Financial Inclusion in British Columbia: Evaluating the Role of Fintech

Government of British Columbia, Expert Panel on Basic Income Research Paper

72 Pages Posted: 29 Mar 2021

See all articles by Ryan Clements

Ryan Clements

University of Calgary Faculty of Law

Date Written: December 30, 2020

Abstract

Financial technology (fintech) can help to mitigate the problem of financial exclusion in British Columbia. Individuals who participate in the traditional banking and financial system experience a variety of social and economic benefits. Yet several factors like personal hardship, financial illiteracy, high product costs, perceived eligibility, informational gaps, a lack of credit history and legal documents, bank resistance, and customer feelings of distrust and disrespect contribute to the exclusion of many from traditional financial products and services. People who are “unbanked” and “underbanked” often turn to high-cost (even predatory) substitutes like payday lenders, rent-to-own firms, cheque-cashing services, and pawn shops. This paper illustrates how some fintech innovations—highlighting numerous companies operating in British Columbia, Canada, and internationally—can benefit people who are unbanked and underbanked as an alternative to “fringe” banking. Fintech is not, however, a panacea for those excluded, marginalized, or underserved by traditional financial firms, and there are several implementation barriers and integration risks in this market development. This paper provides seven key policy recommendations to help maximize the inclusionary benefits of fintech in British Columbia while mitigating its potential risks.

Keywords: Fintech, Financial Inclusion, Unbanked, Underbanked, Financial Exclusion, Challenger Banking, Cryptocurrency, Cryptoassets, Open Banking, Mobile Banking, Neo Banking, Fringe Finance, Predatory Lending, Payday Lending

JEL Classification: G21, G28, I31, I32, O16, O38, O51, Z13, Z18

Suggested Citation

Clements, Ryan, Financial Inclusion in British Columbia: Evaluating the Role of Fintech (December 30, 2020). Government of British Columbia, Expert Panel on Basic Income Research Paper, Available at SSRN: https://ssrn.com/abstract=3775933

Ryan Clements (Contact Author)

University of Calgary Faculty of Law ( email )

Murray Fraser Hall
2500 University Dr. N.W.
Calgary, Alberta T2N 1N4
Canada
4036191173 (Phone)

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