Highlights form the chapter “How Fintechs are creating a more inclusive financial system” in The Future of Global Fintech: Towards Resilient and Inclusive Growth (January, 2024) by World Economic Forum and the Cambridge Centre for Alternative Finance.

Fintechs are a vehicle to widen access to finance for traditionally underserved populations irrespective of the region.

Fintechs, and digital financial services more broadly, have expanded access and affordability of financial services through digital technology and widespread mobile phone adoption. They have the potential to do so for the further 1.4 billion people globally who remain unbanked and many more who are underbanked.

Customer segments and their transaction value proportions.

Fintechs show a clear propensity to serve traditionally underserved customer segments, a strategy that is contributing to the growth of their customer bases. Globally, female, low-income and rural or remotely-located customers constitute a substantial portion of fintech customer bases, averaging 39%, 40% and 27%, while contributing 39%, 26% and 31% of total transaction values, respectively.

As discussed, overall, low-income customers constitute 40% of the total customer base and contribute more than a quarter (26%) to the total transaction values. However, there are nuances by vertical; for instance, digital payment firms noted the highest proportion of low-income customers at 57%, contributing 44% to transaction values. This is in line with other research that has indicated this business model tends to have one of the more proven pathways to profitability.

Overall, fintechs worldwide are prioritizing product and service offerings for micro, small- and mediumsized enterprise (MSME) customers, followed by low-income, female and youth customer segments.

This demonstrates an industrywide commitment to more customer-centric approaches. It may also indicate that fintechs are anticipating greater competition and are dedicating more resources to targeted product and service offerings.

Contributions to financial inclusion and environmental sustainability through product and service offerings.

In addition to examining fintechs’ reach and strategies for expansion among traditionally underserved segments, it is important to gain a deeper understanding of the specific products and services they provide that contribute to financial inclusion and environmental sustainability.

To that end, for this study, different fintech products were outlined and then grouped by their relevance to a) financial inclusion and b) environmental sustainability,29 creating a structured framework for understanding their impact on these essential areas.

It is worth noting that, in terms of inclusive products and features, “micro” products, lowering transaction costs, flexible payment solutions and broader access are typical characteristics of fintech company offerings.

Regarding environmental sustainability products, companies in AEs were more able to provide customers with green lending/ crowdfunding as well as to finance social impact projects.

Mapping the Sustainable Development Goals to fintech

Fintechs increasingly include the UN SDGs in their business strategies, making them agents for catalysing sustainable finance and thus a green and inclusive economy. An analytical framework was first used to group SDGs and designed questions for fintechs about their products, based on the framework provided by the UN Capital Development Fund (UNCDF),30 focusing on the linkage of sustainable finance and financial inclusion as well as their relation to environmental, social and governance (ESG) focus areas, which support SDG outcomes. Both financial inclusion and sustainable finance overlap and create linkages. Similar to product, services and features offerings, fintechs prioritized SDGs linked to financial inclusion more than those linked to sustainable finance.

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