Recent reports estimate that globally, nearly two billion adults do not have access to a bank account. As a result, services such as loan credit and financial planning advice are denied to people all over the world. The primary reason that people do not have access to bank services is the lack of accessibility and affordability, especially as major banks all but dominate the entire market share regarding financial services.
However, there has been a global movement to make financial services more readily available to people who could not normally afford them. Financial technology (fintech for short) is an industry that uses technology to offer premium financial services at much more affordable costs and sometimes even for free. While fintech companies do not aim to compete with large banks, they do offer specific services, such as loan credit or financial planning advice.
Fintech is used to describe new tech that seeks to improve and automate the delivery and use of financial services. In achieving this goal, fintech allows access to financial services to more people and helps fight poverty.
Financial Inclusion in Australia through Fintech
There has been a rise of fintech in Australia. Over the past 12 months, the financial technology sector of Australia has been rapidly evolving. An estimated 600 financial technology companies are currently being operated in Australia and this number has doubled since 2015. In fact, fintech is the largest startup sector in the country, with one in every five startups targeting fintech.
Some of the most successful startups in Australia include Prospa, Zip Money, and AfterPay Touch.
Prospa is Australia’s leading online lender to small businesses. This company has funded over $500 million, allowing small businesses to receive funding in a short period, as little as twenty-four hours. By making these funding more accessible, small and medium business owners will have the proper financial means to expand their businesses.
Zip Money provides microloans to people, free of fees. With over 700,000 users, ZipMoney allows consumers to make important purchases without any delays.
AfterPay Touch is a digital payment service that targets consumer-facing organizations. With over 800,000 customers and 6,000 retail merchants onboard, AfterPay Touch provides payment security, compliance, and fraud services at much more affordable costs.
Although these companies provide vastly different services, they all have a common goal: to make financial services more convenient, accessible and affordable. These companies allow people to absorb unexpected losses, be financially mobile and save for the future. They are very helpful in achieving financial inclusion in Australia and in other countries as well.
Additionally, because these fintech companies are increasing financial inclusion for small and medium business owners, they are allowing business owners more opportunities to grow and expand their businesses. As a result, more jobs will be created and more people will be lifted out of unemployment and poverty.
The Impact of Fintech in Australia and Other Countries
The impact of fintech in Australia and its booming economy is not just felt domestically, but globally as well. For instance, Australian fintech startups are also working together with the Indonesian government to increase financial inclusion in Australia and Indonesia.
Indonesia has 49 million unbanked micro-enterprises. Australia has a new $1 billion New Payments Platform (NPP) that allows people to make real-time payments over the digital economy. This platform has the potential of advancing financial inclusion for both businesses and individuals in Indonesia. Increased financial inclusion will allow people not just to have access to a banking account, but also to escape poverty and recover from financial setbacks.
Recognizing that financial inclusion reduces inequality and helps millions of people lift themselves out of poverty is key to the development of fintech startups around the globe. As more governments start working together with the private sector, the impact of this new technology can be monumental.
– Shefali Kumar