The digital divide in financial inclusion: bridging gaps through mobile banking and fintech innovation in Developing Economies

The problem of the digital divide is a serious barrier to financial inclusion in emerging countries, where innovative financial technologies can potentially alleviate this issue. The current research project sought to investigate the effect of innovations in fintech and mobile banking on the level of financial inclusion and determine the key factors of the digital divide in Uzbekistan. Data for research were gathered through surveys among 2,650 families and 1,120 small businesses in six regions of the country in the first quarter of 2025. Two indexes of the digital divide and financial inclusion were developed using principal component analysis, and the effect of fintech intensity was estimated using OLS, IV and quantile regressions. According to the results, an increase of one unit in fintech intensity index leads to an increase in financial inclusion by 0.29 standard deviation and instrumental variable of this effect is 0.41. Yet, the distribution of these effects is highly uneven as the fintech coefficient varies between 0.12 (insignificant) at the 10th quantile and 0.45 at the 90th quantile. Moreover, young adults and men use fintech more often than older people and women. From these results, it can be concluded that the diffusion of fintech without any intervention might lead to an increase in financial inequality.

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