Emphasizing the relevance and improvement of financial inclusion through Financial Technology (Fintech), the Ateneo de Davao University Junior Finance Executives (JFINEX) in partnership with the School of Business and Governance and the Atma Jaya Catholic University of Indonesia, conducted a webinar entitled Financial Technology: Business Models and Financial Inclusion. 

Divided into two parts, Stevanus Pangestu, S.E., M.M., a financial technology expert from the Atma Jaya Catholic University of Indonesia, discussed a few of Fintech’s categories and how Fintech acts as a driver of financial inclusion.

Derived from the words financial and technology, Fintech is all about advancing financial services through technologies. The speaker defined Fintech as something that brings the financial service industry closer to the customers in society through technology. 

“What Fintech is best at is efficiency. What Fintech does is it enables for a fast, efficient way of transactions,” he said.

Pangestu then introduced the three main categories of Fintech — (1) Payment and Wallet, (2) Lending and Financing, and (3) Investment. 

In Payment and Wallet, Fintech offers convenience in transactions, anytime and anywhere. It also provides speedy processing, as well as a store in wealth, credit, electronic money, and digital wallet.

Traditionally, people rely on banks to let the money flow from borrowers to lenders. However, Fintech acts like a matchmaker between those who have funds and those who need the funds and offers speedy underwriting and risk/credit-scoring.

Moreover, Fintech offers hassle-free investment and investment products that match the needs of investors. 

Fintech: Driver of financial inclusion

Pangestu defined financial inclusion as all about equitable, equal access to financial products and services for all the members of the society.

“Financial inclusion matters because it positively and significantly correlates and affects the well-being of a country, economic growth, stability, and equality. It relates to the reduction of poverty and better status in living and health,” he added.

The fintech expert also emphasized that the higher the financial inclusion index means everyone has fair, equal access to the financial products and services provided in the industry.

Pangestu further explained how fintech increases financial inclusion, illustrating it through Safaricom’s M-Pesa.

M-Pesa, established in 2007 by Kenya’s telecom provider, is a mobile-based peer-to-peer money transfer service. It allows users to deposit money, transfer balances, and withdraw their money within an account stored in their phones. 

Statistics showed that 84 percent of the Kenyans who live in poverty use M-Pesa, and nearly half of the country’s GDP goes to M-Pesa.

Pangestu believed that if Kenya can do it, so could the rest of the countries, especially the developing ones. 

The speaker also discussed the empirical factors of progressing financial inclusion, saying that financial inclusion relies on government policies and national financial inclusion strategies. One example of national financial inclusion strategies is M-Pesa.

SMEs as backbone of the economy

The financial expert also mentioned that financial inclusion stimulates economic growth through fintech, providing small and medium-sized enterprises (SMEs) with better funding.

“A more financially inclusive environment would enable SMEs to obtain greater funding. They need this funding for expansion to grow their revenue. When they get bigger, they can create jobs, stimulating the economy,” Pangestu explained.

He further shared that more than 99 percent of the businesses in Indonesia are small, medium, and micro-enterprises; all these SMEs absorb 97 percent of the workforce and make up 50 percent of the country’s GDP. Hence, SMEs are the backbone of the nation’s economy,

However, Pangestu found out through research that Indonesian SMEs are in their comfort zones, not growing. As they lack financial literacy, even though there is funding everywhere, Pangestu noted the relevance of financially educating the people to access the funding. 

To conclude, Pangestu advised the students to improve financial and digital literacies as he defined fintech like a train that won’t stop. 

Clarissa I. Cayanong, JFINEX President, shared in an interview that their valued organization thrives in honing and motivating its constituents to foster growth, maximize potential, and practice effective leadership through producing globally competent business professionals. 

“The Financial Technology webinar conducted yesterday was considered as one of the milestones of the club in achieving its mission to allow the members to develop academic competence while stimulating skill-based and collaborative learning which they can use and foster within themselves as they go out and discover the real world of business and finance,” she added. 

Cayanong also remembered the numerous challenges they have encountered during the preparation, such as time management, poor internet connection, and miscommunication.

The said webinar was participated by selected professors and students from AdDU School of Business and Governance and Atma Jaya Catholic University of Indonesia last August 19 via Zoom.