By Gayatri Murthy, Maria Fernandez-Vidal, Xavier Faz, and Ruben Barreto (CGAP)

Fintech companies combine technology with access to data to deliver new financial services and experiences to customers. They have been proliferating in emerging markets and developing economies (EMDEs), and some are creating solutions specifically for underserved, low-income, or remote customers. Yet for all the general excitement that fintechs have generated in the global development community, there is little information available about how specific fintech innovations solve pain points in financial inclusion. In 2016, CGAP launched a program to understand fintech innovations and draw clear links to financial inclusion, where they existed. We supported pilots with 18 fintechs in Africa and South Asia that targeted financial services to low-income or underserved customers. Our goal was to explain innovations in a detailed way and generate insight on whether the services (i) work as stated, (ii) create value for underserved customers, and (iii) ease age-old pain points in delivering financial services to underserved customers. This paper is written for funders—whether donors, investors, development finance institutions, or philanthropic organizations—who engage with fintechs to advance financial inclusion. Based on CGAP’s work, it identifies five types of fintech innovation that offer potential for financial inclusion. We also highlight challenges that these fintechs, particularly those in early stages, face that inhibit their ability to impact financial inclusion.

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