from smartphones or computers, there are several noteworthy aspects to consider.
Four benefits of online banking
Firstly, the digitalization of personal banking not only streamlines everyday financial tasks but also fosters financial literacy. With easy access to account information and transaction history, individuals are more likely to engage with their finances proactively. They can readily track their spending patterns, set financial goals, and gain a better understanding of their financial health. This increased awareness empowers individuals to make informed financial decisions, ultimately contributing to their long-term financial well-being.
Secondly, the accessibility of online banking transcends geographical boundaries. It eliminates the need for a physical presence at a bank branch, making financial services available to individuals in remote or underserved areas. This is especially significant in regions where traditional brick-and-mortar banks are scarce. By providing a virtual gateway to the world of banking, online platforms bridge the gap between urban and rural populations, ensuring that more people can participate in the formal financial system.
Furthermore, the convenience of online banking extends to individuals with physical disabilities or mobility limitations. Visiting a physical bank branch can be challenging or even impossible for some people, and digital banking platforms offer an inclusive solution. This aspect of accessibility aligns with broader efforts to promote inclusivity and equal opportunities for all members of society.
Lastly, online banking also has the potential to reduce costs associated with traditional banking services. Physical infrastructure, such as bank branches and ATMs, comes with overhead expenses that can be passed on to customers in the form of fees. Digital banking often operates with lower overhead, which can translate into cost savings for users. For individuals who may have been deterred by high fees in the past, this reduction in costs can be a powerful incentive to embrace online banking, further enhancing financial inclusion.
👉 Read more about digital payments in our recent Five Payment Technology Trends to Watch in 2023 blog article.
Anyone can start investing
Investing, even now, is commonly thought of as something that only the rich and famous partake in. The reality is that with all of the innovations in the FinTech world, almost anyone can invest straight from their phone. Gone are the days of having to obtain a personal stock broker in order to start earning interest on your money, meaning as much or as little can be invested at a time.
There are a wide range of different applications and online services available for investing, ranging from expert to beginner. Even for those that have no knowledge of the investment world, FinTech brings online services that can guide you in the right direction. Some institutions even have services in which your funds are personally managed for a fraction of the typical stock broker cost, making it perfect for those with little initial capital.
One of the core issues in proper money management is a lack of budgeting knowledge. With a limited income, keeping track of spending is essential in order to ensure there’s enough money left over to pay for necessities. Fortunately, new technology now allows for budgeting applications that can directly track spending in a way that’s easy to understand. This can make it easier to monitor exactly where funds are going, and allows users to use the data to make informed decisions.
As the popularity of AI, or artificial intelligence, continues to grow, its applications within the FinTech circle are equally expanding. Where budgeting is concerned, implementing AI can go one step further than the standard budgeting applications. AI will be able to identify specific trends, automatically set money aside and even offer recommendations on how to cut down on spending, putting the power back in the hands of the user.
👉 Get new valuable insights into the world of Digital Wallets in 2023.
In conclusion, the transformation of personal banking through online platforms is not just a matter of convenience; it represents a profound shift towards a more inclusive and financially literate society. By removing geographical barriers, empowering individuals with disabilities, and potentially reducing costs, online banking is expanding access to financial services and opening doors to financial independence for a broader segment of the population. As technology continues to advance, the financial world is becoming more accessible, ultimately driving progress towards global financial inclusion.
Overcoming financial exclusion is key to promoting equality worldwide. Those that are unable to access financial services can face severe consequences that many people would never have to consider. For example, in an age where physical pay cheques are becoming less and less common, people may not be able to obtain a job without access to a bank account.
While work does need to be done to increase the availability of smartphones and network access in less developed areas of the world, the advancements in technology are taking us one step closer towards true financial inclusion and independence.
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