Fintech as a force for good

This is not to say fintech or blockchain technologies might ‘solve’ financial exclusion by their very nature. However, there are many consequences to consider and there is a need to resist building technology for its own sake in such an exciting new industry.

"Fintech startups can use technology to increase access to and improve the quality of financial services for those who are currently un-banked or under-banked.”

According to The World Bank, over 1.7 billion people worldwide don’t have access to adequate banking services. In Australia alone, there are approximately 3 million people severely or fully excluded, according to Good Shepherd Microfinance.

Many people are excluded due to myriad traditional barriers including the inadequacy of banking infrastructure, a lack of technology or geographic remoteness. But even in the most remote regions of the world, the emergence of smartphone technology and other innovations means those traditional barriers are falling.

Acting strategically, fintech startups can use technology to increase access to and improve the quality of financial services for those who are currently un-banked or under-banked.

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Benefits of purpose

Traditional companies like banks are increasingly sharing their purpose in society or making commitments to sustainability and social responsibility as part of their business strategy. This means not only ensuring their business strategy reflects that purpose but also targets community investment initiatives to the same end, agnostic of commercial returns.

Similarly, there is always room for fintechs to declare commitments pursued through community investment, pro-bono services or philanthropic donations.

At ANZ, our community investment strategy has long been aligned with financial services. Programs like MoneyMinded, Saver Plus and a range of initiatives designed to support economic and social participation for disadvantaged and vulnerable communities have new currency under ANZ’s purpose.

But social outcomes certainly don’t need to exist without commercial benefit.

If a fintech is a social enterprise they will know it from the outset, being borne of a primary purpose to solve a pressing social or environmental issue by employing market mechanisms. Some fintechs enable money to be moved across borders quickly, reliably and cheaply, helping underbanked communities with remittances and other banking services.

Social fintech firms can be found all over the world but they are mostly focused in developing nations.

In Manuel Pereira Arias’ overview of the new social fintech sector, companies in developed nations still tend to focus on traditional banking services (money services, online banking, insurance), while those in developing nations tend towards banking the un- or under-banked (microfinance, remittances, crowdfunding). In many instances, this may actually provide a person with their first engagement with the financial system.

Tailored support

In 2015, Australia signed up to the G20 Financial Inclusion Action Plan (FIAP) which is related to the UN’s Sustainable Development Goals.

Led by Good Shepherd Microfinance, Australia’s FIAP program includes 37 organisations including all four major banks. These organisations have made commitments to address financial inclusion, especially for women.

Of the 37, there are banks, credit unions, utilities, retailers, universities and even the Government but to date the only FIAP member rooted in fintech is MoneyBrilliant.

MoneyBrilliant CEO Peter Lalor and his team have made public commitments to ensuring their app - which brings customers’ financial details into one device – can proactively identify customers in financial hardship and provide them with tailored support.

Like the more traditional cross-sector companies involved in FIAP, MoneyBrilliant have aligned with the collective view of financial inclusion and subjected themselves to the same definitions and performance measures across their commitments.

Historically absent

There is an opportunity for more fintechs to become active and visible participants in this cross-sector collective to determine new ways to build financial inclusion and financial wellbeing.

Very early on in the design of ANZ’s financial wellbeing programs (Saver Plus and MoneyMinded), it was acknowledged our target audience was not likely to be engaging frequently with mainstream banks. In order to reach them, ANZ needed to work with highly credible non-profit partners who understood money issues in the community and worked with the bank to effectively co-design and co-deliver programs to support them.

Financially under-served people may also be historically absent from data sources. By partnering with non-profits, fintechs may be able to fill the gap for populations that have not previously been accounted for.

Funding of these cross-sector partnerships will always be an issue but there is much potential for social impact investing and for investment in technology to support non-profits in their societal purpose.

Engaging with technology

Digital exclusion, low digital literacy and other factors can limit people’s ability to engage with fintech platforms.

In ANZ’s 2018 Financial Wellbeing survey, we looked at online banking and unsurprisingly found most people in Australia are now comfortably using internet banking.

Older people (>65) are just as likely to use internet banking as anyone else. However, move that platform from the home computer or laptop to a personal device such as a tablet or phone and the number of older people engaging with the technology drops away dramatically.

The reasons are many and varied – a feeling of less security or increasing cognitive or physical challenges may all contribute.

Accion is a global non-profit seeking to revolutionise financial services for people who are excluded. They have been looking at the balance between ”tech and touch”, which is really important.

Inclusive financial services need to evaluate how they use new technologies alongside human interactions to engage, educate and support their customers. This is likely to be a key factor in determining future success or failure.

At ANZ, we have also been very conscious of this as our programs evolve. There are many opportunities for us to substitute manual and personal processes with digital solutions but we have to be very careful to maintain that human touch where necessary.

Michelle Commandeur is Head of Financial Inclusion at ANZ

This article is an edited version of a fireside chat between Michelle and Shahirah Gardener, co-founder of Finch, at The Intersekt Festival.