As a financial professional, I have seen the limitations of traditional banking firsthand. Despite the growth of financial institutions, there are still billions of people around the world who are unbanked or underbanked. This is where financial inclusion comes in: everyone should have access to financial services regardless of their income or location.
In recent years, platform-based banking has emerged as a game-changer in the financial inclusion revolution.
In this article, we will discuss how platform-based banking is changing the game and transforming the financial services industry.
Introduction to Financial Inclusion
Before we dive into platform-based banking, it’s important to understand what financial inclusion is all about. Financial inclusion refers to making financial services accessible to everyone, especially those who are underserved or excluded from traditional banking. It involves providing financial services like savings accounts, loans, insurance, and payment systems to people who don’t have access to them.
Despite the growth of financial institutions in recent years, many people are still unbanked or underbanked. According to the World Bank, about 1.7 billion adults worldwide are unbanked, which means they don’t have access to formal financial services. Financial inclusion is important because it can help reduce poverty, improve economic growth, and promote social development.
Traditional Banking Limitations
Traditional banking has limitations that make it difficult for many people to access financial services. One of the main limitations is the high cost of providing financial services. Traditional banks have high overhead costs like rent, salaries, and technology, which are often passed on to customers in the form of fees and charges.
Another limitation of traditional banking is the lack of physical access to banking services, especially in rural areas. Many people live far away from bank branches and don’t have the means to travel to access banking services. This makes it difficult for them to open accounts, deposit money, or access credit.
Platform-based Banking: What is it and how does it work?
Platform-based banking is a new way of delivering financial services that is changing the game in the financial services industry. It involves using digital platforms to provide financial services to customers. These platforms can be accessed through mobile phones, computers, or other digital devices.
Platform-based banking connects customers with financial service providers through a digital platform. Through these platforms, customers can access a range of financial services like savings accounts, loans, insurance, and payment systems. The platform providers earn revenue by charging nominal fees for the services they provide.
Vision Banking: The Future of Financial Inclusion
Platform-based banking is just the beginning of the financial inclusion revolution. The future of financial inclusion lies in vision banking, which uses technology to provide financial services to people who don’t have access to traditional banking. Vision banking involves the use of technologies like artificial intelligence, blockchain, and biometrics to provide financial services that were previously unavailable.
One of the benefits of vision banking is that it can reduce the cost of providing financial services. By using technology, financial service providers can reduce overhead costs and pass on the savings to customers through lower fees and charges. Vision banking can also improve the speed and efficiency of financial services, making them more accessible to people who need them.
The Benefits of the Platform Business Model for Financial Services
The platform business model has many benefits for financial service providers. One of the main benefits is that it can reduce the cost of providing financial services. Financial service providers can use a digital platform to reduce overhead costs like rent, salaries, and technology.
Another benefit of the platform business model is that it can improve the speed and efficiency of financial services. By using digital platforms, financial service providers can process transactions faster and more efficiently, reducing the time customers need to access financial services.
The Real-World Application of New Platforms in Financial Services
Many new platforms and financial services are transforming the financial services industry. One example is mobile money, also referred to as mobile payment, a platform-based service that allows customers to access financial services through their mobile phones. Mobile money has become popular in many developing countries with limited traditional banking services.
Another example is peer-to-peer lending, a platform-based service that allows customers to borrow money from other individuals through a digital platform. Peer-to-peer lending has become popular in many developed countries where traditional lending services are expensive or difficult to access.
The Challenges of Platform-Based Banking
Despite the many benefits of platform-based banking, some challenges need to be addressed. One of the main challenges is the lack of regulation in the industry. Many platform-based financial service providers are not regulated, which can be risky for customers who use their services.
Another challenge is the lack of physical access to banking services, especially in rural areas. Many people live far away from bank branches and don’t have the means to travel to access banking services. This makes it difficult for them to open accounts, deposit money, or access credit.
The Future of Platform-Based Banking and Financial Inclusion
The future of platform-based banking and financial inclusion is bright. As technology continues to evolve, financial service providers can provide more services to customers through digital platforms. This will make financial services more accessible to everyone, regardless of their income or location.
Platform-based banking must address challenges and risks associated with the industry to succeed. This includes regulating the industry, ensuring customer protection, and improving physical access to banking services.
Conclusion: The Potential of Platform-Based Banking to Transform Financial Services
Platform-based banking has the potential to transform financial inclusion by making financial services more accessible to everyone. By using digital platforms, financial service providers can reach customers who are underserved or excluded from traditional banking. This can help reduce poverty, improve economic growth, and promote social development.
Vision banking is the future of financial inclusion, and it involves using technology to provide financial services to people who don’t have access to traditional banking. While there are challenges associated with platform-based banking, the future is bright. As technology continues to evolve, financial service providers can provide more services to customers through digital platforms.
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