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Financial Inclusion and Emergence of FinTech

Technology transformation for existing financial organization will evolve with FinTech in Bangladesh. FinTech will play the key role in terms of technology transformation. FinTech can be characterized as the movement to bring trans-formative and disruptive innovation to financial services through the application of new and emerging technologies which address consumer needs through automation. FinTech organizations can play a big role for financial inclusion in digital Bangladesh. Due to factors including consolidation in the financial services industry and regulatory constraints, financial services firms may find themselves constrained from being able to focus their energies on innovation initiatives. FinTech organizations have the advantage of not being encumbered by legacy systems and processes. As a result, FinTech organizations are generally able to move faster and develop solutions that compete directly with traditional methods of delivering financial services. With customer acquisition costs high and regulatory hurdles to overcome, financial services firms are faced with a choice whether to build their own capabilities or seek out FinTech partners to help drive innovation initiatives. This opening has provided an opportunity for FinTech firms to provide new applications either directly to customers, or in partnership with large financial services institutions.

Large institutions must consider how they can move quickly to address consumer needs in an industry on the cusp of change, either through partnerships, acquisition, or internal initiatives. FinTech companies are better suited to initiate disruption by innovating and improving key drivers in an established financial value chain. They can be more agile, focused, and unencumbered by legacy issues like fixed cost, old infrastructure, and technology.

A continued topic of debate revolves around who is in the best position to innovate in financial services, and whether that is large incumbents or FinTech startups. FinTech organizations have the advantage of not being encumbered by legacy systems and processes, and can therefore move faster to develop custom solutions.

The Future of FinTech

 What does the future hold for FinTech? Artificial Intelligence (AI), Blockchain, Machine Learning, and Big Data are becoming central to FinTech solutions as organizations look to new areas of financial services innovation. Financial technology provides a foundation for financial services innovation and transformation, yet firms still must overcome the final barriers and roadblocks to widespread business adoption – cultural change.

The role of AI and related technologies in enabling various industry and service-oriented businesses to scale greater heights has been quite the subject of awe and admiration. Artificial Intelligence helps FinTech and financial firms address and solve human problems, and consequently improve overall efficiency. As a matter of fact, multiple technologies have empowered financial firms to almost completely transform their processes and subsequently generate superior results technologies such as Big Data Analytics, Neural Networks, Machine Learning and breakthrough algorithms have enabled financial companies to provide customers with a more refined experience, keep datasets intact and accurate, and make highly informed decisions to offset the unfavourable impacts of risk.

If we are to look at Artificial Intelligence, in particular, the impact has been absolutely tremendous in recent years. Through AI, FinTech firms and Lending Institutions have been able to more accurately assess a borrower’s creditworthiness by collating large swathes of data and instantly making viable lending decisions.  FinTech firms should have very actively adopted AI to scale-up the efficiency of service delivery by making more accurate and seamless credit-related decisions.

Financial Inclusion & Digital Bangladesh

A citizen-centered approach to building an inclusive digital financial ecosystem by catalyzing low-cost, interoperable digital payment systems that solve last-mile delivery challenges and fostering innovation of pro-poor financial products should be the prime focus.

First, in some context, Bangladesh has a large rural population that mostly deals in cash. A traditional banking system doesn’t work here. However, more than 130 million of 160 million Bangladeshis own mobile phones. Beyond making calls, these phones can also be used to connect rural citizens to financial services. The trend in most emerging markets is not towards simply tweaking financial products and services designed for the non-poor and attempting to push them to the poor who understand nor have much use for them. As the government can guide how it pays recipients, digitizing such payment streams has high potential to accelerate financial inclusion in the short to medium term by laying the foundation in terms of policies, infrastructure and people’s attitude for enabling further, more comprehensive efforts by the private sector.  Interventions in the area of digital financial inclusion too often involve technologies that are made available to the intended users but are then not adopted.

The new system registers citizens using their biometric data, such as fingerprints, and then lets them receive payments on their phone or on a smart card. “A person with a bank account and a biometrically-verified identity can have extreme mobility in terms of making and receiving payments from anywhere in the country – and most importantly – at his or her doorstep without going to a financial institution. Digital Financial Inclusion is very necessary to build Digital Bangladesh.

Digital Bangladesh is one of the nation’s dreams, and so special emphasis is given on the application of digital technologies to realize Vision 2021, which we commonly call Digital Bangladesh. By 2021, after 50 years of independence, our goal is to be a middle-income country with peace, prosperity and dignity. The government of Bangladesh implemented a large number of projects relating to digital technologies and a number of these are already underway. National ICT Policy-2009 was developed with a view to achieve middle-income status of the nation by 2021 and developed status by 2041.

The slogan of “Digital Bangladesh” of the Government of Bangladesh has special significance for national development. Digital Bangladesh with Vision 2021 is a big impetus for the use of digital technology in the country. In spite of several bottlenecks and limitations, works are in progress for the realization of Digital Bangladesh. Several projects for digitization have been completed and a big number of projects are under progress. The nation now, with over 12 crore mobile subscribers and 4.3 crore Internet subscribers, enjoys the fruits of digitization in numerous areas of activities. The ultimate objective is to make more and more services available at the doorsteps of the people with increased digitization where possible. Financial inclusion is very important to achieve the goal digital Bangladesh by 2021.

 

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