NEOBANKS ROLE IN SUPPORTING FINANCIAL INCLUSION

Abstract

            Financial inclusion has a significant impact on economic growth and development and improves the living standards of individuals in emerging economies. However, today, there are still individuals and businesses in developing and low-income economies that are unbanked or underserved with limited access to basic banking services. It must be noted that during the last two decades, many instruments, tools, and programs have been developed to support financial inclusion, which yielded positive results. However, the challenges and barriers remain to be further addressed and resolved to increase financial inclusion. The challenges originate on the supply side as well as the demand for financial services.

            Neobanks, as technologically advanced financial institutions, are valuable instruments in overcoming key barriers to financial inclusion. The manner in which neobanks’ operations are structured enables them to easily adapt their products and serve even the smallest groups or segments with similar needs. Affordable financial services are also provided by neobanks as a result of their higher operational efficiency compared to traditional banks.