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The Role of Fintech in Financial Inclusion: Payment aspect







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The Role of Fintech in Financial Inclusion: Payment aspect
Introduction
Financial inclusion entails the ability of businesses and individuals to access essential and
inexpensive financial services and products that meets their wants. Inclusivity facilitates growth
sustainability. Financial inclusion begins with payments which serve as a path to other financial
services such as credits and savings. This payment calls for the need for transaction accounts that
are functioned by a controlled payment service provider, which will facilitate access to payment
needs and safety to the end-user and gateway to other payment services. Fintech encompasses
digital advancements technologically supported business model improvements in the financing
segment (Philippon, 2019). Fintech innovations can upset prevailing industrial organizations and
alter how prevailing companies generate and convey services and products. They also pave the
way for new partnerships and facilitate access to financial services. The motivation for this topic
study was to investigate the flaws of traditional finance and how Fintech can transform it.
The paper presents relevant developments in Fintech to the payment aspects of inclusion.
It discusses the advantages and shortcomings of improving access to and utilization of safe
transactional accounts. The paper goes further to describe the impact of stakeholder involvement,
financial, communication and information technology infrastructures, and legal and regulatory
framework in the journey to achieve Fintech's capability in improving access to safer transaction
accounts.
Overall review of the theory
The monetary funds have recognized the ability of Fintech to support the Sustainable
Development Goals (SDGs) in financial inclusion, specifical the production of goods to facilitate
the application of the Payment Aspect of financial inclusion ((PAFI) (Hollanders, 2020).

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Developing a measurement framework that will aid countries in improving the access and use of
transaction accounts and providence of additional guidance on fintech advancements were
among the task force re-conveyed by the World Bank on payment aspects of financial inclusion.
Technological advancements have led to a positive impact on cross-border payment
access. Boards such as the financial stability board are working on analyzing the current
shortcomings in cross-border payments. Creating a list of actions to improve and develop them
has been a response by these boards. Even though Fintech is a comparatively new idea,
innovation has played a role in the evolution of payment services for a long time and has assisted
as a catalyst for payment system reform (Hollanders, 2020). It also outlines the essence of
improving prevailing structures and embracing innovative delivery models to widen the spread
of outdated payment products and instruments. The role of innovation such as mobile monetary
or electronic money has been approved and applied in the field as financial technology measure.
This role has broadened the reach of traditional payment instruments and products.
The relevance of fintech development in financial inclusion entails application to the new
access channels and new payment products (Hollanders, 2020). Biometric technology, digital
identification, Application Programming Interface (APIs), and cloud computing are the latest
technologies that facilitate the new product delivery and access modes. Payments are allowed
and initiated via traditional transaction accounts, open banking, and super apps by the
capabilities of new technologies in financial technology. The PAFI fintech wheel emphasizes
new tools in the center, which are mostly coupled to improve the delivery of the new access
modes and products and are not requisite for the access layer and development.
The theoretical and analytical framework

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Figure 1: Fintech Development in relation to financial inclusion (PAFI wheel)
APIs outline how software programs interface and communicate with each other.
Depending on the situation, they can be maintained privately or publicly available.
Big data analysis entails volumes brought about by increased use of information systems
and digital tools (Saxena et al., 2017). It can be described as technology that helps study the
increased volume of data through artificial intelligence, increased processing power, and cloud
computing that APIs can help achieve.
Biometric technology entails using unique individual physiological attributes to
authenticate and establish their identity, including facial characteristics, fingerprints, or vascular
patterns (Raghavendra et al., 2017). Biometric tech has replaced or even complemented
traditional means of providing identity hence minimizing fraud.
Cloud computing enables online networks to increase the flexibility and scale of
computing capacity, facilitating network access to configure shared computing resources,
including storage, application, service, networks, or even service (Saxena et al., 2017). It has also
availed financial institutions with features that facilitate security compared to traditional practice.

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Contactless technologies aid in the acceptance of the transmission of payment between
the payers' payment instrument and the payers' acceptance device without physical contact and
including mobile phones and payment cards (Hollanders, 2020). The contactless technology has
led to electronic wallets such as payment card numbers protecting underlying accounts.
Digital Identification is unique credentials that can identify any legal or individual related
to what the person does or someone else knows about the individual.
Distributed ledger technology is a process that enables networking nodes to authenticate
record state changes or prop...