Photo by Avishek Das, 2017 CGAP Photo Contest Photo by Avishek Das, 2017 CGAP Photo Contest

Fintech: Refocusing on the Poor

Few issues in financial inclusion have generated more hype in recent years than fintech. Yet not all fintech innovations in emerging markets are relevant to underserved, low-income customers. Given the off-the-charts hype around fintech, the growing number and diversity of digital innovations and business models, and lack of evidence around the impact of specific solutions, how can responsible funders and investors in financial inclusion know which fintech solutions to support? Right now, there is no easy answer.

To bring greater clarity to the fintech space, help providers identify innovations they can incorporate into their businesses, and enable funders to distinguish between fintech and fintech that serves the poor, CGAP in 2016 embarked on a multi-year effort to understand whether emerging fintechs are solving key pain points in financial inclusion. As of April 2019, our pilots with 18 fintechs around the world have uncovered several early-stage innovation areas that have significant potential to create value for low-income customers at scale. For example, some fintechs are using satellite data and machine learning to offer insurance and credit at reduced cost to smallholder farmers, one of the world’s most financially excluded groups. Others are creating intuitive smartphone-based payments apps with low data costs and storage requirements, as low-end smartphones and data plans spread rapidly throughout Asia and parts of Africa.


Fintech has attracted off-the-charts hype in the development community. But lost in all the excitement is a cool-headed assessment of what these shiny new things are really delivering for poor people. Greta Bull, in the first in a series of CGAP leadership essays, takes stock.
Photo by Hung Dao Tran

Based on pilots with 18 fintechs across Africa and South Asia, this paper identifies emerging fintech innovations with potential to improve the lives of the poor. It also highlights common challenges faced by early-stage fintechs.

CGAP continues to research a wide variety of fintech business models to identify those that are most relevant to financial inclusion. Our work encompasses early-stage business models with promise, in areas such as insurance, savings and pensions, so that the global development community can support these models with patient capital. We are also examining models that are already starting to scale, in areas like payments and credit, to draw attention effective models and to consumer protection risks.


Where is fintech innovation happening in the Arab world? What types of solutions are emerging? CGAP shares preliminary results from our research on fintech in a region with roughly 140 million financially excluded adults.

There is a staggering $4.9 trillion financing gap for micro and small businesses in emerging markets. These fintech models stand out for their ability to solve small businesses' credit needs at scale.

CGAP estimates that there is a $4.9 trillion credit gap for micro and small businesses in emerging markets.
Additional Resources
Slide Deck

Digital Banks: How Can They Deepen Financial Inclusion?

This slide deck sheds light on the digitalization of banking, describes the three new business models, and hypothesizes about their potential impact on financial inclusion.

Take a look at some fintech pilots that didn't go as initially expected but yielded important insights about how to make better financial products.

After two years of piloting with 18 fintechs around the world, CGAP has identified several fintech innovations that advance financial inclusion.

FinTech startups in developing markets are leveraging partnerships to reach customers as diverse as women's savings groups, dairy cooperatives and smallholder farmers.

FinTech isn't always about rolling out a dazzling new smartphone app. In places where USSD phones are the norm, it means something quite different.