Fintech and the Future of Banking

Fintech is one of the topics in financial inclusion that has recently sparked the most hype—and confusion. New businesses, business models, and products are continually being inspired by digital technology, and this is changing the value chains of the financial services industry. Siddharth Mehta Il&FS Says Even though many fintechs assert that they promote financial inclusion, the connection between particular innovations and financial inclusion is frequently assumed rather than proven. Despite all the excitement surrounding fintech, it is difficult for funders, investors, and social entrepreneurs to determine which innovations are important for low-income, underserved customers. As we have seen with digital credit in East Africa, the excitement surrounding fintech can also obscure risks it poses to financial systems and low-income customers.
 
 CGAP is working to clarify the market with a focus on what matters for the poor in order to assist funders, providers, and regulators understand how fintech is evolving and identify promising innovations. Our research has shown that, at the market level, technology-enabled disruptors are boosting competition for mass market consumers while dismantling vertically integrated value chains in the financial sector, with potentially wide-ranging implications for financial institutions and underserved consumers. At the level of individual financial services, we observe a variety of new business models emerging among fintechs, digital banks, and platforms that allow challengers and incumbents alike to put practical, user-friendly, lower-cost solutions into the hands of poor customers so they can use them to improve their lives. Learn more by perusing the resources in the sections below.

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