impacts of financial technology on inclusion and stability in Australia

 impacts of financial technology on inclusion and stability in Australia

Abstract

The objective of the study is to establish the effect of innovation of finance, or simply the impacts of financial technology on inclusion and stability in Australia. The study will focus on establishing disparities that exist on the same aspects. Financial technology is explained as an ideal response to the poor economic standards of people living in Australia. This research proposal emphasizes on the various methods of data collection and analysis in research designs on compiling a lot of relevant details on the topic. The various details of primary data that will be collected have been explained clearly herein. Different nations have different levels of inclusion of technology tools. The research intends to examine the relationship between low level of technology and lack of inclusion and stability. To collect relevant information, the cross section method preferred will be instrumental in providing qualitative and quantitative data to the research. Furthermore, the data obtained will easily be handled in comparison of the variables. The cross-sectional method used is ideal for snapshots of the population. Comprehensive data analysis from the data collection tools will aim at providing qualitative and quantitative data that will be analyzed by SPSS software and with both descriptive and inferential statistics. All these are focused on demystifying the relationship that will be existing between the variables.

Introduction

Digital finance is the financial technology that offers online banking services through mobile software’s, which is accessible for individuals and companies. Moreover, as per the current technology, Debit cards or Credit card have been associated with mobile application, which has made the transactions more convenient. Also, many financial products have emerged in digital finance to provide the policy makers and Fintech organizations analyses, the economic activities and trends. Constraints in accessing finances to some extent are targeted by the sophistication of the flow of cash and cash liquidity as well. On the other hand, financial inclusion refers to the provision and access to affordable and useful financial products as well as the services which address the needs of a certain population in a sustainable and responsible way. Financial inclusion can further be explored as availability and equality in access to opportunities in financial services and products with increasing sophistication.

Background and Context

Financial Technology in developed and developing countries has been growing over time Australia being among the countries and it can be noted that one of the aims is to globalize apart from the domestic services. Notwithstanding, the level of access to the Fin-Tech tools has not been wide but has had a steady growth in access and use of the tools. Many of these nations have larger populations and diverse social stratification that includes everyone as far as social and economic classification is consulted. In the daily transactions, the financial technology in the past has left individuals suffering bottlenecks from limited and unpopular financial digital tools. Consequently, the needs and the flow of cash as well as facilitation of equal financial opportunities have generally been affected. An example is the Debit and Credit Card initially did not have mobile applications to offer mobile access to funds which is more of a necessity in a person’s life that is to facilitate economic, political and social affairs as well as make them run smoothly. Nevertheless, the situation has greatly revolved and in the current time, there are innumerable mobile banking platforms, and other Fin-Tech tools that are accessed by people. However, some population segments cannot access these tools because of one reason or the other. Fin-Tech tolls should basically salvage the situation where there is an unequal ace to financial provisions and well as regular and assured availability and reliability.

Problem Statement

Digital financial technology offers a variety of services to the consumers in a given place and mostly it avails all the necessary tools to people to provide enhanced payments, access of funds, easy banking, access of credit and repayment and convenience that liquefies financial flow. According Martin (2016), Fin-Tech tools are meant to provide easy and affordable access to financial services which is denoted as a critical aspect of sustainable economic growth and development as they can escalate smoothening of consumption and improve livelihoods by introducing and enhancing access to credit facilities, better saving methods and making cheaper payments.

An EY Fin-Tech census in Australia reveals that the FIN-Tech industry in developing and developed countries has grown rapidly and is a more profitable venture in which many have resolved to engage in. The census reveals that the involvement in the industry is rising and it is looking forward to globalize in 2020 more, the anticipated level of globalization was 23% which is a very significant figure. In a wider scope, it is notable that the Fin-Tech tools in Australia are expanding widely and its usage and coverage felt.

There have been constraints and problems in accessing financial services in mobility and convenience. After the introduction of this tools, of which they there has been a noticeable profuse influx in the market, the question remains on financial inclusion and stability and if it would be enhanced by the increasing Financial technology in economic context. Additionally, inclusion implies equality, therefore disparity of impacts of financial stability and inclusion to reduce the poverty in underdeveloped countries is a major concern as well as what impact it has generated by taking over manual accounting systems.

Aim of the Research

The major aim for this research is to figure out the significance of innovative financial technology in reducing poverty under economic crises and how this artificial financial intelligence could efficiently include and stabilize finance. Also, the research aims at finding out the effect on employment rate after converting financial system and accounting system into artificial intelligence in commerce sector. The research as well aims at finding out the higher risk of security and higher transactional cost in Australia as well as other underdeveloped nations.

Research Questions

In the study, I will consider objectively evaluating the impacts of the financial technology on inclusion and stability. The study will be focused on providing relevant and well-grounded responses to the questions employing methodology and structuring an efficient research design. The following questions will guide the study in general;

1. How does the introduction and enhancement of financial technology improve banking and easy financial access?
2. How relevant is financial technology in demystification of disparities in financial inclusion and stability?

iii. Do Fin-tech tools play any role in elevation of the economic status of individuals in all economic classes?

Literature Review

Guild (2017) explores that implementing a reactive regulatory approach, rather than an overly interventionist one, is the most suitable framework for boosting financial inclusion through technological innovation. James has taken the qualitative data by examining the success of India, China and Kenya in Cashless transaction and peer to peer lending platform.

Frost (2020) raised a concern about the reason behind wider influence of some economies and markets, not the others. However, FinTech is highly adopted by younger population countries, such as India, South Africa and Colombia with 48% of usage but 9% by aged community. Eventually, based on evidences, FinTech does support the economic growth and improve cross-country integration. Yet, failure in Fintech caused by market failure including information asymmetries and adverse selection in lending, liquidity mismatches with deposits, systemic importance and moral hazard with large intermediaries as well as various forms of interconnectedness in the financial system. As such, there is the same need for public policy intervention in the form of adequate and proportionate regulation and supervision.

Tabitha (2019) discusses and concluded that the digital finance such as, Internet banking, E-Valet, Mobile banking, credit cards and debit cards have significantly positive impact on financial inclusion in developing countries. The author has compiled the well-structured questionnaire and entered the data on SPSS by using statistical techniques of one-way ANOVA.

According to Sckolah (2019), since economic crisis occurred in 2018, financial inclusion has adversely affected. The economic instability has brought up with the goal to remove the entire financial obstacle to achieve economic growth. However, the main task was to build an appropriate banking infrastructure that brings “Unbanked” people to invest their money in banks. Sckolah vital focus on was on the financial inclusion on public financial services education through financial technology (2019). However, quantitative methodology has been used in which secondary data was collected from the questionnaires and literatures studies as well as population of this study from Sleman Regency Yogyakarta. Data analyses used in this study are the validity test, reliability test, descriptive statistical test, and SEM (Structural Equation Modeling) analysis test. The results of this study found that financial inclusion has been proven to have no impact on public financial services education. However, financial inclusion has proven to have a significant impact on financial technology in Sleman Regency in 2018. In addition, financial inclusion through financial technology has also proven to have a positive impact on public financial service education in Sleman Regency in 2018.

Nicola and Yanrick (2020) studied the impact of the information technology ibanking sector upon Non-performing loans by using US commercial banks balance sheet. Nicola and Yanrick (2020) has used simple text-analysis algorithm to the biographies of top executives by collecting the data for Federal Reserve Bank of Australia as well as, keeping Non-Performing loans as dependent variable. Keeping NPL as baseline Total loans, leasing financing receivables and debt securities and other assets – past due 90 days or more and still accruing (bhck5525) + Total loans, leasing financing receivables and debt securities and other assets – nonaccrual (bhck5526) – Debt securities and other assets – past due 90 days or more and still accruing (bhck3506) – Debt securities and other assets – nonaccrual (bhck3507). The methodology shows that higher intensity of information technology has led to significant reduction in Non-performing loans that suggest that Fin-Tech is beneficial for economic and financial stability.

SivaKumar (2020) focused on the performance of and the extent of digital lending in financial inclusion in India as well as overviewed the Pardhan Mantri scheme and its performance. Methodology were based on literature review collected from collected from RBI bulletin, annual reports of RBI and Ministry of Finance, GoI, Report on trend and progress of banking in India, various reputed journals, newspapers and websites of RBI, NABARD (National Bank for Agricultural and Rural Development) and Ministry of Finance, Government of India (GoI). SivaKumar (2020) has marked the need for financial inclusion in rural areas to help the household for the growth of their livelihood. It was concluded that Indi has put their efforts to rapidly achieving the financial inclusion in all over the country through the help of government, Reserve bank of India and citizens of country.

Cephas & Zhao (2020) examined the innovative technology of mobile payments has lead the traditional banking system towards financial accessibility in Sub-Sahara Africa by using panel econometric analysis. Cephas and Zhao (2020) has compiled the data from 11 countries in Sub-Sahara region and the data were collected from World Development Index (2011 – 2017) empirical results from cross-sectional dependence (CD) tests, panel unit root test, panel cointegration test, and the fully modified ordinary least squares (FMOLS) approach indicates that (i) the panel time series data are cross-sectional independent, (ii) the variables have the same order of integration and are cointegrated, and (iii) growth in mobile payment transactions had a significant positive relationship with formal account ownership, the number of ATMs, and number of new bank branches in the long-run. Based on the findings, he confirms that the institutional structure of traditional banks that makes them competitive, irrespective of emerging disruptive technologies, has stimulated overall financial accessibility in the region leading to overall sustainable growth in the financial sector. We conclude the paper with feasible policy suggestions.

Hasan and Yajuan (2020) urged that it is vital to reduce financial crisis and improve financial equity and financial inclusion. All core financial forces need be developed to achieve the sustainability of the financial system. This means that both rural finance and urban finance need to be developed on an equal footing (Anagnostopoulos, 2018; Ding et al., 2018). Hasan and Yajuan (2020) has followed the systematic literature review analysis to accomplished the goal of their study and found that significant portion of rural as well as urban community stayed out of the FinTech payment system for not using internet. Therefore, based on findings around 600 millions of people in China are not contributing in expanding financial inclusion. However, that concludes that policymakers should emphasize of critical issue, which become the predominant barriers to stimulate most of rural community towards financial inclusion through financial technology.

Shofawati (2019) expressed that the benefits of Fintech in monetary consideration have not been taken by tremendous sum of populace in Indonesia, which have been given small consideration. Besides, it is additionally far-fetched that either Fin-Tech will be able to impede the financial catastrophe in terrible times. Be that as it may, Shofawati (2019) have connected subjective strategy from the writing survey and concluded that FinTech has reinforce the development of little and medium ventures in Indonesia as well as money related incorporation.10) .

Aaron (2020) contends that the information breaches and security issues in FinTech credit loaning as well as the prerequisite for an suitable direction such as “Fair Credit Announcing Act”. Aaron (2020) has moreover contended the inborn cold-heartedness of Fin-Tech and the bad form of the contracts; the unjustifiable nature of their methods; the lack of translucence. The reason is that in spite of the fact that the two needs of security and get to credit appear to counterbalance one another, they really adjust in outlandish ways. Indeed in spite of the fact that there are true blue security concerns with the FinTech demonstrate, they can be relaxed by more prominent straightforwardness

We contend monetary innovation (FinTech) is the key driver for financial inclusion, which in turn underlies economical adjusted improvement, as embodied within the UN Maintainable Improvement Objectives (SDGs). The full potential of FinTech to bolster the SDGs may be realized with a progressive approach to the advancement of basic foundation to support computerized money related change. Our investigation recommends that the best way to think around such a procedure is to center on four essential pillars. The to begin with column requires the building of advanced character, streamlined account opening and e-KYC frameworks, upheld by the moment column of open interoperable electronic installments frameworks. The third column involves using the foundation of the primary and moment columns to support electronic provision of government administrations and installments. The fourth column – design of computerized budgetary markets and frameworks – underpins broader access to finance and speculation.

We contend monetary innovation (FinTech) is the key driver for financial inclusion, which in turn underlies economical adjusted improvement, as embodied within the UN Maintainable Improvement Objectives (SDGs). The full potential of FinTech to bolster the SDGs may be realized with a progressive approach to the advancement of basic foundation to support computerized money related change. Our investigation recommends that the best way to think around such a procedure is to center on four essential pillars. The to begin with column requires the building of advanced character, streamlined account opening and e-KYC frameworks, upheld by the moment column of open interoperable electronic installments frameworks. The third column involves using the foundation of the primary and moment columns to support electronic provision of government administrations and installments. The fourth column – design of computerized budgetary markets and frameworks – underpins broader access to finance and speculation.

Research Designs

Research designs refer to a set of procedures methods and procedures that I will utilize in the research, collection and analyzing data. In the research, I will be studying and analyzing various variables in the FinTech and specific aspects in spectrum of inclusion and development. The research methodology will be instrumental in identifying the procedures used to collect, analyze and process in order to achieve the study goals. This study intends to adopt cross-sectional survey design. This method of research collects data for making inferences on a particular population of interest in a particular time. Cross-sections are nothing than snapshots of the population which one intends to cover or gather data from.

Cross sectional research design for the research because it gives room for comparison between variables that are specified in the research problem. In this study I will be evaluating relationship that exists between the prevalence of Fin-Tech and the inclusion in finance and development. I will also relate the economic disparities and the financial technology tools in the study areas. From these two aspects, it was worth deducing that the cross-section method will be ideal for the research as it is global.

Study Population

The study will be conducted by and data collected with the aid of several methods such as questionnaires and interviews. From the scope, we have the participants who are the people who their lives are purportedly affected by the Fin-Tech tools as well as the stakeholders of the respective companies that provide financial technology services and too. Nevertheless, I will be interested so much on studying the cross-section population and how their lives are affected by Fin-Tech in inclusion and stability.

The companies who run Fin-Tech tools will have their stakeholders interviewed and engaged in filling of the questionnaires. In this manner, I will be in a position to obtain substantive data for analysis and comparison of the variables that have already been mentioned in the research problem section. Questionnaires provide high degree of data standardization; as a result, I considered them as very important tools for collecting highly valuable data for analysis and definition of the variables.

Data Analysis

After collection of data, the course will embark on inspecting, transforming, cleaning and modelling of data with the goal of discovering useful information in the research about the variables. Intertwined to that, I will suggest conclusion and supporting decision making. After receiving and inspection of data received from the tools, questionnaires and interviews, I intend to key the data in SPSS program for data analysis. The questionnaire is expected to generate both qualitative and quantitative data. Quantitative data obtained will be analyzed using inferential and descriptive statistics which will enable the researcher to organize, summarize and have a better understanding of the analyzed data.

Hypothesis

Throughout the study, the following are the hypothesis;

1. Incorporation or adoption of Fin-Tech tools results to inclusion and stability.
2. Some parts the world, or in some countries, it is hard to access financial services due to low level Financial Technology.

iii. There exist disparities in impacts of the Fin-Tech tools on financial inclusion and stability.

1. Non-developed countries have a higher challenge in inclusion and stability due to inadequate resources in innovation to sustain the tech tools for finance.
2. Cyber security is a threat to financial technology.