Banking beyond borders: How technology is bridging the gap for the financially excluded

Harnessing data analytics, machine learning and AI to empower underserved communities
Banking beyond borders: How technology is bridging the gap for the financially excluded
Banks are stepping up to help underserved communities become more financially literate and responsible.

The global economy is a complex network of transactions and affiliations where financial services facilitate growth and development. However, despite the importance of accessing economic benefits, millions worldwide still lack inclusion in the traditional financial system.

Financial inclusion, ensuring the availability and accessibility of financial services to underserved communities, has emerged as a critical issue for the banking industry today. According to the World Bank, a staggering 1.7 billion adults worldwide lack access to formal financial services. The 2020 Central Bank of UAE survey revealed that 85 percent of adults in the country (aged 15 and above) use at least one form of financial service, leaving 15 percent financially excluded.

The lack of financial inclusion can result in various adverse outcomes, including difficulty in saving for emergencies, inability to invest in education or business, and heightened vulnerability to financial crises.

Read more: Technology trends driving the financial services sector

Accessing financial wellness

Imagine a world where everyone, irrespective of their background or income, has access to vital financial services, enabling them to forge a brighter future for themselves and their communities. This is the vision behind financial inclusion, a concern within the contemporary banking sector. By providing underserved communities access to financial services, banks can empower individuals to save for the future, invest in education and business ventures, and cultivate financial resilience. This improves the quality of life in underserved communities and drives economic growth and development.

However, it’s not solely about providing access to financial services. Banks are also stepping up to help underserved communities become more financially literate and responsible. They offer financial education and training programs through mobile apps, and design financial products and services that are easy to understand and use. For instance, Liv., an offshoot of Emirates NBD – the digital bank catering to a youthful demographic – offers numerous blogs and in-app resources to help users become more financially literate.

Financial literacy

By empowering underserved communities to understand their financial options better and make informed decisions about managing their money, banks are increasing financial inclusion and building more robust, resilient communities.

The banking industry aims to bring financial services to all corners of the world, including underserved communities, and stands firm in adopting cutting-edge technologies to achieve their goal. Data, data analytics, machine learning and artificial intelligence have become the new superheroes in the quest for financial inclusion. Banks are now leveraging non-traditional sources of data, like payment history for utility bills, to better assess the creditworthiness of individuals who don’t have a traditional FICO or credit score.

This means that more people, once deemed unworthy of credit, can now access financial products and services that meet their needs. Moreover, these technologies enable banks to effectively manage risk while simultaneously addressing the financial needs of underserved communities.

The power of technology and the cloud

The banking industry is turning to cloud data management platforms to solve issues revolving around financial exclusion in underserved communities. Cloud-based platforms facilitate easy access to the necessary data for banks to better understand these communities’ financial needs and behaviors. Access to this knowledge helps banks design products and services tailored to the unique needs of their customers.

However, it doesn’t end there. In certain regions, mobile banking apps are revolutionizing financial inclusion. With smartphones becoming ubiquitous, these apps provide a convenient way for underserved individuals to access financial services, even where traditional banks are absent.

Finally, the icing on the cake is that by leveraging data analytics, machine learning, and AI, banks can now target these communities more effectively, creating products and benefits that cater to their specific needs. This leads to reduced client acquisition costs, making financial inclusion efforts more profitable. These technologies not only promote financial inclusion but also drive earnings and profitability for banks by expanding their customer base. It’s a win-win for all involved!

technologyKarim Azar, regional vice president of the Middle East at Cloudera.

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