In the previous installment in this series, we called fintech a “first world response to a first world problem”. I stand by that – but the ‘legacy’ banking systems that so many neobanks take shots at are banking systems nonetheless, and would be welcome in other parts of the world where personal banking is limited.
But in some ways, it’s not entirely true. Sure, fintech is APIs, IoT, wearables, voice, and all the other things we covered in parts one and two. But a significant number of fintech ventures (the ones that don’t find the limelight with metal cards or snazzy savings pots) are working to improve banking technology and accessibility in places where it’s truly needed.
Fintech moves fast in the first world
It really does. And it’s fairly obvious why. Sweden is a great example, where only 11% of the population use cash. On top of that, 10,000 Swedes make transactions via implants. Sweden is a forward-thinking country with no shortage of startups, engineers and venture capitalists. A hotbed for fintech development.
On the other side of the world, Venezuela—ranking 113th on the Human Development index, classing it as a developing country—has faced mass inflation. Many citizens (or those lucky enough) had become reliant on cash sent to them from family members who are abroad or overseas. But those funds are quickly diminished by as much as half once they’ve passed through local currency conversion.
The population had enough, and turned to Dash, the cryptocurrency. But because connectivity in Venezuela is patchy and not everyone has access to desktop or mobile devices, Dash quickly opened up an SMS version of their platform. Two years on, the Venezuelan economy still relies heavily on Dash transactions, with it now being a key pipeline for the population, and Dash’s SMS platform is exclusive to Venezuela.
Hats off to Dash, here. They recognised a group in need, understood the demographic, assessed the technology choices available to them, and made the necessary changes to their product. No radical new platform, no ugly subscription model or tie-in, just straight up accessibility at a fair price. The product even continued to work during a major power outage across the country.
I’ll be honest, before hearing about this brilliant pivot, I hadn’t really associated crypto with developing countries. Like most, I’m sure, I think about those annoying Bitcoin traders on Instagram and weird tweets from Elon.
The technology is there, the infrastructure is there (even if it’s GPRS), we just need a company, whether a startup or an established brand, to make bold and proactive choices. But Dash aren’t alone. There are hundreds if not thousands of fintech firms far from the heaving hubs of London and San Fran, and really focusing in on making financial independence accessible to the ‘underbanked’ parts of the world.
Lending Officers in parts of Africa and the Middle East appear at residential addresses with clipboards, assessing property, cars and assets and noting down their value as collateral against loans. In Uganda particularly, where less than a third of the population have a bank account, people are beginning to use First Access as an alternative. The New York-based software platform combines user data with internal records, making it easier to appraise customers and match them with appropriate financial products.
“The single biggest factor limiting large-scale financial inclusion across Africa is the cost of infrastructure and the ability to deliver those solutions across multiple regulatory jurisdictions”
Andrew Bakers, CTO as Absa Group
Standardising processes and removing red tape with AI
Absa themselves are exploring a cloud-based AI product to combat the issue in Andrew’s quote above. They hope to circumnavigate the fragmented financial landscape of places like Africa with technology that enables banks to standardise procedures and security checks across different countries. So rather than customers hitting constant roadblocks when trying to do business with or transfer money to another African country, they can use Absa’s solution, which is secure and repeatable, making it relatively straightforward to rollout across the continent.
Uniting countries with voice tech
Opportunity International are a company who provide communities in need with financial services. They see a new potential in ‘interactive voice response’ technology – a system that delivers automated messages in local languages, and even dialects. This is in dire need, not only because two thirds of African banking customers have literacy challenges, but also due to lack of physical bank locations. Thus, most cross-border transactions are taking place at phone kiosks in small shops.
So is this fintech? Overall, yes. But these examples are what we and many others would dub ‘microfinance’. These aren’t world-changing solutions to overthrow the big banks. Nor are they brightly coloured bank cards with cool apps and animations. These are super niche products and solutions targeted at very particular problems. I have a lot of respect for a well-funded and comfortable New York technology business who pour their time, love and money into helping families on the other side of the world, families who don’t even have a phone line, make simple banking decisions.
So to tie this whole series up and remind you what it’s all been about: fintech is cool. Fintech is smart and clever. Fintech is global. As an active and interested user myself, fintech has made huge improvements to my financial life, whether we’re talking pensions, ISAs or daily banking. But is my life immeasurably different because of this? Not really. Does fintech have more value and potential when driven by a fourth sector focus? Absolutely.
Fintech should work its hardest to help the neediest. That may be a developing country in political and economic turmoil. That may be a small village cut off from the world due to lack of infrastructure. Or that may simply be a family, anywhere in the world, who need better financial support than what’s currently available to them.
Let’s not assume that everyone has an iPhone 12, a Monzo account, and a crypto wallet. Like everything we do and every project we take on this year and beyond, we are asking ourselves “Is this ethical? Is this making the world a better place? Is this inclusive?”
Ask yourself the same too.