Fintechs and the Public Sector

Governments around the world are starting to see the potential of fintech and are beginning to use it to help govern their people better. Fintech can provide a number of opportunities for governments and the public sector, from making it easier for citizens to pay taxes to help reduce corruption.

In this article, we will take a closer look at how governments are using fintech and what the future holds for this growing industry.

What are the different types of fintech?

There are a number of different types of fintech, including:

• Payment processing
• Money transfer
• Lending
• Investing
• Insurance
• Real estate

Payment Processing

Payment processing is one of the most common ways that fintech is helping the public sector. Governments can use payment processing fintechs to make it easier for citizens to pay taxes, fees, and other government-related payments.

In addition, payment processing fintechs can help reduce corruption by making it easier for citizens to donate to charity and make other payments without having to go through a middleman.

One of the ways that governments are using fintech is to make it easier for citizens to pay taxes. In countries like Pakistan and Brazil, there are now apps that allow people to pay their taxes directly from their phones. We could have mentioned countries like China that have already gone cashless.

However, it is important to mention countries like Pakistan and Brazil when we talk about the benefits of fintech in the public sector because Pakistan for instance has a very low tax to GDP ratio. Multiple reports on the country`s financial woes have stated that the country needs to increase its tax to GDP ratio. However, a country, that is riddled with corruption cannot be expected to improve its tax collection overnight.

This is where fintech comes in. The incumbent government figured out a workaround to the bureaucratic hurdles of increasing tax collection. The government has implemented a wide range of fintech tools to improve revenue collection. These tools include mobile apps, to help people file their taxes easily with a few swipes. POS terminals are linked with the treasury to directly collect sales tax and bring transparency to the system.

This makes it simpler and faster for taxpayers to submit their payments, as well as easier for vendors to file for rebates and it also reduces the chances of mistakes being made. In the future, we may see more developing countries adopting this type of system, which could make paying taxes much easier for everyone involved. Leading to better public services and improvement in the standard of living in the developing world.

Money Transfer

Money transfer fintechs are also commonly used by governments to help transfer money between different branches or departments. This can help reduce the amount of time it takes to transfer money and make it easier for citizens to access their government funds.

This is another area where the government of Pakistan has taken an innovative step to remove the inefficiencies of the system. The government has introduced a payment app called “Raast”. Through this app, any bank account holder can link their cell phone number with their bank account and then use their number to send and receive payments instantly, without any processing charges.

Lending

Lending fintechs is an area that governments can use to provide loans to small businesses and entrepreneurs. Private lenders have already established a thriving fintech lending market. The public sector can enter into partnership with the private sector to provide finance to small businesses. This can help stimulate the economy and create jobs, particularly now when the global economy is restarting after the pandemic. In addition, lending fintechs can also help reduce corruption by making it harder for government officials to give out loans to friends and family.

Investing

Investing in fintechs are another type of fintech that can be used by governments to help invest in new businesses and technologies. This can help the government diversify its portfolio and reduce risk. In addition, investing in fintechs can also help the government track where its money is going and make sure that it is being used efficiently.

Insurance

Insurance fintechs are also becoming more popular with governments as they provide a way to ensure citizens against risks. This can help protect citizens from financial loss and help the government reduce its liability. In addition, insurance fintechs can also help the government provide better coverage for its citizens.

Real Estate

Real estate fintechs are another type of fintech that is being used by governments to help manage the property. This can include things like tracking ownership, managing leases, and processing payments. Real estate fintechs can help make it easier for governments to manage their property and reduce the amount of time it takes to process transactions.

UAE has already used blockchain to convert its public records to the blockchain, this has brought transparency and better accountability. As a result, the real estate market of the UAE has shot sky-high.

What are the future prospects for fintech and government?

The future prospects for fintech and government are looking good. One key area that fintech has to be used by governments is to reduce corruption and bring transparency.

In many countries, public officials are often corrupt and accept bribes in exchange for favours. However, with the use of blockchain technology, it is becoming easier for governments to track and record transactions. This makes it more difficult for corrupt officials to accept bribes without getting caught.

In the future, we may see more countries using blockchain technology to help reduce corruption in their governments. As more people become aware of the potential of fintech, more governments are likely to start using it to help govern their people better. In addition, as the industry grows, there will be more opportunities for the government and the public sector to use fintech to improve efficiency

Do you think fintech can help the government? Let us know in the comments