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How tech is helping to build an inclusive financial future

April 21, 2022


Patrick Reily, Co-founder, Uplinq

The World Bank cites financial inclusion as one of the key enablers to reducing extreme poverty and boosting shared prosperity. Unfortunately, many countries still fall way behind on levels of financial inclusion and are unable to offer their citizens equitable access to essential financial services. When this occurs, we get financial exclusion. Sadly, this remains an issue around the world, which is preventing nearly 1.2 billion people from fulfilling their true economic potential.

by Patrick Reily, Co-founder, Uplinq

The knock-on effects of financial exclusion are felt by everyone. Essentially, individuals who are excluded from economies are in turn, unable to make meaningful contributions to them. As a result, economic growth in these areas can be limited, which has created a tremendous incentive to promote levels of financial inclusion across the world. In particular, there’s a real need to boost financial inclusivity in regions, such as Africa and Latin America, where the issue may be leading to diminished growth.

Why is financial exclusion problematic?

There are several ways to assess the economic harm caused by financial exclusion. As mentioned, the phenomena contribute to both microeconomic and macroeconomic problems. On a personal level, financial exclusion inhibits a person’s ability to access mainstream financial services, such as savings and pension schemes. Unfortunately, such limitations increase the likelihood of personal debt and limit opportunities for education, personal development and access to employment.

What’s more, financial exclusion overlaps significantly with issues like poverty, as well as broader challenges, such as social exclusion. To this end, without equitable access to financial services, individuals may begin to feel cut off from society. Simply put, these people don’t have access to the same security frameworks afforded to others. Sadly, this can then manifest into a myriad of further economic and societal problems.

Does financial exclusion hurt businesses?

While some of us may be deeply concerned about the plight of the financially excluded, others may feel less concerned as they deal with problems of their own. However, financial exclusion has a negative economic impact on all of us. On the broader scale, financial exclusion can stymy economic growth, lower educational attainment and limit the development of innovation and intellectual property. Directly or indirectly, we all pay an enormous price.

What’s more, the concept of financial exclusion also extends to businesses. In this instance, it applies to companies who are unable to access traditional financial services in the same manner as market competitors. Primarily, this issue tends to affect small-to-medium-sized businesses (SMBs), many of whom find themselves at a disadvantage to larger counterparts when looking to access essential financial services, such as lending capital. Without equitable access to lending capital, the ability of SMBs to reach new markets is severely limited.

Why do SMBs matter?

With high levels of financial exclusion, businesses, as well as the economies they function within, are unable to reach their maximum economic potential. As such, there is a need for all of us to combat the issue. At Uplinq, we believe the fight to promote financial inclusion begins by tackling the issue within the SMB market. If we do that, we can take the first step towards building a more inclusive world for all.

Ultimately, SMBs are the lifeblood of most Western economies, providing around 63% of new private-sector jobs created in the US alone. To properly scale, many of these businesses need access to lending capital, which isn’t always available. Furthermore, on account of their size, many SMBs lack the requisite financial data to pass traditional credit checks. This is not to say these businesses aren’t worthy of receiving lending capital, but instead, simply struggle to effectively make the case within the context of existing decision-making frameworks.

Building a more inclusive world

So, how do we go about building a more financially inclusive world? At Uplinq, we believe a radical overhaul of traditional decision-making systems is required. Specifically, it’s time to update the antiquated decision-making processes used for SMB lending decisions. For too long, these services have relied on limited data sets to generate results. As such, many existing systems are unable to offer an accurate picture of a businesses’ true financial viability, which limits lending opportunities.

Thankfully, modern technologies now exist, which offer dramatic improvements in this area. Notably, solutions like Uplinq can assess billions of alternative data points to create a more comprehensive picture of a business’ financial viability, regardless of its size or status. By implementing these technologies within their systems, lending companies can begin to serve the SMB market in a far more inclusive manner.

If we can achieve this goal, then we can begin to build a more inclusive world, which will benefit us all. This is the objective we’re working towards every day. Our innovative solution can allow credit lending providers to generate the most accurate lending decisions possible. To this end, our solution can help a greater number of SMBs receive lending when they need it most, helping to close the gap between them and their more established counterparts.

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