The words ‘fintech for good’ get thrown around a lot in the industry. They’re the buzzwords you can always count on whenever a group of fintech leaders are standing in a room. But does the phrase have any legs – or is it just a collective industry pipe dream?
Though pretty self-explanatory, the idea of fintech for good is using financial technology and its innovations to create a more inclusive and accessible world for all. Whether that’s addressing financial issues such as poverty or financial exclusion, or other global issues like climate change.
For Greg Ott, CEO of small business financial health platform Nav suggests a definition for fintech for good He said: “its finding historically underserved audiences – like small business owners – and putting them at the centre of every decision we make. We believe embedding the idea of ‘good’ in products, instead of bolting it on as a way to drive engagement or making a one-time donation to a cause and marketing it as a commitment – is the only way to drive ‘good’ that’s impactful instead of performative.”
Great expectations
Fintech always has a lot of potential to do a lot of great things – by its very nature it exists to solve problems. It takes the issues that have been troubling the industry and flips them on their head, presenting exciting and innovative solutions that have us all thinking ‘Now that’s clever!’.
With these exciting solutions, the out-of-the-box thinking and the general can-do attitude that everyone in fintech has by the bucket load – it makes sense that the industry puts their collective power into doing some good. But is it realistic?
The words fintech for good get thrown around so much at this point, have we become desensitised to them? It’s easy to get cynical about the world, especially with the current state of affairs. Is doing good just a pipe dream? Something we can all dream about to make ourselves feel better?
Or is it all just a marketing ploy? Is merely declaring your pursuit to ‘do good’ enough without having to follow through? Merely plant a couple of trees or donate to a few charities and your good box is ticked for another year.
Cynicism is natural
Like I said, it’s easy to be cynical, but many in the industry are passionate about fintech’s ability to do a bit of good in the world and change things for the better.
Ashley Aydin, principal with VC firm VamosVentures, is one such individual. He believes that “fintech companies have the potential to be real businesses and do good at the same time”.
He continued: “Companies can streamline inefficient status quo financial experiences and democratise financial knowledge for those who would not have access to it otherwise. With financial technology, we can help individuals grow their wealth, make payments more seamlessly, have the right infrastructure to grow their businesses, and more.”
Window of opportunity
Providing financial opportunities to those traditionally left behind is probably the easiest way fintech can do good. In fact it’s pretty much the raison d’etre of most of the industry.
However, it’s not always as simple as just doing. James Galassi, digital, product and marketing director at Acuity Knowledge, a provider of research and analytics to the finance sector, believes that companies must be driven by a higher purpose than just the desire to do good.
“From providing people with easy access to their credit scores so they can make more informed financial decisions, to using new payment rails to slash the cost of cross border payments, fintech has a history of being a force for good and putting more power into the hands of customers. This, however, is not a given,” he said.
“Companies must be driven by a higher purpose. One that seeks to create a positive and lasting change with both customers and the wider world. Fintechs can only do this if they act with humility and a genuine desire to understand the motivations of their customers. This will enable them to see the world through their customers’ eyes and create products and services that authentically connect with them.”
Purpose and planning
Philip Hart, chief internal auditor and executive co-sponsor for ESG at ClearBank echoes these thoughts:
“Fintech for good is not just a marketing exercise – it is a real force for positive change. For it to be effective you have to seek out the issues and situations where there’s an opportunity for fintech to help people. As an example, there have always been people without bank accounts, and the shift to digital payments risks leaving them even further behind. As of 2020, 1.2 million UK adults had no current or e-money account of any sort. There’s also a great deal of overlap between those who are unbanked and those in receipt of benefit payments. The result is wider access and greater choice.”
Of course, ESG standards are always high on the list. If anything they dominate the conversation whenever you’re talking about doing good.
Gabby Kusz, CEO of the Global Digital Asset & Cryptocurrency Association, said: “Just as there are good and bad applications of any type of business vertical the same holds true for fintech. The most important measure and pathway for any business vertical to achieve its own ‘for good’ will be its ability to align with, embody and action on ESG or environmental, social and governance. ESG standards, measurements and communication continues to grow and develop. As it does so will the ability of all business verticals to contribute towards the concept of ‘for good’.
Actually done good
It should be said that fintech is already doing a lot of good. Credit should be given where it’s due. Fintech really is making a difference when it comes to the lives of those who are unbanked or financially excluded. It would be remiss to downplay the actual effects fintech has had in this space already, proving the aspiration to do good is more than just a pipe dream.
Elizabeth Lyons, COO at SaaS platform T-REX, said: “The opportunity for fintech to create positive outcomes has never been greater. There are so many incredible stories for consumers. From free access to financial services to enhanced decision-making thanks to digital products. What doesn’t always make headline news is the impact fintech, particularly enterprise fintechs, are having on the institutional side.
“Innovation and collaboration are the very fabric of fintech DNA. This partnership mindset is propelling sustainable growth forward at a pace we’ve never seen before.”
Teaching the masses
Of course, you can’t forget about education. Fintech is making leaps and bounds when it comes to actually teaching people about money and how to use it.
For Stuart C. Harvey Jr, chairman of the board of advisors at Rego Payments believes fintech can absolutely be a force for good – but it’s all about “education and experience.”
“Studies show that a lack of financial education can cost 15 per cent of adults at least $10,000 in 2022. Fintech services are closing the gap, giving parents resources to teach their kids personal finance at home.
“Doing good has to start with our children. As a parent, I hope my kids are not just smart with their money, but also generous. At an early age, kids want to help. That’s why I believe that fintech companies, like REGO, can make ‘fintech for good’ a reality. We just need to give parents tools to reward their kids for making financial decisions that benefit their community”
Of course, there’s still a long way to go in all of these areas. The world isn’t completely financially inclusive, and not everyone knows how investing works. But it’s something, and something is always infinitely better than nothing, right?
The future is bright?
The debate of whether fintech can really be a force for social good rages on and will likely remain a constant aim of the industry – and definitely isn’t going anywhere as a buzzword any time soon. Whether it is a realistic end goal or just a finance fantasy will remain to be seen. But I’m confident, as with many others in the industry, that fintech for good really is the future of finance.
The demand for sustainable, accessible and inclusive services is only getting bigger and bigger as time goes on. Fintech will always be there to help fill the gaps and innovating until the problem is solved. But that innovation can go hand in hand with purpose – and that is where the future lies.
