When I first started working in financial technology, I never truly understood the vast gap that exists for people who are considered “underbanked.” I always assumed that everyone had access to a bank account and financial services, but that wasn’t the case. A few years ago, during a trip to a small rural town, I realized just how many people didn’t have the resources or access to manage their money effectively. It was eye-opening to see how many people still relied on cash and did not use banks, many of them not because they didn’t want to, but because they simply couldn’t. It’s moments like these that made me realize how critical fintech companies are in shaping the future of financial inclusion.
But what exactly is fintech doing to help these underbanked communities? Let’s dive deeper into how these companies are helping individuals receive, hold, and send funds, and how this is making a real difference in people’s lives.
Understanding “Underbanked” and Why It Matters
I used to think that the term “underbanked” simply referred to people who didn’t have a bank account. However, I quickly learned that the underbanked aren’t necessarily without financial services; they just don’t have easy or reliable access to them. In simple terms, underbanked people are individuals who don’t fully use or have access to the financial services available to others, such as loans, savings accounts, or credit cards. They might have a bank account, but due to high fees, low trust, or inconvenient services, they don’t use it for much more than holding a small amount of cash.
This realization hit me hard when I traveled to several rural areas where mobile phones were used more than physical bank accounts. I met a woman in her late 40s, who lived in a remote village in India. She had no bank account and used cash for almost every transaction. When I asked her why she didn’t use a bank, she simply said, “It’s not for people like me.” But that’s where fintechs have made a major difference, by providing digital solutions that allow underbanked individuals to access banking services on their phones, often at lower costs and with greater ease.
The impact is clear: fintechs are bridging the gap and offering solutions for people like her, whether through mobile wallets, digital payment systems, or other financial tools.
How Fintechs Help Underbanked Customers Receive Funds
One of the most significant ways fintechs are helping the underbanked is by providing easy and secure methods to receive money. A few years ago, I was volunteering in a small village where many of the residents depended on money sent from relatives working abroad. Previously, sending money back home involved high fees, long waiting times, and often unreliable services. But the introduction of mobile money platforms like M-Pesa in Kenya and Venmo in the U.S. has completely transformed this process.
I saw how M-Pesa made it easier for people to send and receive money through their mobile phones without needing a traditional bank account. For many, this was a game-changer. I’ll never forget meeting a young man named John, who was working in Nairobi while his family lived in a small town hours away. He told me how he used to send money home through Western Union, but after discovering M-Pesa, he was able to send funds directly to his family’s mobile wallets, saving both time and money.
Even in developed countries, fintechs like PayPal and Cash App are making it easier for people without bank accounts to receive payments. I remember one time I paid a friend for a service using Venmo, and she mentioned how grateful she was that she didn’t need a bank account to get paid. She had struggled with traditional banks in the past due to high fees, but now she could receive money instantly on her phone without any extra charges. This ease of use has been a huge win for underbanked communities, who no longer need to rely on costly, time-consuming bank transfers.
How Fintechs Help Underbanked Customers Hold Funds
As I spent more time with people who are underbanked, one thing became clear: storing money in a safe, accessible place was a huge challenge. I met many people who kept their savings in cash, hidden under their beds or in their homes. This practice, while understandable, put them at great risk of theft or loss.
This is where fintechs really shine. I’ve had the chance to observe how mobile banking and digital wallets have given people who are underbanked the opportunity to safely hold their funds in a way that was never possible before. Take Chime, for example. I’ve spoken to users who love the idea of having a simple, no-fee account with access to savings tools. One woman I met during a trip to the Midwest told me that before she signed up for Chime, she never thought she’d have the chance to store money securely without paying monthly fees. Now, she uses it for both receiving and holding her paycheck, which makes her feel much more financially secure.
There are also services like Green Dot that offer prepaid debit cards, allowing people to keep money in a secure account and use it just like a regular bank card, but without having to deal with the high fees often associated with traditional banks. I personally know several people who use prepaid cards because they don’t trust big banks or can’t afford to keep a minimum balance. These services are especially helpful for people who live in areas where bank branches are far and few between.
I’ve also seen how services like M-Pesa allow people to store money digitally, even earning interest in some cases. For people in rural or underserved areas, this offers a way to manage their funds that wasn’t previously possible. It’s incredible to witness how much people’s financial lives have changed with the ability to hold money on their phones.
How Fintechs Help Underbanked Customers Send Funds
Sending money has always been a challenge for the underbanked, especially when it comes to international remittances. I remember during a trip to the Philippines, I saw how hard it was for families to send money abroad. Traditional money transfer services like Western Union and MoneyGram were commonly used, but their fees were high, and the service was often unreliable.
But fintech has completely changed the landscape. Now, people in underbanked communities can send money anywhere in the world using services like Xoom, Revolut, or Wise (formerly TransferWise). These services not only reduce fees but also make the entire process much faster and more accessible.
I had a chance to see this firsthand when I visited a small village in Africa where migrant workers send remittances home. The families there used Sendwave, a mobile app that allows users to send money across borders with low fees. The process was simple: open the app, enter the recipient’s details, and send the money within minutes. This process has saved people tons of money on high international transfer fees. I spoke to a few locals who told me how much of a difference Sendwave made, as it allowed them to receive more of the money sent to them by their loved ones abroad.
These services are also making it easier for underbanked people to send funds locally, whether it’s to family, friends, or businesses. The ability to send money using just a mobile phone has opened up new possibilities for those who once relied solely on cash.
The Impact of Fintech on Financial Inclusion
Having worked in this industry for years and seeing the incredible transformations firsthand, I can say with certainty that fintech is playing a key role in closing the financial inclusion gap. It’s not just about providing access to financial tools; it’s about giving people who were previously excluded from the system the chance to manage their finances in ways they never thought possible. I’ve met individuals who have saved more money, paid fewer fees, and have been able to send money across the world, all thanks to fintech innovations.
What I’ve learned is that fintechs don’t just provide products or services; they’re reshaping lives. Through mobile wallets, digital banking, and low-fee transfers, people who once felt isolated from the financial world now have the tools they need to participate fully. Whether it’s a single mother in a rural village or a young worker in a bustling city, fintech is making financial services accessible to all.
Conclusion: A More Inclusive Future Thanks to Fintechs
The future of finance is clearly digital, and it’s exciting to see how fintechs are making a difference in the lives of the underbanked. From receiving funds instantly, to securely holding savings, to sending money across borders with ease, fintechs have opened up a world of opportunities for those who once felt excluded from the financial system.
Having experienced the challenges of the underbanked firsthand, I’m optimistic that these innovations will continue to evolve and provide even greater access to financial services. As fintechs grow, more and more people will gain the financial tools they need to build better lives. The impact is already significant, and I can only imagine how much more inclusive the world will become as these services expand.
It’s clear that fintech is not just changing the way we manage money, it’s changing the lives of millions, one digital transaction at a time.
