Following the pandemic’s effects on the global economy, the number of those underbanked has swelled to troubling proportions. Worldwide, there are an estimated 1.7 billion underbanked. Meanwhile, the global unbanked population has surged to 31% of all adults. According to experts, the number of underbanked citizens exacerbates inequalities and slows economic growth. For instance, UN Women has noted that another 47 million women and girls will fall below the poverty line as a result of COVID-19 and their lack of access to financial services.

Conversely, Neo-banking and mobile wallets have seen massive progress. Reports show that from a $19 billion market size in 2019, the digital banking market is expected to be worth over $450 billion by 2027. A large part of this growth is credited to widespread internet connectivity, which more banked individuals continue to take advantage of. But what about the unbanked and underbanked? Given their need and right to financial security, can digital banking serve them just as well? Evidence suggests that it can—and here’s why:

Leverages smartphone penetration

Smartphone penetration continues to surge worldwide. Currently, there are more than six billion smartphone users worldwide. Even in countries with emerging economies like Brazil, Kenya, and Indonesia, Pew Research shares that smartphone ownership can be as high as 60%. Thus, Neo banking and eWallets can leverage these smartphones to reach those who are otherwise unwilling or uncomfortable to transact in person. What’s more, since the World Bank has determined that underbanked and unbanked households are more likely to have mobile data connections rather than home-based broadband, mobile banking makes financial services more accessible.

Addresses physical limitations

One of the biggest reasons noted by the underbanked and unbanked are physical obstacles. This can mean traditional banking solutions are too far, too expensive to reach, or too difficult to access for those with mobility issues. But with mobile banking, there will be less of a dependence on physical visits. Because mobile banking platforms can service and educate consumers on the same platform, the unbanked can also access financial tools to manage their finances. Moreover, mobile banking also includes access to digital wallets. As explained by AskMoney, digital wallets are convenient applications that enable users to make payments remotely and earn transactional incentives. Digital wallets can also take the place of debit or credit cards, which for many, are hard to sign up for and claim. This is another convenience that those with logistical or physical concerns will appreciate.

Makes cashless & cardless payments inclusive

If you consider that a growing number of institutions (like the New York City subway) are embracing contactless payments, the need for everyone to have an mobile banking and wallet presence is critical. By connecting the underbanked and unbanked, they can easily create and maintain their accounts. This enables them to actively take part in a cashless society. In countries like India, where more companies are making the shift to cashless transactions, having a mobile banking option is vital in order not to exclude the 190 million unbanked adults. After all, recent evidence suggests that the primary reason why cashless adoption is slow or uneven across countries is due to populations who have no bank accounts with which to participate.

Provides data transparency

Trust, or lack thereof, is another leading reason why many are underbanked or unbanked. Surveys reveal that more than 30% of adults still distrust financial institutions and, therefore, look to other move affordable options. However, with mobile banking, account holders can access, study, and keep track of their finances from the comfort of their own palm. This can help provide banking transparency, while also allowing people the comfort of knowing and seeing their finances first-hand. Plus, since many fintech banks have accompanying mobile apps that send alerts, users can be consistently looped in on the security of their accounts.

One of the biggest concerns that many have with banking has to do with fraud. In many cases, the likelihood of cybercrime and identity theft has further stalled mobile banking adoption. However, the proliferation of smart solutions and safeguards provided by entities like Paygilant have created a mobile banking ecosystem wherein institutions and account holders alike need not worry about criminal activity. This transparency and advancement in banking security are among the prime reasons why Neo banking has flourished. Recently, Forbes revealed that this access to banking information and cybersecurity details has increased the number of senior digital banking users to 27% in just a few months.

As more technological innovations are introduced for the benefit of the public, let us not forget the unbanked and underbanked. After all, if we want our economy to fully bounce back with sustainable growth, we need everyone to be more financially active and stable—and mobile banking seems to be the key to achieving that. For more on banking and payment solutions, please visit Paygilant.