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services,” Uttamchandani said. “There is also a persistent gender gap in financial inclusion, with women making up 56% of all unbanked adults. Key factors driving continued exclusion include the cost of developing tailored products and servicing small value accounts (particularly in rural areas), as well as the risk associated with offering products like credit and insurance to customers for whom data that can inform underwriting is scarce or nonexistent.”
FinTech holds promise for improving economic parity across the world.
“The use of digital financial services (DFS) have the potential to lower costs, increase speed, security and transparency and allow for more tailored financial services that serve the poor
at scale,” Uttamchandani said. “DFS include mobile money services, payment cards, and other FinTech applications, which have contributed to important gains in financial inclusion.”
Delaware’s FinTech industry has the potential to lead in
the development of the technologies that will ease access to financial services. An example is the collaboration between the University of Delaware and Discover Bank to build a new FinTech Center on the STAR Campus. The university draws students from around the world, some of whom may invent financial technologies that can be applied to solving some of their country’s seemingly intractable problems of creating access to wealth and capital among the currently unbanked, particularly those in rural or remote areas where financial institutions are lacking.
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“Between 2014 and 2017, the share of adults in Sub-Saharan Africa with a mobile money account grew roughly twice as fast as those with a financial institution account (9% and
4%, respectively),” Uttamchandani said. “DFS can also offer unique advantages for low-income households, with research linking DFS adoption to reductions in extreme poverty among women-headed households and a greater ability
to save for the future and cope with emergencies.”
While FinTech can lead to increases in access to financial services, the same technology that creates opportunities also creates risks. Regulatory authorities around the world are dealing with issues of privacy protection and the unauthorized use of personal and financial data. Those companies with solutions to these risks will benefit from the expanded use of FinTech.
The Digital Financial Services report stated that unequal access to technology often excludes the poor, particularly women, potentially putting them at risk of predatory lending and over-indebtedness. It also reported at financial integrity could be threatened by use of crypto-assets, pre-paid cards and other tools that may enable individuals to circumvent controls.
Despite risks, for Delaware FinTech, IT, and financial services companies including banking, investment advisory, insurance, and the supporting accounting and legal services sector, the expansion of FinTech in developing countries provides unique opportunities to develop partnerships, meet market demand, and create economic parity.
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