How Digital Banking Services Are Encouraging Financial Inclusion

September 1, 2021

Digital banking platforms are stepping in and filling the gap as they provide millions of unbanked people with access to financial services.

As digital financial services develop, banks and non-banks have the prospect of reaching millions of new customers among previously excluded and underserved populations. Digital financial channels are growing and now include mobile phones, smartphone apps, and digital assets—with some projects already scaling significantly.

This digital move is benefitting millions of poorer customers who are now moving from cash-based economies over to formalised financial services, such as payments, transfers, and savings. This trend is set to increase as more technologies and innovations roll out over the coming years.

Unbanked: the global picture

About 31 per cent of adults globally are unbanked according to the World Bank. These 1.7 billion people lack access to a bank account via a financial institution or mobile money service. In the United States, around 17.2 million adults are unbanked and 46m are underbanked according to the Federal Reserve. This has increased the need for alternative financial providers such as challenger banks and neobanks.

Innovative payment platforms and services are seeking to serve the unbanked and underbanked by delivering safe and easy access to financial services. This is made possible by combining technologies including virtual payment cards, mobile phone payments, and digital assets to make payments services, banking platforms, and secure transactions more accessible. As a result, these services are reaching a wider audience and fostering financial inclusivity as well as creating seamless banking services.

Benefits of digital banking services for the unbanked

The essential components of digital banking that foster financial inclusion for the unbanked are digital banking platforms, smartphone banking apps, and POS payments services. Together, they enable customers to make and receive payments, view and manage their finances, and make seamless payments to merchants.

The benefits of gaining digital financial inclusion for the unbanked include access to financial services, cheaper transactions, personalised financial services, and greater security especially from loss and theft. Financial inclusion can also enable people to begin saving and planning for their long-term financial well-being, increasing their economic participation and economically empowering them.

Indeed, some digital banking services have already incorporated digital assets into their existing services with more planning to add them to promote financial inclusivity through the benefits they provide. For example, many people who don’t have access to traditional financial services can readily create a digital asset wallet and begin transferring funds and typically at lower fees than at a brick and mortar institution. As access to digital banking services grows it’s set to fuel economic growth and improve unemployment rates by creating the means to seamlessly and securely pay people for work and services.

Stay ahead of the curve with Baanx

Digital assets are gradually being incorporated into mainstream finance around the world. Therefore, it’s essential that ambitious organisations carefully consider the financial toolkit and infrastructure they require to continue serving their staff and reaching customers including the unbanked. We can develop the necessary back-office architecture to provide you with services including virtual and physical debit cards, virtual IBANS, forex, and more so you can launch new financial services quickly, safely, and securely.

Contact us to learn more about our innovative open API platform that’s bridging the gap between traditional fiat currencies and digital assets and how we can help you launch a banking and payments service in a matter of weeks.