Technological Innovation Impacts Economic Justice and Widespread Financial Access

According to the World Bank's new Changing Wealth of Nations report (October 2021), global wealth has grown overall—but at the expense of future prosperity and by ever-increasing inequalities. The society in which we live is increasingly becoming more and more unequal. The distribution of wealth in the world today is extremely imbalanced, with nearly half of the world's net wealth belonging to the top 1%. Whilst the macroeconomic indices have become more favourable, the low-income rarely benefit from these gains.

Many emerging economic markets have seen increased development and economic advancement over the last two decades. During this period, these markets have frequently experienced double-digit economic growth. These markets have adopted many social and economic dynamics that the century's top economies went through. This is specifically evident looking at the dramatic rise of an emerging middle class and the average increase in middle-class income, wealth and spending. However, ironically, at the same time, these emerging markets' social and economic growth has been met by an unprecedented reversal in the processes of wealth production, accumulation and redistribution in the world's once-dominant economies. Families with higher incomes obtain a sizeable portion of their wealth from business equity, financial market assets, and investments such as real estate, bonds, stocks and gold.

Additionally, those from the higher income class would typically have access to as well as a unique and better understanding of financial institutions, qualified financial advisors, and the tools and resources utilised to manage their money. Middle to lower-income families relies more heavily, if not entirely, on income from wages. Savings and home equity make up a significant proportion of wealth accumulation if any.

Not only our social structures have evolved, but the population, and age demography structures, have also dramatically changed. Millennials and Gen Z make up more than half of the global population. Gen Zs are individuals born after 1997. The key characteristic of Generation Z is that - they are the first digitally native age group, i.e. they are exposed to technology since birth and grow up with technology. Another fact about the Gen Zs, they expect everything to be seamless – easy, simple and smooth to get the result.

Technological innovation is key
Alongside the above, the way we work, live and play today is very different from what it was in the previous decade, which was not so long ago. It is undeniable that technology is a crucial impetus to this. 

Technology-enabled financial services, or Fintech, started in 2008 or 2009 during the last financial crisis. Fintech has shown how new technologies can disrupt the existing system – changing how things are done now or in the past to widen access to financing and wealth creation, especially for disadvantaged or underserved communities. The disruption has been further fueled in the last ten years through advancements in web, digital and mobile technologies amplified by various social media apps and mobile-commerce platforms.

For those in the mid to lower income bracket, the underserved and marginalised communities, the primary fintech applications would be to improve and close access gaps in payment, credit markets, savings, investment and insurance.

Mobile payment innovation has brought electronic payments to individuals and small or micro businesses that were previously inaccessible due to more expensive and complicated electronic systems such as debit and credit cards. Well-known and proven examples, such as M-Pesa and IndiaStack, have created the infrastructure for an efficient, economic and simple system of mobile payment to replace traditional and more expensive banking services. As a result, millions in Africa and India now have access to basic financial services such as electronic payments and small loans.   

Nowadays, digital transformation is not a choice but a need for the industry's continuity.

About the Author

Elain Lockman, CEO and Co-Founder of Ata Plus, has extensive experience in government-linked organisations and start-up businesses, specifically in the areas of management & operations (business strategy, business development, stakeholders relationship management [government, corporates & influencers], branding, marketing and corporate communications).