Two billion adults globally do not have access to formal financial services and are excluded from opportunities to improve their lives. In Sub-Saharan Africa, 34% of adults do not have an account with a formal financial institution while 94% of adults don’t have access to formal housing finance. Financial inclusion and the provision of financial services underpin development, therefore, without finance, there can be no development. Conversely, where financial systems function better and cheaper, development occurs faster and is more inclusive.
The Opportunity: Digital Financial Services (Fintech)
While tremendous gains in financial inclusion have already been achieved, digital financial services are essential to close the remaining gaps in financial inclusion. Digital technologies offer affordable ways for the financially excluded—the majority of whom are women—to save for school, make a payment, get a small business loan, send a remittance, or buy insurance. Fortunately, advances in technology, data processing, security, and new ways of organizing and managing financial activities are allowing financial services at a much lower cost to a much larger customer base. For example, the high cost of serving rural areas have nearly been eliminated by massively scalable technology platforms, the internet, digital cash, etc. The cost of setting-up the technology for a fully functioning bank is now so low that this is no longer a significant barrier to entry.
Moving to digital cash makes illegal transactions much more difficult and could increase tax revenues, reduce corruption and criminal activities potentially releasing up to $5 trillion per year for better developmental uses. New technologies make transfers and remittances faster, safer and cheaper and if we could bring remittance costs down from 10% to 1%, we would put an additional $52 billion each year into the pockets of the poor.
Fintech's focus is mainly around lending processes (46%), payments (23%), savings and wealth management (10%) and insurance (10%). WHATIF aims to operate in the following seven segments of the Fintech universe: