The fintech industry was challenged to harness the potential of financial technology to drive financial inclusion and alleviate poverty at this week’s FinTech North conference in Manchester.
Held at Whitworth Hall in Central Manchester, the fifth annual conference brought together industry leaders, innovators and experts to explore the critical role of financial technology in expanding access to financial services, particularly among marginalised populations in developing countries.
Highlighting the urgent need for financial inclusion, Dr. Andrea Lagna, senior lecturer in fintech at Alliance Manchester Business School, stressed the pressing issue of financial exclusion, affecting approximately 1.4 billion people worldwide.
He painted a vivid picture of individuals who lack access to basic financial services, making it impossible for them to escape poverty. However, he offered a ray of hope by underlining how fintech innovations can effectively address this global problem.
“Imagine being so poor that you cannot afford a bank account. You have no access to car payments, you cannot borrow money. You cannot buy insurance services. This scenario is not fictional. It is the reality for many people around the world – 1.4 billion people around the world are financially excluded.”
The confluence of fintech and financial inclusion
As he delved deeper into the topic, Dr. Lagna provided insights into the historical evolution of financial inclusion, highlighting how it emerged as a market-based approach to poverty reduction and economic development in the early 2000s.
He pointed out the shift from microfinance to financial inclusion, especially as international organisations like the IMF and the World Bank recognised the potential of fintech in this realm. The success story of M-PESA in Kenya exemplifies the transformative impact of mobile money services on financial inclusion.
Dr. Lagna acknowledged the ongoing debate surrounding fintech-led financial inclusion. While optimists celebrate how fintech can improve financial inclusion, critics argue that it may not eradicate poverty entirely. He stressed the need for concerted efforts to reduce barriers to financial inclusion and the importance of ensuring that the mission of financial inclusion remains central for fintech firms.
“Some argue that too many organisations refer to fintech-led financial inclusion, without a clear and truthful focus on the poor. So fintech financial inclusion sometimes may lose sight of poor individuals.”
Areas of focus for positive impact
In the latter part of his presentation, Dr. Lagna outlined three key areas where collaboration among various stakeholders can enhance the positive impact of fintech-led financial inclusion. These areas included business strategy, digital technologies and the business environment.
- Business strategy: the importance of preventing ‘mission drift’ in fintech firms, ensuring that their socially oriented mission remains intact, even when facing profitability challenges or regulatory changes.
- Digital technologies: the need for designing digital technologies with a focus on the habits and needs of unbanked individuals, enabling them to access and utilise financial services effectively.
- The business environment: the roles of civil society organisations and regulators in advancing financial inclusion. Plus, the role of regulators in fostering responsible fintech innovation while ensuring consumer protection and data privacy.
Also on the FinTech North Manchester agenda
The conference highlighted how Greater Manchester’s fintech scene is rapidly evolving, becoming of the largest fintech hubs outside of London.
One conference session put the spotlight on greener finance. Panellists, including Alex Mollart, CEO of Tandem Bank, Georgina Mitchell from Wellhouse Consulting, Will Smith, co-founder of Tred and Katherine Keddie, co-founder of Adopter, discussed the challenges of greenwashing, the importance of standardised reporting, and regulatory measures to address these issues.
There was an air of optimism about the ongoing transition to greener financial products and the increasing awareness of environmental and social considerations in investment decisions. They emphasised the collective responsibility of the financial industry in driving the transformation toward a more sustainable future.
Janine Hirt, CEO of Innovate Finance, highlighted the importance of focusing on fostering collaboration and advocating for the sector’s interests. She outlined key priority areas for Innovate Finance: fostering stronger partnerships, enhancing skills, talent, culture and governance, promoting international connectivity and scaling, supporting fintech as a force for good, and advocating for effective regulation and policy.
Hirt also mentioned that despite economic challenges, the UK remains a global leader in fintech investment, with high adoption rates and a positive impact on the UN Sustainable Development Goals. She urged the sector to maintain proactive regulation, address climate change and promote diversity.
“We need a regulatory framework that is protecting the consumer. But equally, we want the British consumer to be able to access the benefits of all of this new technology.”
Phil Vidler, co-founder and managing partner of the Fintech Growth Fund and CEO of FinTech Alliance, discussed the mission and goals of the Fintech Growth Fund during his session. The goal is to provide not only capital but also expertise and support to fintech companies as they scale and address challenges faced during their growth stages. The fund also aims to play a crucial role in nurturing and advancing the UK fintech ecosystem by filling the middle gap in growth-stage investments and leveraging the knowledge of strategic partners to drive success.