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.
While this is what fintech for good means to us, we wanted to reach out to the rest of the industry to understand what it believes fintech for good entails, and what sets a company doing good apart from the rest. In this article, we hear from 0VIX, Milken Institute, Modulus, Gretel, OriginClear, First Wealth, AAZZUR, and Orca.
Navigating financial problems easily
Garry Krugljakow, founder of 0VIX Protocol told us, “A ‘fintech for good’ company identifies a real-world solution that can help its users navigate financial problems seamlessly. The key to setting itself apart from the rest is education and access: if a user has a limited understanding of general finance and little access to innovative technology, they won’t gain value from fintechs that don’t account for access. Fintech companies must have a deep understanding of their consumers’ needs if they want to succeed in the market.”
Ability to empower
Nicole Valentine, Esq., fintech director at Milken Institute said, “The ability to empower! When end-users are able to achieve their financial goals by leveraging fintech products or services to access the financial ecosystem, that’s the epitome of fintech for good and how it should work. Companies that are focused on creating products and services that are affordable and inclusive are ideal models for the industry. Fintech’s advantage is its ability to deliver financial services efficiently by through its technology power. A “fintechfor good” company effectively leverages the power of technology to reach and broaden access to capital for people, communities, and business owners.”
Richard Gardner, CEO at Modulus said, “A ‘company for good’, fintech or otherwise, can be measured by what it is doing when the cameras aren’t rolling. Just as you can judge a person by what they do when nobody is watching. The best firms build their corporate social responsibility directly into their culture.
“Fintech innovation can significantly impact developing economies. I think one place to look is emerging technologies which combine fintehc and regtech with AI in order to curb fraud and potentially save hundreds of thousands of lives on the by preventing the sale of counterfeit pharmaceuticals, which a 2017 PricewaterhouseCoopers paper noted as a market worth $163-217billion annually. But those billions come at a cost, with counterfeit operations accounting for roughly one million deaths globally. Perhaps surprisingly, in 2015, The American Society for Microbiology concluded that roughly 10 per cent of all drugs in circulation are counterfeit. This is due to a multitude of reasons, including weak pharmaceutical regulatory policies in many developing nations.
“Among those medications which are most frequently counterfeited, anti-malaria treatments are king. In just a single year, the World Health Organization estimated that over 100,000 death-by-malaria cases in Sub-Saharan Africa were caused by counterfeit pharmaceuticals. Counterfeit drugs run the gamut, often looking identical to name brand pharmaceuticals, even though they are lacking active ingredients, making them, essentially, a placebo. Even worse, some counterfeits have less than proper dosages of active ingredients, meaning that the counterfeit actually helps to create drug resistance to genuine pharmaceuticals across entire geographic regions.
“This is a prime example of where fintech can actually improve the quality of life of an entire region. In conjunction with security measures, including holographic security tape and QR codes, fintech would allow doctors and hospitals receiving shipments of pharmaceuticals to verify authenticity using only a smartphone. While it wouldn’t end the practice of counterfeiting, it would certainly steeply curb the market for counterfeiters, particularly in areas where pharmaceutical regulation is in its infancy.”
Putting vulnerable customers at the forefront
Duncan Stevens, chief executive of Gretel said, “Many financial institutions are realising they need to do more to help and support underserved communities close to home, particularly those who are classified as vulnerable. The FCA has firmly put vulnerable customers at the forefront of planning for financial companies and the vast number of people – over 27 million – who are now considered vulnerable, make it among the most pressing priorities to be addressed in financial institutions in the years ahead.
“What we have learnt is that the industry works best when collaborating. Removing obstacles to collaboration and working across all sectors of the industry to bring in new and innovative technology to be more financially inclusive is eminently achievable. Traditional financial providers and fintechs working together will achieve the best outcomes for customers in the years ahead.”
Finding a niche
Riggs Eckelberry, founder and CEO of OriginClear said, “A ‘fintech for good’ company has a greater purpose than one that is purely for profit. My company Water On Demand isn’t just lending money or assisting with transactions. As centralised water infrastructure fails, more and more businesses and communities are having to take matters into their own hands, yet they lack the capital to obtain the treatment systems they need. That’s where the idea of becoming the very first water fintech came into play. We wanted to take care of the funding and contract management—not just for us but for the water industry as a whole. This opens the door to incredible, word-changing technologies that otherwise wouldn’t be accessible to those that need them. That’s a fintech for good.”
Power of business to solve social and environmental challenges
Anthony Villis, managing director, First Wealth said, “It’s about using the power of business to solve social and environmental challenges and make the world a better place – which is easier said than done. It’s about doing good work that makes a positive impact on the community, the people you work with and the environment – and being profitable. We’re incredibly proud to be a B Corp certified company that allows us to be part of a global community that shares our core values and a clear sense of purpose that inspires, motivates, and energises us to continue to develop and do better every day.
“The world of finance has historically been the preserve of the few and I believe that the ‘fintechs for good’ out there are looking to break down these barriers and harness the power of financial technology to try and solve the global societal and environmental challenges at large that we all face.
“At First Wealth, our ambition is to democratise access to financial planning by applying 25yrs of financial services experience with new technology we are pioneering called Open Advice, that aims to make advice more affordable. Collaboration and knowledge-sharing is at the heart of this. We want to level the playing field by building tech that is available not just to us, but to other advisers across the world, so that they are armed with the right tools to launch their own digital advice services. Financial education shouldn’t be limited to the few who can most afford it. It’s why we have recently launched Thrive Money powered
by Open Advice – a financial education business and social enterprise that serves to provide free financial tips and advice aimed at a young, predominantly female, audience who have historically been over-looked and under-represented. We would love to see other businesses in our profession follow suit and employ this new technology for good.”
Working to support one of the UN’s 17 sustainable development goals
Philipp Buschmann, CEO and co-founder of AAZZUR said, “A fintech for good is a fintech that is focussed on far more than just supporting people and businesses with their financial needs. Really, they should be working in some way to support one of the UN’s 17 sustainable development goals. That means fintechs that are focussing on things like fighting climate change, reducing inequality, ending poverty, or preserving our oceans and forests.
“Fintechs are in a great position to help these causes because they often have an overview of all, or a portion of, their users’ financial footprint. They can then help them cut back or offset the spending that goes against these 17 goals or redirect it towards something more positive.”
Founders must embed the desire to do good into the culture of the DAO
Grace Kwan, co-founder of Orca said, “As the founder of a web3 protocol, “fintech for good” requires a different approach. In a traditional company, it’s up to the company’s leadership to ensure that the impact of the organisation is net positive. Even when leadership changes hands, the former leaders are often able to select successors who will carry out their legacy.
“But in the typical DAO, or decentralised autonomous organisation—the structure that most web3 protocols use to rally their community around their cause—tokens, not C-suite titles, represent control of the organisation. Any community members with enough tokens can set the direction of the DAO. This radically open form of governance is beautiful in theory, but can be frightening for a founder who sincerely wants their protocol to do good. What’s to stop a malicious actor from purchasing a majority stake, then pivoting the protocol toward selfish ends?
“Only the members’ collective conscience. Therefore, it’s up to the founders to embed the desire to do good into the culture of the DAO. This requires a community that shares similar values, so that the majority of members agree that doing good is a core part of the DAO. This way, even when certain members are tempted to move in a less altruistic direction, the majority will override that temptation.”