Harnessing FinTech for Financial Inclusion: Analysis of the influence of system scalability, online authentication, and products substitutability

This study looks at the evolution of FinTech from a disruptive force to acomplementary element within the financial landscape. Drawing on disruptiveinnovation theory and financial intermediation theory, this study takes a holisticapproach to uncover the mechanisms driving this change. Data was collectedusing a structured questionnaire distributed to 162 IT employees of financialinstitutions in Tanzania. The data was analyzed using structural equationmodeling with Smart PLS. The results show the positive influence of thescalability of FinTech systems and online authentication on financial inclusionand emphasize their central role in expanding access to financial services. Theeffectiveness of online authentication in promoting financial inclusion isparticularly noteworthy. However, the results show that product substitutabilityhas a negligible influence on financial inclusion, pointing to the need for astrategic reorientation of resource allocation. These findings provide industrypractitioners with valuable strategies to navigate the complex intersection ofFinTech and traditional banking. This study contributes to the theoreticaldiscourse by presenting a unique model that integrates disruptive innovationtheory and financial intermediation theory. It argues for concerted efforts to useFinTech as a catalyst for promoting financial inclusion and draws attention toits potential as a powerful enabler for inclusive financial systems. Keywords: Financial inclusion; financial technology; FinTech; Disruptive Innovation;Financial Intermediation.

Financial technology (Fintech) marked by technological developments in financial services, has become a significant player in the world of finance. It has the potential to increase financial services’ availability and affordability, particularly for marginalized people. The main purpose of this study was to establish the effect of Fintech on financial inclusion in the banking sector in Kenya. The proposed objectives are: to determine the effect of mobile money on financial inclusion in the banking sector in Kenya and to evaluate the role of mobile banking on financial inclusion in the banking sector in Kenya. This study was grounded in financial intermediation theory and information asymmetry and adverse selection theory. This study employed desktop research methodology. This study adds to the debate on how technology and finance intersect, opening the door for additional investigation of creative solutions for financial inclusion while promoting the attainment of sustainable development goals and sustainable development. This study established that mobile money greatly improves financial inclusion by reducing gaps for disadvantaged groups and boosting accessibility, especially in rural areas with limited traditional banking infrastructure. This study also found that mobile money services greatly improve financial inclusion in Kenya's banking sector, particularly in rural areas, by democratizing access to financial services and closing gaps for underserved populations. Furthermore, by improving accessibility, security, and efficiency, mobile banking significantly advances financial inclusion. The study recommends that regulators, financial institutions, and mobile money service providers in Kenya should work together to promote innovation and competition in the mobile banking sector.

After 65 years of independence, large sections of Indian population still remain unbanked. This has led generation of financial instability and lower income group who do not have access to financial products and services. However, in the recent years the government and Reserve Bank of India has been introduced the concept and idea of financial inclusion.Financial inclusion is an important method of economic development of a nation. Financial sector inclusion is very important component of inclusive growth strategy. Financial inclusion can be described as the delivery of banking and other financial services at affordable costs to the vast section of the disadvantaged and low income groups. It plays very vital role in economic progress. Financial sector inclusion helps in eliminating poverty, reducing inequality, eliminating unequal access to opportunities, reducing inequalities of choice. This study tries to understand policy initiatives by the govt for financial inclusion, reasons for financial exclusion, steps taken by the government for financial inclusion and implications of financial inclusion. This study is mainly based on secondary data and collected information from books, journals and website.

Financial inclusion has been recognized as a poverty reduction tool, and many economies have taken it up as a national agenda. To achieve the expected levels of financial inclusion, governments have worked with financial intermediaries to reach the expected target group, the unbanked poor. As per the financial intermediation theory, the role of financial intermediaries is to minimize the information asymmetry in the financial system. To enhance financial inclusion, many countries and financial institutions have embraced information and communication technology (ICT). ICT has been recognized as a tool that has worked greatly toward enhancing sharing of information at a low cost and that has thus helped in improving financial inclusion. Though many countries have achieved high levels of financial inclusion through ICT, the levels of poverty have not declined. It was thus important to establish the relationship between ICT, financial intermediation, and household investment. This study methodology was a review of the literature on financial inclusion, financial intermediation, ICT, and household investment. From this study, it was noted that ICT is helping in financial intermediation and thus more people can access financial services. Unfortunately, the levels of ICT capability among the poor are low, and in that case, the poor are not able to utilize financial services offered through ICT platforms to undertake household investment. This is the reason as to why, despite the high levels of financial inclusion, the poor still remain poor. This study recommends that the government should ensure that the levels of ICT among the populace are high. Financial institutions on the other hand should provide financial services with more user-friendly platforms.

PurposeDrawing from the fact that institutions act as incentives and disincentives to human behaviour in financial markets, the purpose of this study is to examine the moderating role of institutional pillars in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe study used cross-sectional research design and data were collected from the poor residing in rural Uganda. Statistical package for social sciences was used to analyse the data. Descriptive statistics, correlations and regression analyses were generated. Besides, ModGraph excel programme was adopted to graphically explain the moderating role of institutional pillars in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.FindingsThe results revealed that institutional pillars of regulative (formal rules), normative (informal norms) and cultural cognitive (cognition) significantly moderate the relationship between financial intermediation and financial inclusion of the poor. Furthermore, the results also indicated that financial intermediation and institutional pillars have significant effects on financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study focuses on only cross-sectional design, thus, leaving out longitudinal study. Future research using longitudinal data that explore behaviours of the poor over time could be useful. In addition, only quantitative data were used to measure variables under study and use of qualitative data were ignored. Thus, further studies using qualitative data are feasible.Practical implicationsPolicymakers and advocates of financial inclusion in a developing country such as Uganda should adopt institutional pillars (regulative, normative and cultural-cognitive) in promoting financial intermediation in rural areas. The institutional pillars working in combination set the “rule of the game” or “humanly devise constraints” that guide economic exchange by promoting and limiting certain actions of actors in underdeveloped financial market as stipulated by North (1990) and Scott (1995).Originality/valueTo the best of the authors’ knowledge, this is the first attempt to examine the moderating role of institutional pillars under the theory of institutions in the relationship between financial intermediation and financial inclusion of the poor in a developing country setting. Indeed, institutions guide contract enforceability and information sharing in human interaction to lower transaction cost in the financial markets. This is missing in literature and theory of financial intermediation in promoting financial inclusion, especially in rural Uganda.

Background: Financial management in the digital era has shifted significantly due to the rapid adoption of digital financial services and technologies. Specific background: Despite increased financial inclusion in Indonesia, financial literacy remains low, leading to inconsistent financial behavior across demographic groups. Knowledge gap: Previous studies have rarely examined the comprehensive moderating role of financial technology in the relationship among financial literacy, lifestyle, financial inclusion, and financial behavior within the general public. Aims: This study aims to analyze the relationship between financial literacy, lifestyle, and financial inclusion with financial behavior, and to examine how financial technology moderates these relationships. Results: Using the Partial Least Squares–Structural Equation Modeling (PLS-SEM) method with 96 respondents, results indicate that financial literacy, financial technology, and lifestyle significantly shape financial behavior, while financial inclusion does not. Financial technology strengthens the relationship between financial literacy and financial inclusion with financial behavior but not with lifestyle. Novelty: The study identifies the dual moderating role of financial technology in linking literacy and inclusion to responsible financial practices. Implications: These findings emphasize the need for integrated financial education and digital literacy programs to promote smarter and more sustainable financial management in the digital economy. Highlights Financial literacy and technology jointly shape responsible financial behavior Financial inclusion alone does not ensure improved financial management Financial technology strengthens the link between knowledge and financial discipline Keywords Financial Literacy, Financial Technology, Lifestyle, Financial Inclusion, Financial Behavior

Interacting in a dynamic society and the demands of a modern lifestyle demand fast movement in meeting complex financial needs. This study aims to investigate how financial inclusion and technology influence farmers’ financial attitudes and income in the Sulawesi Selatan district, Indonesia―a total of 657 participants who filled out the questionnaire and joined this study. Structural equation modelling (SEM) was used to examine the research hypotheses. This study confirms that financial inclusion has a greater effect on farmers’ financial attitude. Whereas, financial technology does not have a positive effect on farmers’ financial attitude. Furthermore, farmers’ financial attitude has a positive and significant effect on farmers’ income. Interestingly, farmers’ financial attitude partially mediates the role of financial inclusion and technology on farmers’ income. This study contributes to the understanding of the impact of financial inclusion and technology on farmers' financial attitudes and income in Sulawesi Selatan, Indonesia. It reveals that financial inclusion significantly enhances farmers' financial attitudes, while technology does not have a positive effect. Additionally, farmers' financial attitudes have a positive influence on their income and partially mediate the relationship between financial inclusion, technology, and income. These findings highlight the importance of policies that not only improve access to financial services but also promote financial literacy and positive attitudes. This research serves as a valuable reference for policymakers and educational institutions aiming to foster entrepreneurship among rural populations.

The purpose of this study was to determine the impact of financial behavior, financial inclusion, and financial technology on MSME performance with financial literacy as a mediating variable. The research population included all micro, small, and medium enterprises (MSMEs) located in Ciamis Regency, and the sample was drawn using a random sampling technique. A total of 106 respondents participated; this number was determined by applying Slovin's formula. Information was collected using a questionnaire, which was then processed and analyzed using Partial Least Squares (PLS). The results show that financial behavior has a positive impact on MSME performance, financial inclusion has no significant impact on MSME performance, financial technology has no impact on MSME performance, and financial literacy has a positive impact on MSME performance, financial literacy acts as an intermediary between financial behavior and MSME performance, financial literacy mediates the relationship between financial inclusion and MSME performance, and financial literacy does not mediate the relationship between financial technology and MSME performance. Recommendations for government agencies and financial institutions include providing well-structured financial literacy programs and assisting MSMEs in implementing financial technology. This approach is intended to increase MSMEs' access to financial services as well as their capacity for sustainable growth by equipping them with the knowledge and skills to effectively utilize these resources in their day-to-day business activities.

The study sought to evaluate the significance of government regulations on the relationship between financial technology and financial inclusion of Small and Medium Enterprises in Kenya. This study emanates from the Doctoral dissertation of the first author where the co-authors served as supervisors. Technology, Organization and Environment Theory and Financial Intermediation Theory were utilized. The study adopted explanatory research design. The top 100 Small Medium Enterprises in Kenya constitute the target population and the sample size was 200 based on purposive sampling technique and simple random sampling where two respondents were picked from each Small Medium Enterprises of interest. A response rate of 81.5 percent was achieved. The study used multiple regression analysis and it was established that government regulations had significant moderation effect on the relationship between financial technology and financial inclusion of small and medium enterprises in Kenya. The study recommends that the existing transaction limits should be reviewed in line with economic conditions of the country. Government should ensure that favorable lending rates are put in place so as to further enhance the level of financial inclusion of small and medium enterprises in Kenya. Government guidelines on screening of customers should be favorable to business owners and stringent requirements should be discouraged. Keywords: Government Regulations, Financial Technology, Financial Inclusion, Small and Medium Enterprises

Financial inclusion is the provision of financial services at affordable costs to sections of underprivileged and low-income segments of society. Failure to constantly redesign strategies that help the commercial banks adapt to changing business environment may lead to a strategic mismatch between what they offer and what markets demands. The study objective was to assess technological banking innovations and financial inclusion by commercial banks in Nairobi County Kenya. The study was anchored on the theory of financial intermediation, diffusion of innovation theory and Silber’s Constraint theory of Innovation. A descriptive research design and a positivism philosophy were used because the conceptual hypotheses were drawn from existing theories and identified knowledge gaps as founded on the research design. Multiple regression model was employed in this study. For the purpose of this investigation, the target population included all the 42 registered commercial banks operating in Nairobi County, Kenya in the year 2016. Purposive sampling technique was used to determine the sample size. Thirteen (13) selected banks that had successfully implemented technological banking innovations in Nairobi County were purposively sampled for the study. Both primary and secondary data was used in this study. Primary data was collected using questionnaires. Secondary data on mobile bank transactions and mobile phone subscriptions in the banks for the period between 2011 and 2016 was obtained from Central Bank of Kenya, Kenya National Bureau of Statistics and the Banking survey manuals. Questionnaires were administered to randomly selected respondents. The confirmatory test for multicollinearity was done using the Variance Inflation Factor. Data was analyzed using correlation, Goodness of Fit, analysis of variance, F statistic/significance of the study variables and regression of coefficients which were used to draw inferences on the relationship between the study variables. Data was presented using tables and figures. Results of the study indicated that the predictor variables; mobile banking, agency banking, electronic banking outlets and internet banking have an influence on financial inclusion. Correlation results also indicated that mobile banking, agency banking, electronic banking outlets and internet banking were positively associated with financial inclusion. Additionally, the regression findings indicated that mobile banking, agency banking and electronic banking outlets were statistically significant predictors of financial inclusion. However, Internet banking had a significance level of 0.586 which is higher than the conventional threshold of 0.05 which rendered the variable as statistically insignificant in prediction of financial inclusion. The findings concluded that mobile banking, agency banking, electronic banking outlets and internet banking have an influence on financial inclusion with the technological innovations being well adopted by the customers in the respective banks .The study recommended that the banks’ management should make use of these research findings to come up with innovative approaches of improving financial inclusion while maintaining the existing ones in the conduct of their business so as reach more clients with their products and services.

This study investigates the dynamic linkages between financial sector development, financial inclusion, credit supply, and economic growth in East Africa, drawing on financial intermediation theory, endogenous growth and finance–growth nexus models. It examines how improved financial infrastructure enhances credit access and inclusion, thereby influencing long-term growth. Using annual panel data from 1990 to 2023 for Burundi, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, and Uganda, composite indices for financial development, credit supply, and inclusion were constructed via Principal Component Analysis. Dynamic heterogeneous panel models, including pooled mean group, mean group, and dynamic fixed effects were applied, with robustness checks using fully modified ordinary least square, canonical cointegration regression, feasible generalized least square and Dumitrescu and Hurlin causality tests. Results show financial development significantly boosts inclusion and credit in the long run, with credit supply positively linked to growth, though high lending rates constrain expansion. Causality test reveals a long-run unidirectional link from financial development indicators to growth, with no short-run effects. Policy implications highlight deepening reforms, raising incomes, and regulating interest rates and public spending to foster inclusion and sustainable growth, while addressing regional disparities and structural barriers.

This study aims to analyze the influence of financial literacy, financial technology, and financial inclusion on the financial performance of SMEs in the service and trade sectors in Pontianak City. The background of this research lies in the importance of financial literacy and inclusion in improving business sustainability, as well as the limited utilization of financial technology among SME actors. This research employs an associative method with a quantitative approach. The population consists of all SMEs in the service and trade sectors in Pontianak City, totaling 2,218 units. A sample of 150 respondents was selected using proportionate stratified random sampling. Data were collected through questionnaires and analyzed using validity and reliability tests, classical assumption tests, multiple linear regression analysis, t-test, and F-test. The results of the F-test indicate that financial literacy, financial technology, and financial inclusion simultaneously have a significant effect on financial performance. The t-test results show that financial literacy and financial inclusion have a positive and significant partial effect on financial performance, while financial technology does not have a significant influence. The coefficient of determination (R²) is 0.071, indicating that the three independent variables explain only 7.1% of the variation in financial performance, while the remaining 92.9% is influenced by other variables not examined in this study. These findings highlight the importance of strengthening financial literacy and inclusion among SME actors to enhance their financial performance. Meanwhile, the use of financial technology still requires optimization through proper education and guidance.

Premised on Meta analysis of financial intermediation theory by Gurley and Shaw (1960), Leland and Pyle (1977), Diamond and Dybvig (1983), Allen and Santomero (1996), Scholtens and van Wensveen (2000), the main purpose of this study is to test for the predictive power of each of the dimensions of financial intermediation of market penetration and quality of financial services on financial inclusion of the poor by microfinance banks in rural sub-Saharan Africa grounded on the financial intermediation theory. This study adopted a cross-sectional research design and data were collected from 400 poor households located in rural Uganda. The data were analyzed using ordinary least square hierarchical regression (OLS) in SPSS (statistical packages for social sciences) to generate the explanatory power of each of the dimensions of financial intermediation on financial inclusion based on coefficient of determination (R²). In addition, results from analysis of variances (ANOVA) were also generated to establish the differences in the perceptions of the poor towards being financially included through financial intermediation. The results revealed that market penetration and quality of financial services as dimensions of financial intermediation significantly explains 22 percent of the variation in financial inclusion of the poor in rural Uganda. Additionally, when individual effects were considered, both market penetration and quality of financial services had significant and positive effects on financial inclusion of the poor in rural Uganda. Accordingly, our study contributes and recommends specific policies toward the role of financial intermediaries in financial deepening, especially in rural sub-Saharan Africa where there are limited presence of traditional banking structures to serve the unbanked rural poor households.

Financial inclusion is one of the top priority issues as an important key towards reducing extreme poverty and increasing shared prosperity by giving people easier access to financial facilities.The World Bank and the G20 countries have a high commitment to providing financial inclusion for organizations, companies and the general public.The issue of financial inclusion was greatly amplified during the COVID-19 crisis.The objective of this study is to find out the relationship between financial inclusion, financial technology and financial regulation on business performance.This research uses the variables provided by the Enterprise Survey for data published in June 2022 carried out by the World Bank called the World Bank Enterprise Survey or WBES June 2022.SmartPLS was used for the data analization method.The results of this study found that financial technology has a positive influence on financial inclusion and financial performance, both by itself and mediated by financial inclusion.However, financial regulation has a negative impact on financial inclusion and business performance, either by itself or mediated by financial inclusion.This research suggests investors and entrepreneurs in the future to improve their company's performance by increasing the financial inclusion and financial technology of the company.In addition, this study suggests regulators provide relief from regulations on the use of financial facilities so that companies can carry out business activities smoothly.

Disruptive innovation is regarded as the most influential innovation theory in business theory in the early 21st century. Clayton Christensen, the founder of the theory, has attracted extensive attention both in theory and practice since the theory was founded more than 20 years ago. This concept was elaborated and developed in Christensen’s 1997 book, The Innovator’s Dilemma, and in subsequent articles and monographs. Specifically, although disruptive innovation involves a lot of content, its core content needs to meet four basic criteria: (1) locking customers in a new way; (2) usually lowering gross profit; (3) usually not following the traditional trajectory of improving the performance valued by mainstream consumers; (4) introducing new trajectory of performance and improving performance along parameters different from the traditional ones. In addition, the disruptive innovation theory has been also described as the game between two types of enterprises with asymmetric capacity resources. Usually it describes the game between new entrants and incumbents. The weak side must rely on innovation to subvert their strong competitors. The crux of the problem is what the strategies are taken by the weak side. Christensen argues that new entrants must choose a customer base that differs from incumbents and they need new technologies to produce better qualified and lower priced products. If low-end customers are selected, it is the low-end customer disruptive innovation strategy; if potential consumers are selected, it is the new market disruptive innovation strategy, and a disruptive innovation strategy is an effective way to defeat strong competitors. This paper reviews the theory of disruptive innovation, classifies and analyzes the research and practice of disruptive innovation theory in the past more than two decades by means of literature review, and objectively comments on the misunderstanding, modification and development of disruptive innovation. In addition to The Innovator’s Dilemma, Christensen’s other books and papers are also reviewed. The main contributions of this paper can be divided into three aspects: (1) It systematically reviews and analyzes the literature of disruptive innovation in the past more than 20 years, which is of great significance to the theoretical researchers and practitioners of disruptive innovation, particularly in China. (2) It proposes the MSE innovation model and the future direction of disruptive innovation in the digital economy. As for the MSE innovation model, since 2014, Christensen has continually proposed three different theoretical explanations based on disruptive innovation, which are market creating innovation, sustaining innovation and efficiency innovation. (3) It elaborates the problems and prospects of disruptive innovation theory in the context of digital economy. The authors identify four potential directions for disruptive innovation in the digital economy. First, we propose that as digital transformation becoming more important in both developed and emerging economies, the future development of disruptive innovation will be linked to the integration of digital technologies and promote the development of the digital economy. Second, in the digital economy, entrepreneurs do not have enough time to learn new knowledge. In this unstable environment, the ability to make relevant immediate decisions becomes a competitive force, providing new entrants with the opportunity to compete in the market. Third, since both disruptive and breakthrough innovations can be explained by asymmetric theories/models and are developed based on the discontinuous technologies, as a result, they are all facing competition from mainstream markets. In addition, the theory and practice of disruptive innovation are dynamic processes. Fourth, while we cannot deny the value of disruptive innovation, we cannot ignore that it may not have a positive impact on society when it is implemented. Therefore, researchers should increasingly focus on the “positive side” of technology, including disruptive technology, because it is highly correlated with people’s desire for a better society. The future development of this theory can expand its application scope and strengthen its positive role in social economy. Finally, the authors recognize that gaps between the disruptive innovation theory and practice need to be filled by researchers in the future.