|According to the World’s Women Report 2015, there are 781 million illiterate people on the planet. The underlying assumption that those that pass Standard V are literate and numerate is fundamentally flawed. These estimates, therefore, significantly understate the size of the problem – perhaps by as much as 100%. In India, for example, “Half of all children in Std V have not yet learned basic skills that they should have learned by Std II.” (Pratham, ASER 2014).|
5. Furthermore, villagers value personal relationships – particularly when it comes to money. The idea of trusting technology that they do not understand for anything except very basic payments is out of the question. The idea of using a fintech solution on a mobile phone is alien and often even intimidating. This is particularly when the majority of systems they have seen or heard about remain unreliable and offer limited customer support and recourse.
6. Finally, it is quite clear that till date, the regulatory environment and consumer protection provisions remain too weak to secure the poor. Many have already lost money in basic money transfer transactions. Millions are negatively listed on credit bureaux and in the databases of large banks because of digital credit. Furthermore, in the flagship M-PESA deployment, almost half of non-airtime top-up transactions are for gambling … With a track record like this, how can we honestly claim that technology is helping the poor?
Perhaps it is time to take a step back and to reflect beyond the hype. Until we address these six fundamental barriers to the deployment and use of fintech by the poor, it will indeed remain irrelevant to them. In fact, we risk exacerbating the digital divide and leaving the poor and vulnerable behind.
The most basic innovation at the heart of digital financial services is mobile money. Yet GSMA’s State of the Industry Report 2016 tells us that just 12% of the 286 deployments have more than 1 million active users. With such shaky foundations, it is clear that we have a long way to go before fintech can deliver on its promise of bringing services that are accessible and valuable, and thus can provide financial inclusion for the poor.