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Why FinTech is Thriving In Emerging Markets

The Blue Water Team

Financial technology (fintech), is thriving in emerging markets (EMs) because of its ability to deliver solutions (such as mobile payments and online banking), to otherwise financially underserved areas. This article by Global X examines the current success fintech is experiencing in emerging markets. 

Emerging market consumers require financial services. 

One driver of fintech's success in EMs is the fact that the consumers in these markets are moving steadily into the middle class and rapidly increasing their consumption of goods and services. These consumers increasingly require financial services. 

Emerging markets often lack banking solutions. 

Even as EM consumers increasingly desire financial services, they also face a lack of traditional banking solutions. In 2017, for example, about 2 billion individuals worldwide lacked banking services. Fintech delivers the right solutions for these "unbanked" populations by lowering the costs of delivering financial services. 

Emerging markets are willing to adopt new technologies. 

Despite generally lower Internet availability in EMs, these markets demonstrate a remarkable willingness to adopt new technologies, including fintech. China, for example, spent almost 8x the amount of money digitally than did the United States in 2017. 

Emerging market tech companies are embracing fintech. 

Fintech is finding a warm welcome among many of the major tech companies in EMs. Even traditional banks in EMs are adopting fintech solutions to better serve customers. 

Emerging market governmental policies encourage fintech adoption. 

Many of the governments in emerging markets are recognizing fintech's value and are creating policies that encourage its adoption and growth in their nations. 

Because of these factors, emerging markets present an incredible opportunity for fintech to grow. In some cases, emerging markets may advance more quickly in the area of fintech than their developed market counterparts. Locating and investing in related ETFs, therefore, can help investors to realize the investment success they desire.  Check out our investment ideas for investing in fintech.