There’s a new buzz around banking with the emergence of exciting new market players such as Monzo, Starling and Revolut. However, not everyone gets to reap benefits of the latest banking trends - or even a bank.
Fintechs have started to address this issue by creating products for people that have limited, or no access to banking services (‘the unbanked’), but there is still a lot of work to be done - and we believe there is a great financial opportunity for fintechs and banks to partner together.
A global issue
For many parts of the world, ATMs, as well as banking services, are an intrinsic part of modern life. However, in reality, financial inclusion is a very disparate picture. Last year, The World Bank estimated that 1.7 billion adults lack a bank account and 31 percent of adults are unbanked globally.
It is perhaps of little surprise that unbanked individuals tend to live in developing economies. Whilst India for example, may be the fourth fastest-growing economy and home to 16 percent of the world’s population, there are still many generations of women without birth certificates and official personal documentation. This makes basic activities that we take for granted such as opening a bank account or applying for a loan almost impossible.
Technological innovation is opening doors, however. Humaniq provide a mobile banking solution powered by blockchain, targeting people with no identification documents and therefore no access to banking services. They believe that this segment will reach over two billion individuals in the coming years, and aim to financially empower them by replacing typical photo identification, such as passports required to open an account, with bio-identification technology.
Monzo meanwhile have recently moved past one million users since opening in 2015, and have been working on offering savings accounts, online payments and an ATM debit card to the unbanked population. The unbanked in parts of the world such as Africa and India only use cash to trade and technically no physical accounts to put it in, so tapping into this market could prove lucrative for new players.
Traditional banks can develop new business models that solve many of the issues the unbanked face by leveraging technologies that support financial equality and inclusion. Improving accessibility for these individuals will also create a significant financial opportunity for banks, one that we estimate could add an additional $24 billion to annual revenue.