Fintech Apps are Impacting Financial Inclusion in Yemen

Financial technology, FinTech, has made a revolution in the way financial services companies work, mainly exchange and transfer companies in Yemen. These companies have experienced rapid growth in the field of technological development during and after COVID-19 pandemic that encouraged users to adopt technological solutions to mitigate the epidemic spread, especially during the periods of complete and partial lockdowns. This is what McKinsey Global Management Consulting indicated when linking the recovery from the pandemic to digital means.

E-financial applications have spread in an unprecedented way in Yemen. People began to accept their use, particularly when these apps provided many benefits and saved users’ effort and time. Financial companies motivated users to rely almost entirely on applications by reducing app-services tariff rates, and thus their use has increased compared to the situation before the epidemic. Consequently, the basic notion of ​​it - to make the costs of performing various tasks much cheaper - has been applied, and therefore, the service coverage has been expanding to easily reach different social classes. The wide use of smartphones among the Yemeni society, practicing a digital life, really helped in such an idea. Despite all progress in financial technology and the increase in digital payments, it cannot be denied that numerous segments of the community still depend on manual cash payments to receive salaries or transfer through people, specifically to rural and remote areas, and daily sales in traditional and wholesale markets, primarily for agricultural, fish, and handicraft products. Hence, this is a stimulating way to increase financial inclusion and normalize the FinTech in productive societies whose people do not have bank accounts. This will help them improve their businesses and assist in integrating societies into development processes they were previously deprived of.

Considering the results, FinTech is not an option anymore. Rather, it has become a necessity to meet the requirements of the new life in the globe as the pattern of financial transactions and purchasing methods has already changed. For instance, how will a Yemeni youth be able to purchase a smart device through Amazon without using a Visa Card! Truly, this applies to the increasing movement in the Yemeni youth group who work in e-commerce, primarily those girls who buy many of their needs from other girls through e-apps and adopt e-payment. This is what Muhannad, a young man in his twenties, briefed us. He normally pays for his wife’s purchases directly from his account. “I used to spend much time in the market buying my wife’s needs, which is boring and tiring, but now I can fulfill purchases via cellphone. Therefore, my wife no longer needs to go out to the market after the exponential growth of commercial Facebook pages". he adds.

Recently, financial companies, counting on electronic applications for payment and transfer have become more reliable compared to their counterparts that still employ the manual method. This led to an increase in the number of emerging companies in the field of financial technology during (2020 - 2022) and technical projects qualified to serve these companies and develop their performance. Remittance sector was topped by these companies and projects followed by microfinance sector, where new banks and entities have arisen providing this service. There is a strong endeavor from the Central Bank of Yemen to regulate the work of emerging financial companies, mitigate the risks related to terrorist financing and money laundering, and build an ideal and stable financial market.

Regarding achieving the sustainable development goals through financial technology, a report entitled "Igniting Sustainable Development Goals Progress through Digital Financial Inclusion" was issued on 18th-September 2018 by the Office of the Special Adviser of the Secretary-General on Inclusive Finance for Development, in cooperation with The Better Than Cash Alliance, hosted by the UNCDF and the World Bank. In terms of eradicating poverty, FinTech provides access to affordable tools and services that can help increase economic opportunities for low-income families. In the goal of ending hunger, financial technology services greatly help farmers regarding facilitating access to funds needed to expand agricultural productivity at lower costs. Additionally, fintech applications contribute to providing appropriate platforms for social transfers for those suffering from malnutrition, in an efficient, faster, safer, and more reliable way. Concerning achieving these goals in Yemen, local and international humanitarian organizations are working to accomplish much of it.

One of the most well-known electronic financial apps in Yemen is Al-Kuraimi Jawal, belonging to Al-Kuraimi Bank for Islamic Microfinance. It is currently used by nearly a million Yemenis. It conveniently enables users to receive and send remittances, exchange currencies, complete purchases, pay bills, save, obtain funds, open Bank accounts, and receive and pay salaries. This indeed encouraged organizations to deal with this bank because of its accessibility and ease of use, specifically the possibility of reaching zero cash. This, in turn, helps in eliminating corruption in transactions and encouragement of financial inclusion in Yemen. According to Ahmed, a production supervisor in a food processing company, he mentioned that Al-Kuraimi app facilitated his financial transactions. " After using to spend a lot of time among about 600 employees in line to receive my salary, I presently receive a message of receiving it straight to my account, from which I can pay the monthly family expenses. It was like a transition from torment to bliss, especially in hot weather where you can't stand much in line for salaries." he clarified.