Fintech accelerates financial inclusion; Smart’s PayMaya shows way for Philippines

MANILA, Philippines - About one billion people in Asia and the Pacific, are ‘financially excluded.’ Less than 27 percent of adults have a bank account, and only 33 percent of enterprises have taken a loan from a financial institution.

According to the Asian development Bank (ADB), increased access to affordable financial services can be a lever for Asians to smoothen consumption, manage risk and improve their lives through better savings options, access to credit, and cheaper payments or remittances.

However, the majority of bank and non-bank institutions still rely on branch networks, which have limited the wider population from accessing financial services.

Most activities have to be done over the counter in person, and processing are time-consuming. The most common barriers to financial inclusion are the high cost of providing or using services, the lack of nearby services, and lack of identification required for consumers to open bank accounts, for example, and for providers to comply with ‘know your customer’ rules.

Innovations in information and communication technology (ICT) and the emergence of new financial technology (fintech) players are accelerating financial inclusion much more rapidly than at any other time in history.

According to Lotte Schou-Zibell, a technical adviser, sustainable development and climate change department of ADB, fintech partnerships and business models are delivering financial services that reach remote clients, as well as those at the base of the income pyramid.

Digital finance solutions offer great potential for achieving universal access to financial services.

For instance, bKash in Bangladesh has demonstrated how mobile money – through mobile phones – can be a catalyst for gaining access to a diverse range of financial services such as credit, insurance, savings, and remittances.

The Aadhaar biometric identification card system, in place in India for around seven years, makes it easy for consumers to confirm their identity when opening a bank account.

The same card has enabled the government to digitalize transfers such as energy or rice subsidies to the poor, which allows users to access their benefits easily and cheaply without recourse to a middleman, and keep them secure.

From the government’s point of view, distribution becomes cheaper and easier to monitor.

The Philippines is also seeing a lot of digital financial inclusion taking place as consumers are embracing new technologies for banking and finance.

By downloading the all-in-one digital payment mobile app PayMaya of Smart Communications, for example, Filipinos can send money, pay bills and earn money much more easily than before.

PayMaya generates a unique 16-digit instant virtual Visa card automatically upon registration.

This new electronic money account can be topped up through any reloading station, and be used immediately for online shopping, peer-to-peer transfers, to pay for mobile phone load and pay any merchant worldwide that accepts Visa.