How FinTech is Shaping the Global Digital Economy
Kiva is a non-profit that extends financial inclusion to the underserved segments of society through crowdfunded microloans. Globally, over 1.7 billion people do not have access to basic financial services, including banking and lending.
Since its inception, Kiva has facilitated over $1.5 billion in loans to over 3.6 million borrowers. More than 80% of borrowers are women. 70% of borrowers are from rural areas, while 15% live in conflict areas.
A crowdfunding platform enables the offering of microloans. They are processed through field partners, allowing access to funding even in rural areas where vast populations have little to no access to technology.
As one of the top digital finance companies, it is focused on creating better financial inclusion for societal good. Rather than hoping to qualify for a loan from a traditional bank, Kiva’s crowdfunding initiatives enable underserved communities to get loans from citizens.
The loan repayment rate is 95%, which means funders often fund a loan, get repaid, and then invest in another.
(Source: Forbes)
The FinTech Economic Contribution Indicators
Digital banking services are taking over: 46% of people exclusively use digital channels for their financial needs. Banks now provide digital gold, online insurance, lending, payments, and much more through digital banking apps. Therefore, product engineering services in digital economy companies and banks are in high demand.
As of 2019, 75 percent of consumers globally have adopted some form of money transfer and/or payment service. Insurance (insurtech) adoption has seen significant growth from 8 percent in 2015 to almost 50 percent in 2019.
Fintech market share across 48 fintech unicorns is worth over $187 billion as of the first half of 2019, or slightly over 1% of the global financial industry. More and more FinTech unicorns are in the making as consumers now prefer digital channels over inconvenient physical channels for finance.
Read more: FinTech Chronicles, Part 1: The Early FinTech Era and its Adoption
How FinTech Empowers the Digital Economy
Today, FinTech is driving the global economy. Consumers are looking for ways to inculcate digital finance in their daily lives. Whether it’s payments or investments, FinTech has made its way into the everyday budget of consumers.
However, FinTech is now significantly contributing to the digital economy. Purchase options, payment mechanisms, super apps, digital rewards, and more are building an inclusive economy driven by FinTech.
- Open Banking
Open banking standards and APIs enable banks to allow third parties to access consumer data for creating a connected FinTech ecosystem. It is a new reality that is ultimately driving the world to an open digital economy. Open banking ensures consumers get the right FinTech products and services they need whenever they want. Every FinTech app development company now recommends banks consider Open Banking solutions.
- Decentralized Finance
Blockchain is the latest kid on the blog – one that is making all the waves in FinTech. More and more banks are implementing blockchain to decentralize the financial system. Blockchain has already begun to create a completely transparent digital economy where all transactions are visible – thereby eliminating frauds and leading to more financial inclusion.
- Financial Superstores
The term Financial Supermarket/Superstore is what’s driving the digital economy rapidly. Financial institutions now offer a plethora of financial services online apart from just digital banking. Stock brokerage, insurance, and investment banking are only a couple of services that these institutions provide. They are bringing consumers online and creating a digital financial ecosystem, which is ultimately driving the digital economy.
Conclusion
FinTech collaborations, cross-industry partnerships, payment networks, lending/credit platforms, and more are fueling the growth of the digital economy. Today, FinTech is much bigger than ever. Any software product engineering company that deals in FinTech is moving beyond the average digital wallets – they are creating enterprise FinTech solutions and super apps driving the growth of the industry.
