Financial technology, or fintech, is the use of technology to improve and automate financial services. In recent years, fintech has emerged as a powerful force for financial inclusion and good finance hygiene.
One of the most critical ways that fintech is promoting financial inclusion is by making financial services more accessible to people who banks have traditionally underserved. For example, fintech companies use mobile money platforms to provide banking services to people in rural areas who do not have access to traditional banks. Fintech companies also use innovative lending models to lend to people with poor credit histories.
In addition to promoting financial inclusion, fintech is also helping people improve their financial hygiene. Fintech companies are developing various tools that can help people track their spending, set financial goals, and save money. For example, several apps now allow users to round up their purchases and deposit the spare change into a savings account. Some apps gamify saving, making it more fun and engaging.
The use of fintech for financial inclusion and good finance hygiene is still in its early stages, but it has the potential to make a real difference in the lives of millions of people worldwide. Here are some examples of how fintech is being used to promote financial inclusion and good finance hygiene:
- Chumz: Chumz, a Kenyan-based start-up, has built a goal-based mobile app that helps users save and invest money from their mobile money accounts with as little as US$0.05. One of the unique features of Chumz is that it encourages users to save based on their behaviour. “For instance, if a user spends money at a pub, the app suggests investing some of that money instead of spending it all. Similarly, if a user receives mobile money, the app prompts them to save some of the money.
- Qapital: This app allows users to set savings goals and then uses gamified, automated rules to help users save. For instance, it can round up a user’s purchases to the nearest dollar and deposit the difference into a savings account.
- Twine App: This is a collaborative saving app. It uses gamification elements, such as goal-setting and progress tracking, to motivate couples to save money together.
- Acorns: This app rounds up small purchases to the nearest dollar and invests the spare change in a diversified portfolio. The app provides educational content to teach users about investing, effectively merging financial literacy with automated micro-investing.
- Robinhood: Known for its stock trading platform, Robinhood integrates gamification elements, such as scratch cards for free stocks and visual animations, to make investing more engaging and approachable for novices.
- Long Game: This app encourages savings through games. When users deposit money into their savings account, they earn opportunities to play games and win cash or cryptocurrency prizes. The app essentially rewards users for saving money.
These are just a few examples of how fintech is being used to promote financial inclusion and good finance hygiene. As fintech continues to evolve, we can expect to see even more innovative ways to use technology to improve the financial lives of people around the world.
Financial awareness, ethics, and responsibility are usually overlooked during the formative years of one’s education, but financial hygiene is essential for survival. Most people are unaware that basic financial practices are the key to a secure future. Your savings will help on a rainy day. Hence, it is crucial to understand that no income is disposable, all your money is hard-earned, and you should take good care of it. Managing your expenses and spending wisely can help you build a more sustainable future.