Fintech Can Provide Excellent Solutions, but Without Financial Literacy, It’s Just a Pipe Dream.

In a developing country, financial inclusion is key to boosting the economy forward, but in the case of the Philippines, is it just out of our reach?

 

The Financial Challenge of the Philippines

For the longest time, the Philippines has struggled to develop itself due to the general lack of access to services for the everyday Filipino. Although the population has almost doubled since 1990, jumping from around 61 million in 1990 to 106 million in 2019, the infrastructure, utilities and services have not grown accordingly. Cities haven’t grown fast enough. Sufficient roads and public transportation systems have not been set up. Business has remained Manila-centered. This translates to denser cities, more congested streets and thoroughfares, and just longer lines everywhere. 

Life is generally hard in these parts where financial services could most certainly bridge constraints and possibilities.

But for many who already spend so much time and effort getting to and from jobs that pay just enough to survive, the liberating benefits of financial services remain beyond their reach, and is something they just have to live without. 

 

Fintech Paving the Way for Economic Development

In the face of this challenge, fintech companies come to the rescue with digital solutions that provide people with timely and relevant financial services that will help them participate in the economy and gain financial inclusion. According to the World Bank, “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – delivered in a responsible and sustainable way.” Financial inclusion seeks to cut down time wasted to avail of services and time to money, better securing their financial development and security, so that people can have more freedom to dedicate their time to what matters to them.

 

But There’s Another Side to the Story

Although fintech is constantly innovating and providing consumers with faster and more streamlined ways of availing of services, financial growth cannot arise without proper financial literacy. According to Investopedia, “Financial literacy is the education and understanding of various financial areas including topics related to managing personal finance, money, and investing.” Included is how to budget properly, how to manage personal finances, and how to save for a rainy day. It is crucial because it is one thing to have economic power and efficient systems at your disposal, but it is another thing to know how to use it well.

Cashalo greatly realizes the need for financial literacy that it offers ways to meet the needs of the consumer. Aside from the provision of products it offers tools that equip consumers with the necessary knowledge to make the most out of their service. It accomplishes this by fusing the use of the product with introductions into financial literacy. This enables people to avail of the services while learning at the same time.

One example of this is in Cashalo’s Cashacart “basket financing” product, which enables people to start borrowing in small amounts for daily needs such as grocery shopping or appliances at partner stores. This gives the broader base of the population the opportunity to receive credit services despite their financial situation. It also offers those unfamiliar with credit borrowing a low-risk method for getting acquainted with the process.

By availing of the credit services, customers are able to improve their credit history, which then enables them to gain access to more financial services and bigger sized loans in the future. This gradual process offers an exposure to finance via a hands-on education regarding the process of procuring loans so that more people are aware of the tools at their disposal while giving them actual availing power for these tools to significantly impact their lives.

Another way Cashalo furthers financial inclusion is through the convenience of its offerings. Since phones are ubiquitous and are always within arm’s reach, more consumers can participate in the economy without the hassles of commuting or traveling to a bank, standing in a long line, filling out paperwork, waiting for an approval, dealing with a low initial credit rating, etc. Access to digital credit means streamlining the process of participating in the economy, and accessing a financial service that is seamless, fast, transparent, safe, and competitive.

Cashalo’s services are enablers, showing those without a formal financial education a way to grow in understanding the options available to them, while providing them with the services and benefits of financial products and services.