Fintech For Good: Fact or Fantasy? With Milken Institute, Provenir, Nav and ClearBank

The words ‘fintech for good’ get thrown around a lot. But does the phrase have any legs – or is it just a collective industry pipe dream? Polly Jean Harrison, features editor at The Fintech Times, shares more views from across the industry following part one and part two.

Assessing the ‘goodness’ of fintech

In assessing whether fintech is ‘good’, we should ask ourselves is it empowering or exploitative, suggests Nicole Valentine, fintech director at the Milken Institute, an independent economic think tank based in Santa Monica.

“Is it equalising or destabilising? Fintech is only as good as what it can do. The promise of fintech must match its implementation and application in the real world for people with real issues accessing and transacting capital.

“There are real deficits and gaps in banking systems around the world. Fintech platforms and products have proven their ability to close economic divides and open up opportunities for homeownership and entrepreneurship.

“Fintech is good when it can serve as leverage and a bridge. What fintech needs is more than just a promise of being good. Fintech is an opportunity, a tool, that can empower and provide social economic mobility. It’s up to leaders to create and deploy inclusive fintech solutions that meet the needs of diverse users. If fintech wants a Big G, as in good, on its report card, it must turn the ideals of inclusion, access, and innovation into a reality for us all.”

Impact of fintech in the nonprofit sector

Fintech is driving significant innovation in the nonprofit sector, making it easier to receive donations, empowering organisations to address urgent needs globally, and giving rise to innovative business models  for nonprofits, says Kim Minor, senior vice president, global marketing at Provenir, data and credit decisioning software for the world’s fintechs.

“We are seeing tremendous innovation in the ‘fintech for good” sector, and this is not just a lightweight ‘good washing’ – fintech is helping reinvent the business of giving – addressing significant economic shifts and making meaningful differences in local communities.

“It is said that necessity is the mother of all invention. The nonprofit sector is being significantly challenged by global economic uncertainty, and the need for their services is greater than ever. At the same time, record high inflation is daunting for nonprofits, which are particularly vulnerable because they cannot react to rising prices the way for-profit businesses can.

“Fintech providers have introduced solutions that make it easier and less costly to receive donations which means these organisations can focus more on their mission and spend less time and effort fundraising. And it can also make funds more accessible, on a global basis quickly, which can empower non profits to address urgent needs in the event of natural disasters or humanitarian crises. We are seeing completely new and innovative business models for non profits being born on the back of fintech.”

Driving authentic ‘fintech for good’

Greg Ott, CEO of fintech Nav, the financial health platform for small businesses, emphasises the importance of going beyond vague intentions and empty promises in fintech.

“From the outside, a crowded tech category can look like a gold rush. Every company seems to want a piece of a potentially profitable pie. Fintech has certainly suffered from this perception, fueled by the flurry of look alike companies competing for consumer’s attention (and wallets).

“Pair that with the evolving role of purpose in marketing and it becomes a bit of a reckoning. Consumers no longer accept empty promises of ‘doing good.’ The proof is in the impact of a company’s activity more than a vague intention of ‘good.’

“What does that mean for the idea of ‘fintech for good’? It means 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.

“At Nav, ‘fintech for good’ means a relentless commitment to building intelligent products that help small businesses thrive. We hear constantly from our newest customers that the financial landscape is impossibly complex and opaque for small businesses. Our role as an objective partner for business owners is to help them understand and navigate that landscape quickly, get the information and options that are most relevant to them, and get back to running their business.

“To us, good means recognising that what’s good for small businesses is good for communities, individuals, families and entire economies. From where we build, when all this is embedded in your mission and products, the good happens naturally and authentically.”

Fintech for positive change

Philip Hart, chief internal auditor and executive co-sponsor for ESG at ClearBank, the first UK clearing bank in 250 years, highlights that fintech for good is not just a marketing strategy, but a real force for positive change.

“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 of societal impact, 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.

“ClearBank has worked with PayPoint and the Department of Work and Pensions to create a system where benefit payments are delivered as secure digital vouchers, issued in real-time through a choice of SMS, a unique barcode displayed on a smartphone, PDF delivered by email or a reusable mag stripe plastic card—whatever works best for the customer.

“These can be used to withdraw funds at one of 28,000 PayPoint retailer outlets or 11,500 Post Office branches. The result is wider access and greater choice for people who can often find these choices narrowing as a result of change.”