Three fintech trends that will reshape social impact in 2019
Discussing trends in fintech for social good at Money20/20
Money20/20 has always brought together the brightest minds from the fintech and impact investing communities. Increasingly, it’s focused on the ways that inclusive fintech catalyzes social and economic progress: digital financial services can provide the world’s three billion financially underserved people with the tools they need to build better lives.
This year, Money20/20 hosted a “Fintech for Social Good” track that featured frank conversations about the challenges, opportunities, and future of using technology to build a financial sector that works for everyone. It’s so important that conferences as visible and important as Money20/20 are elevating the social impact of our work: doing so brings more resources, ideas, and energy to address an urgent problem.
It’s an important time to be having these conversations. Earlier this year, we found that, while access to financial services had increased by more than 500 million new accounts, the World Bank’s Global Findex revealed that savings has declined, the use of formal credit is flat, and resiliency has not improved since 2014. Access to financial services isn’t enough: clients demand high-quality, affordable financial products and services that they can use to benefit from the world economy, either by sending their children to school, launching businesses, or protecting their homes, health, and livelihood.
That’s one of the most important trends that will reshape our work in 2019 and beyond — but it’s not the only one. I joined The Rise Fund’s Maya Chorengel to discuss some of the new technologies changing how we can provide the underserved with better financial services:
#1: New data sources mean new opportunities
Over the last decade, the cost of satellite imagery has dropped precipitously. In the same period, the quality of that imagery has increased exponentially.
Why does that matter for inclusive finance? It lets us gain sharper insights into remote communities quicker and at lower costs than ever before. One of our portfolio companies, Apollo Agriculture, uses satellite imagery to assess a smallholder farmer’s land and see what they’re planting, what would help them raise larger crops, and their ability to repay a loan.
Apollo uses that information to provide better seeds, fertilizer, and credit. One-acre smallholder farming families represent so much the world’s poverty: up to two-thirds of the world’s working poor making their living in agriculture. Anything we can do to provide them with better financial services can make a tremendous difference in their lives.
And satellite imagery is just one example of new sources of data: electronic invoicing in Latin America, more mobile phone and internet usage, even smart devices can generate better information about users, revealing their habits, priorities, and creditworthiness. This explosion of data represents a significant new asset in creating inclusive financial products and services.
#2: Insurtech can protect the world’s most vulnerable
That’s far too many people who live one injury, natural disaster, or crop failure away from financial ruin. And it’s largely a result of market forces: in the past, it cost too much to create, manage, and provide inclusive insurance policies to the underserved.
We can use technology to change that. In the last year, Accion Venture Lab made its first three insurtech investments in Lumkani, Pula, and Toffee. Each of these startups is using new innovations to provide some of the world’s most vulnerable people with the protection they need. We hope that they’re just the start.
#3: Thinking through tech and touch
Every financial service provider and investor — including Accion — is grappling with how to best use “tech and touch”. We can’t ignore how new data analytics, machine learning, and automated customer engagement innovations can help reduce the costs of back-office operations and help businesses scale.
But we can’t overlook the fact that some human touch is still needed in almost every financial product, service, or market.
There’s no one way to find a balance: everyone must constantly re-evaluate how they use new technologies and human interventions to cater to customers’ needs. That’s particularly true for inclusive financial services.
I’m very optimistic about what we can accomplish in 2019 and beyond. Not because of the technology that’s transforming our industry — but because of the people committing to this work. When I speak at business schools, nearly a third of students want to be social entrepreneurs.
That’s so much more energy and brainpower today that we can tap to solve this problem, and I can’t wait to see what that new generation of leaders will do create a financially inclusive world.