The efficiency and security benefits that fintech companies have brought to developed nations have largely bypassed developing nations. However, fintech players are starting to disrupt the existing financial order in these markets as an increasing number of people own mobile phones. Since there is less of a digital footprint, the sophisticated algorithms that some fintech companies use to generate personalized offers or risk scores in developed countries aren’t useful. Thus, in order to succeed in this environment, companies such as SERV’D in India build apps that encourage users to expand their use of technology. SERV’D helps households and its workers, such as nannies, drivers, and cooks, create simple work contracts and get paid online. The data that is generated captures the wage and payment info of over 400 million workers who would otherwise have no way of demonstrating their income for loans and other benefits.
Another struggle consumers in developing countries face is the lack of a steady paycheck; many only have temporary jobs, which can be selling produce one month and picking tea the next. They also have unpredictable expenses which means the standard, rigid insurance premiums in developed countries are not a viable option. To combat this, companies such as Uber’s Xchange allows drivers to participate in very short-term leasing programs that are a few months long and have a low down payment. In this sense, Xchange tries to meet consumers’ flexible earnings with flexible financing. By adapting to developing countries’ infrastructure and integrating financial technology in a way that plays to the lives of the people, these companies can play a crucial role in bringing these countries into the digital space.
https://hbr.org/2017/01/fintech-companies-could-give-billions-of-people-more-banking-options
It is always interesting to see how different technologies are applied in developing countries compared to developed countries. Especially as developing countries are able to utilize such technologies while still being a few steps behind in their economic development. As I have not previously thought of financial services being introduced in developing nations, I have found this article valuable in the possibilities that such technology can provide. I am curious to see if there will be increases in the standard of living or wage potential due to these technologies being introduced or if there are ways in which the financial data can be assessed to provide better financial or social services to specific areas.