Expanding Financial Inclusion Using Digital Finance

Abstract

Financial innovation based on digital finance is achieving financial development and, at the same time, expanding financial inclusion. Digital finance is considered to be one of the most important and essential stages of financial development. Financial inclusion has often been approached from the perspective of social policy rather than economic or financial policy. Recently developed fintech technology is at the cutting edge of the financial markets but, at the same time, plays a decisive role in bringing the most underprivileged to the financial sector. We have reviewed recent trends in digital finance such as internet banks, crowdfunding, and peer-to-peer financing, and credit rating calculations through AI-big data analysis and found out that digital finance has contributed to expanding financial inclusion. The emergence of cryptocurrencies is also beginning to cast a new light of financial inclusion on the socially marginalized people. ICO, a new method of using blockchain technology, allows venture startup companies to be funded through the sale of digital currency. However, there are risks in fintech financial products, and there are also risks in financial consumer protection because of financial illiteracy and asymmetry of information. The AI-big data analysis can ease the asymmetry of information for the financial company. However, the asymmetry of information and knowledge may get worse as the structure of financial products of digital finance is more and more complicated for financial consumers. Therefore the government needs to take policies to develop digital finance while trying to protect financial consumers.