Fintech as a Mean for Digital and Financial Inclusion

Abstract

Finance is shaping human relationship from an economic point of view as well as having influences on social structure and politics. In this relation, Fintech, a combination of the words “Finance” and “Technology”, is defined as “a new financial industry that applies technology to improve financial activities" [11] or as those “applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet” [10] or as “any innovative ideas that improve financial service processes by proposing technology solutions according to different business situations, while the ideas could also lead to new business models or even new businesses” [8]. As Bill Gates said “Banking is necessary; banks are not” describing what is happening throughout the financial industry: massive disappearing of traditional jobs, consolidation in the banking industries, robots that advice how to manage and save money. These changes have an impact on the social structure, but also have the potential to systematically promote financial literacy and inclusion. For example Grohmann, Klühs and Menkhoff [7] showed across four indicators of financial inclusion (having a bank account, having a debit card, saving in form of a bank account and the use of the debit card within the last year) that financial literacy is a significant precondition for financial inclusion. To what extent can Fintech applications be used to promote financial literacy and thereby inclusion? And what role do FinTech organizations play in supporting social progress? The aim of the article is to provide a systematic overview of Fintech's potential to promote digital and financial inclusion on diverse levels.