Will Fintech Impact Emerging Markets In 2017 ?

Banking can be traced back for thousands of years. You could say it was the world’s first major industry outside of simple trade. Much of the developing world has been left untouched by modern banking, however. As a global community grew, impoverished and underdeveloped nations were excluded from this exclusive world of international finances, and most importantly, basic banking services. Now as technology spreads even into the most remote parts of the developing world, it seems they are skipping the physical element of banking altogether, and instead jumping feet first into the world of digital finances.


That’s where Fintech comes in. Short for financial technology, it covers a broad spectrum of financial related services and functions. As the developed world gradually moves away from cash transactions, developing nations are going to be leaping ahead of us by immediately moving into a cashless society. What makes me so sure of this? You only need to look at a model nation that has gone from a developing country to a world superpower. Of course, I’m talking about China.

Smells Like Money

Now, China is both typical of developing nations, and also unique in its own way. The strict control over the nation afforded by a one-party state has indeed helped its economic policy flourish by controlling as many variables as possible. If there’s one thing the financial markets hate, it’s variables. Given them a controlled set of results, and you can believe that economic bliss will soon follow. Don’t let the “Communist” part of the Communist Party of China fool you. Like the rest of us, China has smelt the sweet honey of Capitalism and are acting as such.

China is a huge mover and shaker in the fintech world because of when exactly their nation flourished, but also in that they looked ahead and realized that in the long term, we were all going digital. Similarly, India is set to have a fintech boom because of the huge expansion of modern technology through the country through infrastructure, funded by an equally huge industrial boom. Many parts of India are without electricity, so understandably they will be the first priority of the infrastructure expansion. When this is complete, however, then we shall see the fintech boom, just like China.

Look Closer

So where is the actual impact in the market? Well, think about it. These people have previously dealt only in cash. These aren’t a few villages with a dozen people either, these are populations going into the several million. All their money is going to enter the global banking system and be prime for investments, savings, securities, loans, etc. Of course, according to the China model, nearly 60 percent of new bank accounts will remain inactive, regardless of the proliferation of fintech. That 40 percent remaining, however, is still fertile ground for economic growth, and developing nations know this.

Part of the reason why developing nations are so eager to join the global community is because of this access to the financial markets. By allowing their citizens the opportunity to increase their personal wealth through financial services like investment, stocks, business loans, and so on, they increase the chance to inflate their national tax revenue. You can’t track and tax people dealing in cash very easily, but by entering the digital world, the finances become traceable and taxes can be properly enforced. It really is a give and take system. Developing nations offer their people a new world of opportunities in return for a slice of their earnings, to hopefully reinvest back into the upkeep of the nation itself.

What’s Next?

China has already become a major world player because of its industrial boom and controlled access to the global economics sector thanks to fintech. If trends continue as we believe they will, Indian could be next, and then African nations like Nigeria or Kenya. It’ll be very, very interesting time for world economists.