How Fintech Brought the Developing World Forward

Developing countries need many things to progress: investment in infrastructure and education, better healthcare, and stable democratic institutions. But one factor that’s often overlooked is financial exclusion.

It’s easy to assume finance is a given, especially in developed economies like the US or UK, where most people have bank accounts and access to credit. But even there, financial exclusion still exists.

So, in developing economies, the problem is far more acute. Without access to finance, people can’t easily pay bills, apply for loans, save securely, or trade with local businesses. In an increasingly digital world, being financially excluded means being locked out of modern life altogether. How does one pay for their Netflix subscription in cash?

That’s why developing countries that have embraced financial technology (fintech) have leapt ahead of those that haven’t. By widening access to basic financial tools, fintech has played a vital role in pulling economies forward and bringing millions of people into the formal financial system and therefore expanding the middle class.

Let’s explore a few examples.

M-PESA in Kenya: A Mobile Revolution

Perhaps the most famous case of fintech transforming a developing economy is M-PESA in Kenya. Launched in 2007 by Vodafone and Safaricom, M-PESA allowed users to send and receive money via basic mobile phones with no bank account needed.

This innovation didn’t just provide a convenient way to transfer funds; it fundamentally changed the economy. Suddenly, people in remote rural areas could participate in the financial system. Small businesses could trade more freely, families could send money across the country, and even access to microloans became a reality.

According to a 2016 study by MIT, M-PESA lifted around 2% of Kenyan households out of extreme poverty. That’s not a small number. Financial access meant people could save securely, invest in their children’s education, or build a small business. And M-PESA’s model has since been replicated in countries like Tanzania, Ghana, and even Afghanistan.

India’s Digital Payments Boom

In India, fintech has driven one of the fastest-growing digital payment markets in the world. The government-backed Unified Payments Interface (UPI) has enabled people to instantly transfer money from one bank account to another using just a smartphone.

For a country where millions were previously unbanked or relied entirely on cash, the impact has been enormous. UPI processed over 100 billion transactions in 2023 alone. Street vendors, farmers, taxi drivers can all now access instant, free payments and digital records, enabling them to prove income for loans or insurance.

This digitisation of money has knock-on effects: reduced corruption, increased tax compliance, and even improved gender equality, as women gain more direct access to and control over money.

Fintech Startups Bridging Gaps

Across Africa, Latin America, and Southeast Asia, thousands of fintech startups are solving local problems in clever ways.

In Nigeria, platforms like Flutterwave and Paystack are making it easier for small businesses to sell online and accept payments in multiple currencies. In the Philippines, GCash has helped millions access banking and insurance services, even if they’ve never stepped foot in a traditional bank.

These platforms don't just mimic Western financial systems; they often leapfrog them. Many developing countries skipped checks and debit cards altogether and went straight to digital/mobile money. That’s a key point: fintech isn’t just about copying the developed world. It’s about meeting real needs, on the ground, with innovation that fits the local context.

The Bigger Picture

Of course, fintech isn’t a silver bullet. Regulatory support, digital infrastructure, and literacy are all crucial. A mobile wallet is useless if there’s no mobile signal, or if people don’t trust the system. But as part of a broader development push, fintech is a genuine force for good.

When people are financially included, they’re more resilient, more empowered, and more able to lift themselves and their communities out of poverty.

So while fintech might seem like a buzzword in the West, in the developing world, it’s often the first meaningful step toward full participation in the modern economy.

And that, perhaps, is the true promise of financial technology: not just efficiency, but opportunity.