Enhancing Financial Inclusion Using FinTech-Based Payment System

Financial inclusion has gained a lot of attention in the recent years. In its simplest form, financial inclusion refers to a person having an account at an established financial institution (Zins, A., & Weill, L. (2016). The Determinants of Financial Inclusion in Africa. Review of Development Finance, 6(1), 46–57. https://doi.org/10.1016/j.rdf.2016.05.001 ). Demirguc-Kunt et al. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington DC: The World Bank. https://doi.org/10.1596/978-1-4648-1259-0 , define it as “access to and use of formal financial services.” It is estimated that 1.7 billion adults do not have financial accounts around the world, where almost half of them are concentrated in seven developing economies, namely China, India, Pakistan, Indonesia, Nigeria, Bangladesh, and Mexico. Whereas the vast majority of adults in developed economies pay their utility bills through accounts, only about one in four adults in developing countries do so using accounts (Demirguc-Kunt et al., 2018: 50). The patterns of the unbanked vary with the different economies. In economies where half or more of the adults are unbanked, the unbanked from poor households have the same likelihood as those coming from rich households (Demirguc-Kunt et al., 2018: 4). While in economies where 20–30 per cent of the adults are unbanked, the majority of the unbanked are most probably from poor (Demirguc-Kunt et al., 2018: 4). An analysis of these numbers shows that most of the unbanked in developed countries come from poor households.