Last year, The World Bank estimated that 1.7 billion adults lack a bank account and 31 percent of adults are unbanked globally.www.globalfindex.worldbank.org
Can banks cooperate with fintech companies?
How do these fintech companies create an ecosystem that would allow much fast transactions and transparency for the unbanked? By creating a powerful platform where mobile solutions can be developed on. This allows, individuals and businesses alike to interact freely, powered by cutting-edge technology such as machine learning, biometric and blockchain.
Visa has already started collaborating with a host of parties to empower the unbanked by building financial inclusion through innovative solutions, such as voice authorization and touch ID. By collaborating with the right partners, they can scale innovation through a global network.
Banks, on the other hand, can enrich the ecosystem by connecting their own accounts and clients to the fintech network. This development is happening right now, though there remains a big obstacle for many banks - their legacy systems. The rigid governance of banks has been the greatest obstacle in partnering with technology innovators; once they find a way around that, consumers will be able to enjoy the perfect balance between the great customer experience offered by fintechs and the stability offered by the traditional banks.
With the rise of online solutions and general availability of the internet, fintech companies can step up and provide solutions to connect the unbanked with banks. Even Facebook is investing in tokens to provide solutions, such as online payment methods, that can address the lack of mainstream financial services. With revenues and market opportunity expected to reach $1 trillion by 2023, the banking sector should look closely to work with fintech companies in the future.
Connecting the dots
To stay relevant in today’s evolving financial landscape, banks need to shift their position. It is not only millennials turning away from mainstream banking, freelancers and travelers are increasingly looking to online solutions too. If many organizations are connecting individuals who lack financial services to a global accessible payment network that is safe, transparent and simple, shouldn’t banks follow suit?
If you want to learn more about the unbanked market, please feel free to reach out to Dan Jones, Partner, Capco Digital.