Financial inclusion refers to the process of including low-income people into formal financial systems, encouraging savings, investing, entrepreneurship and decreasing poverty and inequality.
Mobile banking is an indispensable asset in the drive to increase financial inclusion. It enables those from underserved communities to open bank accounts and conduct transactions without having to travel outward.
Accessibility
Recent innovations in FinTech, particularly mobile banking, provide an extraordinary opportunity to integrate informal populations that have previously been excluded from formal financial systems into formal ones. Mobile banking technologies, particularly those focused on eastern Sub-Saharan African countries and mobile money systems can overcome access barriers such as cost, distance, and documentation requirements for many low-income countries. Though some research has already explored this connection between FinTech innovations and financial inclusion (AFI 2018), more work needs to be done (AFI 2019).
As more people turn to digital solutions for banking, financial institutions must ensure these services are accessible for all. This includes eliminating online barriers that restrict disabled customers who require assistance using websites and apps for tasks. Employers also require easy digital payroll services so that paychecks are delivered more regularly while increasing employee happiness and productivity (NOW Money 2022), which will lead to improved business results – something NOW Money helps with by offering digital payroll solutions that reduce unbanked and underbanked employees.
Convenience
Bank mobile apps provide an efficient means of accessing banking services. With them, users can easily check account balances, transfer funds between accounts, pay bills, apply for loans and store and secure digital documents – providing those dealing with financial inequalities a straightforward method for managing their finances.
Financial inclusion is key to economic empowerment; yet many obstacles prevent individuals from accessing formal financial services, including country regulations and policies, infrastructure constraints, poor education/literacy levels and low income levels.
Modern innovations offer hope to overcome such barriers. CDFIs can offer banking services and loans to low-income communities, while mobile banking technologies such as mBanking reduce financial inclusion costs by eliminating physical infrastructure needs; additionally making money transfers and services more available to rural populations. Such technologies help individuals overcome financial inequalities while improving quality of life.
Flexibility
Mobile banking services give individuals the ability to complete financial transactions at a time and place that suits them, helping to reduce barriers of access and usage for underserved populations while freeing up in-branch staff for more complex inquiries.
These digital money services do not all benefit equally from these products. Research on M-Pesa in Kenya and other East Sub-Saharan African countries has shown that the availability of formal finance fosters household wealth creation without much improvement in income inequality (Catterjee et al, Citation2021; Kochar 2011, Citation2022; Dimova and Adebowale 2018, Zhang and Posso 2019, Citation2020).
Furthermore, FinTech may vary in its ability to reduce inequality depending on policy interventions. According to some research (such as an experimental study), financial inclusion policies which reduce participation costs (for instance by reducing documentation requirements) have greater positive equity effects than policies which aim to increase bank credit availability for low-income households (Kochar et al, 2022; Asongu and Nwachukwu 2018). These results point out the necessity of further exploration on this relationship beyond specific technologies or regions.
Security
Mobile Banking is very convenient but is susceptible to security issues. In order to prevent them, banks will need to use encryption and biometric authentication in order to safeguard users from identity theft and facilitate safe transactions.
Mobile banking services often feature features like check deposit from any location – an invaluable benefit for consumers without access to traditional banking facilities.
Expanding access to affordable and reliable financial services is key in breaking out of poverty for hundreds of millions of people around the world, both through new technologies and policy reform. Our research suggests that mobile money banking provides these services quickly and efficiently in underserved populations.