‘How can Fintechs Help the Developing World?’ With PPRO, Zolve and More

This August at The Fintech Times, we’re looking to highlight some of the amazing things fintechs are doing around the world. We are always hearing about the “latest groundbreaking innovation doing good for the community”, but are these innovations doing good for those in an already advantageous position, or are they helping make the financial world more accessible? To us at The Fintech Times, fintech for good means companies looking to help people who desperately need it, prioritising financial inclusion and sustainability.

This week, The Fintech Times has focused on what sets ‘fintech for good’ companies apart from the rest; hearing a range of companies views. Today, the focus shifts to how fintechs can specifically help the developing world – with views from PPRO, Aleph Zero, Quasar Finance, Zolve, Verto, Future and Provenir.

Consumers adopt solutions depending on their circumstances

James Booth, vice president and head of partnerships in EMEA, at PPRO said: “Many consumers in emerging markets still can’t access mainstream financial services; the banking infrastructure simply isn’t there. But as these markets are developing, consumers are adopting the latest solutions, often leapfrogging many more mature markets like Europe or North America.

“Take the African continent for instance; while credit cards are a rare sight, the continent is a leader in mobile payments, boasting companies like M-Pesa, the region’s largest fintech platform. In Europe, more than 50 per cent of consumers rely on card-based payments for their online transactions; in comparison, 60 per cent of online payments in APAC are completed via an e-wallet, according to our 2021 Payment Almanac.

“Fintech should bring the right financial services to the right people and PPRO is on a mission to democratise the payments ecosystem so that everyone, no matter where they are, can access the ever-growing ecommerce market.”

Educating users is the crucial step

Antoni Zolciak, COO and co-founder at Aleph Zero commented: “By providing extensive educational campaigns focused on non-custodial wallets and assisting in adopting reserve-backed and audited stablecoins. With issues such as being unbanked, or unable to receive money from abroad without paying 10-20 per cent in remittances, or hyperinflation, a properly decentralised system could potentially go a long way to help. Moreover, DeFi protocols could also help eliminate predatory lending practices.

“According to the World Bank‘s ‘Global Findex Database’, nearly half of all unbanked adults live in just seven countries; one of them being Nigeria (four per cent), where the broader crypto adoption is already at high levels due to, among others, lack of financial inclusion, naira falling 60 per cent versus USD since 2014, and rising inflation.

“Responsibly designed stablecoins can be the remedy for unstable government-issued currencies as long as the users are aware of the personal responsibility associated with personal crypto wallets. Easy access to fiat on-ramp / off-ramp is also crucial as it might not be possible to use digital assets in everyday situations.

“In a study prepared by the Gemini exchange, Indonesia and Brazil have been named as countries with the highest crypto adoption rate worldwide. Provided we were to put enough trust in fully-backed stablecoins, they could be seen as an efficient inflation hedge. Some might even go as far as to say that when facing local hyperinflation, Bitcoin can still, despite it’s extreme volatility, be classified as a better option by some.

“What’s important to point out is that the recent fallouts of centralised operators working with DeFi platforms have shown the need for direct interactions between the users and the protocols—however, without a centralised entity, the user experience can decrease drastically. This brings us to the original notion of ensuring that the users are educated well enough to become comfortable in taking full responsibility for their own assets. Without a high level of awareness in differences between interacting with a for-profit operator, and non-custodial solutions, they stand to lose more than they could gain.”

Trustless applications are the key to financial inclusion

Valentin Pletnev, CEO and co-founder of Quasar Finance said: “In countries where people don’t have access to bank accounts or may even be discriminated against opening them, trustless and decentralised applications are not only a luxury, but a necessity. The value proposition of permissionless applications is magnitudes higher in those developing nations – its their only true gateway to accessing global financial markets and transfer value censorship free.”

Helping the world understand the available financial products

Raghunandan G, co-founder and CEO of Zolve, said: “Fintechs bridge the gap between the general masses and traditional banks, which tend to cater to specific target audiences.

“Many populations remain unbanked for several reasons. A primary factor is that traditional banks cater to target audiences that will help in generating revenue and profitability – which means these institutions do not reach out to the population in general.

“Thus, there remains a huge gap between the masses and the information around traditional financial products. Many people around the world know very little about the financial offerings available from banking institutions. This lack of awareness can put consumers at a disadvantage when it comes to personal finances and building wealth.

“This is where fintechs come in and help. They offer technology-rich solutions that help people around the world understand the available financial products and how they can help in individual circumstances. With data connectivity and internet adoption being huge in today’s world, fintech can reach anyone with a smartphone.

“Fintechs provide information and solutions. They can help bridge the knowledge gap that exists between consumers and the financial products and solutions available to them. For instance, in some countries, consumers are at a severe disadvantage if they lack a high credit score. In many cases, this may result from cultures that do not encourage borrowing. Rather, young consumers are taught to spend within their limits. Fintechs serve as important educational resources for people around the world to learn about and access financial solutions catered to their individual needs.

“Finally, as you might expect when you combine technology and education, fintechs offer rather amazing user experiences. If a consumer becomes stuck anywhere along the journey or does not have the correct information, they can easily reach out for help to figure out the best options for their situations.”

Modern solutions for cross-border and domestic payments

Ola Oyetayo, CEO and co-founder of Verto said: “The B2B global payments industry is expected to grow to nearly €200trillion by 2028, over six times the size of the retail payments market. But, international payments remain a complicated and expensive proposition for businesses in the developing world, particularly in emerging markets like Africa, where local currencies are less liquid than those in developed markets.

“Solving the trade and cross-border payment complexities that companies in emerging markets face is a great foundation for building a future of greater financial inclusion for all. Creating innovative modern banking solutions that allow businesses to make cost-effective cross-border and domestic payments quickly and securely across the globe, places businesses in underserved regions on an even playing field as their counterparts in developed markets, therefore driving a fairer and more inclusive financial ecosystem for the developing world.”

Emerging markets have already birthed exciting fintechs

Jean-Louis Warnholz, co-founder and CEO of Future said: “Many of the most exciting fintechs were born in rapidly emerging markets, from Kenya and Nigeria to Indonesia. Successful innovations opened up new ways to pay, for example, mobile money in Kenya, lower transaction costs, and created access for families previously without a bank account or access to credit. Consumers in many of those markets rely on cash only for their purchases, limiting affordability, especially for goods that have higher upfront costs, whether that’s a home, a car or a new laptop. Fintechs can play a role in bridging cash flows and expanding access to essential goods and services.

“Financial inclusion has always been at the core of Future’s mission. Prior to Future, I helped build the BlackIvy Group, a values-driven company bringing essential goods and services – healthcare, food and housing – to more families across East and West Africa. I witnessed first-hand the devastating impact of climate change across communities in East and West Africa. Future, as a fintech, is now building the payments and rewards ecosystem to inspire the shift to low-carbon products and services in the U.S. and beyond, and give families the tools to fight climate change in their daily lives.”

Reinventing existing services to serve people worldwide

Carol Hamilton, senior vice president, global solutions at Provenir said: “Businesses and consumers in the developing world face unique challenges when it comes to accessing financial services. Lack of internet service and cash-based cultures are just a few of the obstacles many face to obtaining the financial assistance they need.

“Take Africa for example, where financial penetration is low even when compared to emerging markets in Latin America such as Brazil – only two out of five of the adult population have a bank account, versus 70 per cent across other emerging markets. Access to bank branches and formal credit is also poor. Credit card penetration in Africa is very low, at two per cent of the population aged 18 [or over] versus seven per cent across other emerging markets. These metrics highlight the difficulties individuals in Africa face in accessing basic financial services. Meanwhile, the World Bank and African Development Bank report that there are 650 million mobile users in Africa, surpassing the number in the United States or Europe.

“Fintechs can help make financial services more inclusive by offering new services and reinventing existing ones. For example, the use of alternative data for credit scoring presents a great opportunity to serve those previously unbanked. For example, fintech Credolab works with lenders globally and has found that when working with its clients in Africa, the best source for alternative scoring comes from mobile wallet data as very few consumers utilise either debit or credit cards. This alternative data also serves as a substitute for income, helping to compute predictive value for credit risk decisions. Fintechs can introduce this new approach to evaluate financial risk levels by applying alternative scoring platforms for a more holistic view of an individual’s ability to pay.”