The Unbanked Population: Missing Links in the Fintech Ecosystem | FinTech

As the specter of a financial slowdown in China looms, economic effects are beginning to cascade through­­ the entire Southeast Asian archipelago, heightening the unease of investors and businesses. #Banks are braced for dwindling dividends and financial conventions are under threat from the growth of #Fintech. According to #McKinsey’s 2015 Global #Banking Annual Review, in 2014 VC investments in Fintechs leapt to $12.2 Billion compared to 2013 and in 2015, with more than 12,000 Fintech companies moving into every banking activity and market.

For the penurious villager in Cambodia, however, the peaks and troughs of economic cycles bear miniscule impact. Driven to the periphery by the financial ecosystem, this burgeoning class represents the least financially-educated of the social hierarchy. Due to a lack of financial structure, this band of individuals – comprised of micro businesses and the financially challenged – encapsulate Asia’s economic paradox.

Despite the growing realization that long-term economic growth needs to be built on the foundation of financial inclusion, the World Bank’s recent report revealed that only 27% of citizens in Southeast Asia have access to a bank account. Cut off from conventional resource channels, a significant number of the region’s population have no avenue to raise capital or apply for credit. The promise of social mobility remains elusive for the “#unbanked”, perpetuating the vicious cycle of poverty for generations.

The emergence of Fintech has disrupted a host of industries, fronting new opportunities and striving to fix old problems. FinTech has shown a potential in driving economy and gradually upgrade the welfare of more than 600 million people in the region. Harnessing the potential of data analytics, Fintech has chartered new paths; amalgamating business know-how and social networks to fill barren gaps left by commercial banks.

However, most platforms, which includes P2P lending and crowdfunding, target small and mid-sized businesses with high-growth potential. While these additions supplement commercial banks and enhance the capital financing ecosystem, the clientele hasn’t shifted dramatically.