Start ups eat banks lunch in push for financial inclusion

The rise of fintech startups has disrupted the traditional banking industry, particularly in the area of financial inclusion. Here are some ways in which startups are eating banks' lunch in their push for financial inclusion:

1. Mobile-first approach: Startups have developed mobile-first solutions that cater to the needs of underserved populations, who often lack access to traditional banking services. Mobile wallets, such as M-Pesa, have become incredibly popular in Africa and Asia, allowing users to store and transfer money using their mobile phones.
2. Digital-only banks: New digital-only banks, like Chime and Revolut, have emerged, offering low-cost, low-frills banking services that are more accessible and convenient than traditional banks. These banks have disrupted the traditional banking model by eliminating physical branches and offering services entirely online.
3. Peer-to-peer lending: Startups like Lending Club and Prosper have created peer-to-peer lending platforms, allowing individuals to lend and borrow money directly, without the need for traditional banks. This has increased access to credit for underserved populations.
4. Microfinance: Startups like Branch and M-KOPA have developed microfinance solutions that provide small loans to low-income individuals, often using alternative credit scoring methods. This has helped to increase financial inclusion in developing countries.
5. Agent networks: Startups like Western Union and MoneyGram have established agent networks, allowing users to send and receive money through a network of local agents, rather than relying on traditional banking channels.
6. Blockchain-based solutions: Startups like Ripple and Stellar have developed blockchain-based solutions that enable faster, cheaper, and more secure cross-border payments, which can help to increase financial inclusion for migrant workers and small businesses.
7. Innovative payment methods: Startups like PayPal and Stripe have developed innovative payment methods, such as contactless payments and mobile payments, which have increased financial inclusion by making it easier for people to make transactions.
8. Financial literacy: Startups like Credit Karma and NerdWallet have developed financial literacy tools, providing users with access to credit scores, financial advice, and budgeting tools, which can help to increase financial inclusion by empowering individuals to make informed financial decisions.
9. Partnerships with traditional banks: Some startups, like Paytm and Alipay, have partnered with traditional banks to offer financial services, such as loans and insurance, to underserved populations.
10. Regulatory support: Governments and regulatory bodies have begun to support fintech startups, recognizing the potential for innovation to increase financial inclusion. For example, the US government has established the Office of Financial Technology, which aims to promote responsible innovation in the fintech industry.

While traditional banks have been slow to adapt to these changes, many are now partnering with fintech startups or developing their own digital solutions to stay competitive. Ultimately, the rise of fintech startups has increased financial inclusion by providing more accessible, convenient, and affordable financial services to underserved populations.