For the Global Symposium on Innovative Financial Inclusion, Muhammad Bin Ibrahim, Governor of Bank Negara Malaysia, said that financial inclusion has been accorded global priority to address the widening income gap, promote economic empowerment amongst the low income households and SMEs, and to unlock the growth potential of the middle class.
World Bank estimated that between 2011 and 2014, 500 million people have gained access to financial services for the first time. While that indicates encouraging progress, there are still as many as 2 billion unbanked adults globally.
Innovation in financial services that is driven by financial technology, or FinTech, has tremendous potential in bridging the gap and enhance financial inclusion. Some of these are:
- Technology-based, innovative, low-cost business models providing financial services thus making it viable to reach the poor
- Mobile payment system that overcomes inadequate bank facilities to enable convenient fund transfer between various parties. This had real impact as seen in Sierra Leone, where digital payment which ensured timely wage distribution to health workers helped end the Ebola epidemic. (read more here).
- Marketplace lending, such as crowdfunding platforms, that connects investors directly with SMEs to democratize access to finance thus empowering the SMEs
The financial sector regulators collectively agreed on the importance of understanding the technology wave and setting regulatory boundaries for innovation to thrive while ensuring safety and security. Regulatory sandbox has been proposed, or currently being developed, in jurisdictions such Singapore, Malaysia, Indonesia. Australia and Thailand.
At Kapital Boost, our focus on funding community growth by helping the SMEs is a means of achieving financial inclusion. By providing SMEs with financial access through crowdfunding, as an alternative to tightened bank credit, it empowers SMEs and boost its contribution to GDP and employment amongst others. The trickledown effect to the local economy and populace leads to shared prosperity, one of the value goals of financial inclusion.