Can technology bridge the gap between rural development and financial inclusions?

Abstract

ABSTRACT Poverty reduction and income inequality have remained major challenges in all economies especially in developing countries. It is evident that digital financial service, as a platform, enhances great opportunities to access finances in various areas. Unfortunately, the markets in developing economies are fragmented and the use of digital financial services has not yet gained popularity. The often-cited barriers to mobile money adoption in these economies include but not limited to illiteracy, limited knowledge about mobile money and very low levels of trusts and above all poor infrastructures. The high-level disparity between the rural and urban dwellers is another very big issue based on their inability to benefit from the services. And these financially excluded are those who do not use any financial services or products to manage their finances. It is on record that technology interventions assist financial institutions to reduce costs and affords them increased customer reachability; however, most of the rural dwellers are not on their radar. This paper sets out to determine the extent to which the visible and ever increasing gap of financial exclusions can be bridged with the application of technology. Findings however revealed that most financially excluded individuals and businesses find solace in the informal sectors due to the traditional human touch involved. And the informal sector offers them the benefits of deeper customer relationships as opposed to endless forms that need to be filled in the formal financial institutions. The paper recommends a rethink on the part of the financial institution managers and the inclusion of some aspects of the activities of the informal sector in order to woo the unbanked and the under-banked.