Continued skepticism towards banks impedes the progress of the fintech ‘revolution’

Persistent distrust in traditional banks continues to impede the progress of the fintech sector, necessitating a concerted effort to rebuild confidence among consumers, particularly the unbanked population.

According to Juan Pablo Ortega, CEO of Yuno, an online payment platform, the path to achieving financial inclusion in developing nations requires addressing the prevalent skepticism toward non-cash alternatives, especially in regions with high inflation rates such as Argentina. Ortega highlighted instances where locals prefer storing their wealth in physical cash rather than trusting banks, illustrating the extent of the challenge.

During a panel discussion moderated by Kristina Lucrezia Cornèr at the Web Summit Qatar, Ortega emphasized that consumers are reluctant to engage with banks they do not trust, citing the example of small business owners burdened by exorbitant interest rates.

Despite these challenges, Ortega noted signs of a burgeoning financial inclusion movement driven by fintech companies in Latin America, Asia, and parts of Africa. He stressed the importance of regulatory support and the need for fintech firms to earn consumer trust to facilitate inclusion effectively.

Highlighting Nubank, a Brazilian neobank, Ortega praised its efforts in this regard, including its recent partnership with Circle to promote USD Coin adoption across Latin America. Notably, Nubank has expanded its services to include a variety of cryptocurrencies, signaling a broader acceptance of digital assets.

In terms of global crypto adoption, emerging economies like India, Nigeria, and Vietnam lead the charge, according to Chainalysis’ 2023 Global Crypto Adoption Index. However, challenges persist, as evidenced by recent regulatory actions in India, where several crypto exchanges were banned for non-compliance with financial regulations.

Yashish Dahiya, CEO of Policybazaar, emphasized India’s focus on financial inclusion as a key component of Prime Minister Narendra Modi’s poverty alleviation plan. However, uncertainties remain regarding the role of crypto in this initiative, given recent regulatory crackdowns.

In conclusion, while the fintech sector holds promise for enhancing financial inclusion, rebuilding trust and navigating regulatory landscapes are crucial steps toward realizing its full potential.