Fintech, financial literacy, and financial education

Abstract

Financial technology (Fintech), i.e., using software, applications, and digital platforms to deliver financial services to consumers and businesses through digital devices such as smartphones, has become recognized as a promising tool to promote financial inclusion, i.e., access of excluded households and small firms to financial products and services. This chapter reviews developments in Fintech and considers their potential contributions and risks to financial inclusion and financial literacy. It describes the overall development of Fintech, and describes recent evidence about the effect of financial literacy on the knowledge and adoption of Fintech products and services, as well as the possible impacts of Fintech on income inequality and the implications of the COVID-19 pandemic for Fintech adoption. This chapter also considers the definition and role of digital financial literacy (DFL). It argues for the need to extend national financial education strategies to cover DFL, including policies that address the need to tackle gaps in financial literacy and DFL among disadvantaged groups such as women, the poor, rural dwellers, and micro-, small, and medium-sized enterprises.

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