Adopting FinTech to promote financial inclusion: Evidence from western African economic and monetary union

Abstract

Studies have indicated that many households living in developing countries, especially in Sub-Saharan Africa, have limited access to financial services offered by the banking system due to multiple socioeconomic barriers. This paper analyzes the impact that FinTech could have on the supply of financial services, including Western African Economic and Monetary Union. We estimate a logit model on Fintech-related variables using data from Global Findex 2017 to find variables that potentially affect financial inclusion. The analysis highlights several results. Firstly, they reveal that many major obstacles to financial inclusion, such as insufficient resources, lack of trust, and lack of official documents, cost, and religious reasons. Second, they demonstrate who is most financially excluded: women, young people under 25, the poor, and those with low levels of education. Thirdly, they also reveal that FinTech has the potential to remove many of these barriers and accelerate financial inclusion in the Western African Economic and Monetary Union. The richest 20% of people, young men, and those with tertiary education are considered to be the key factors of Fintech adoption. These results imply to involve FinTech widely in the delivery of financial services and to promote more financial literacy.