How the Fintech Industry can Lift Millions out of Poverty
Poverty has been one of the world’s toughest and most important problems for a long, long time. Many solutions have been brought up to combat this challenge, but poverty is still prevalent and does not seem to be going away. Is it time we looked at Fintech for a possible solution that will help millions of people make enough to support themselves?
Poverty. One of the biggest problems that plagues our society. Poverty is defined as the state of having a socially unacceptable amount of money and not being able to provide for one’s self because of low income. Of our booming global population, 9.2% of the world lives under the international poverty line, according to the World Bank. This is an intolerable number, when considering the international poverty line is less than $1.90 a day. People across the world are suffering because of not being able to support themselves and their families.
Now, it is important to think about all of the current solutions available for fixing this problem. And let it be known, this is not something that can be fixed overnight. The world will always have some amount of impoverished people, however it is extremely important to reduce the poverty rate as much as we can. Nevertheless, some of the proposed current solutions to this problem are educating more children, lowering taxes, creating more jobs, and raising wages. These are all great solutions, and they are all necessary for creating a better economy where more people will be able to prosper and provide for themselves. However, there may be another solution that could potentially be even more effective.
The new way of helping out the poor is more technologically advanced than the others, and is already proven to boost economies. This new way to reduce poverty is by using Fintech. More specifically, by using mobile wallets for everyday transactions. Online transactions are cheaper and more sustainable. Additionally, risk of having money stolen is reduced significantly due to the online factor. Fintech also makes investing in the stock market or even cryptocurrencies much easier, and investing is another aspect that has the potential to reduce poverty.
This seemingly perfect new industry gets even better, because its effectiveness is already proven in an impoverished country. In 2005, Kenya had a poverty rate of 43.6%. With almost half of the population living under poverty, clearly something was going wrong. Then, in 2007, M-Pesa was introduced. M-Pesa is essentially mobile banking on your phone, which also lets its users store and transfer money through their mobile device. This new service significantly reduced the poverty in Kenya, as in 2016 the poverty rates fell to 35.5% of the population, which means that almost ten percent of the population was able to get themselves out of poverty, many with the help of this app.
Why does this app work? You may ask. Well, the reason why M-Pesa is so effective is because it gives all of its users the ability to have their own bank account. This term of financial inclusion means that everyone is able to have their own bank account and financial features, such as credit, insurance, and many other useful aspects. Financial inclusion among impoverished people will allow them to be more involved with their cash, and as Kenya has shown with M-Pesa, the system works extremely well.
What Does This Mean for the Future:
To sum everything up, poverty is one of the issues that will always exist in our society, but using Fintech to fight this issue could change everything, as M-Pesa in Kenya showed. Just because people around the world lack resources and struggle, there are solutions, and technology may be the way out of this situation. Mobile banking and Fintech have the capability to improve the world and change millions of lives, so we should embrace it and watch as our society boosts.