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.\
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 Softlab360, CRIF, Papara, Crown Agents Bank, Creditspring, Singlife with Aviva and axio.
Interest in innovation
Opening our conversation, Henry Zelikovsky, CEO of the software engineering company Softlab360, defines the key characteristics that set the best companies apart from the rest
“‘Fintech for good’ – a curious phrase. It immediately prompts a few questions – how is fintech good? Who is it good for? And, good to? Fintech in its essence provides significant improvements in speed, quality of financial transactions, and broader access to financial services to anyone, at any age,” Zelikovsky explains.
“New capabilities in technology and new capacity in digital communications spawned greater innovation in the fintech industry. Innovation brought about new interest and support in investment for technologies enabling reusable energy, protection of natural resources and faster and more direct access to funds to enhance the standard of living in developing countries.
“Companies that channel their strategies towards developing technologies providing these capabilities, that focus on raising investment options, on facilitating investments, on evaluation and projection tools against investment risks are in the forefront of doing good for investors and for consumers.
“Companies that focus on enabling consumers with more efficient, more expedient means of paying for services empower companies that provide services to continue doing good. ‘Fintech for good’ has become a digital signature of these companies. It sets them apart.”
Open banking insight
While continuing from the comments of Zelikovsky, Sara Costantini, regional director for the UK and Ireland at the credit bureau company CRIF, homes in not only on the definition of fintech for good, but also the specific technologies that are leading the industry forward in this way.
“Like any organisation with a strong sense of purpose, what sets a ‘fintech for good’ apart from the rest is a mission, and its willingness to stick to that mission, to harness tech to improve things for individuals, businesses, society and the environment,” Costantini comments. “At CRIF we are focused on furthering financial inclusion, ensuring people and businesses can access appropriate financial solutions with ease – particularly those typically underserved.
“In the current economic climate, it’s more vital than ever that we live up to this role and support individuals and businesses to access affordable, responsible financial products and credit solutions which can help them weather this challenging time. Sadly, however, recent research shows that one in five people in the UK are locked out of the mainstream financial system, with many pushed into using higher-interest credit because other financial products aren’t available to them – for example, because they have poor or thin credit histories.
“In addressing this issue, fintech has been proven to be a positive force in society. Specifically, open banking allows lenders to securely connect to a consumers’ current account and access real-time, in-depth information about a consumers’ financial situation.
“With this financial data, organisations such as CRIF can provide additional analysis to profile financial health and determine creditworthiness. With an accurate picture of finances, a whole world of opportunities is opened as providers can offer people tailored products and services on a much wider basis, while ensuring lending remains responsible and low-risk.
“At CRIF, we have found that by staying true to our mission of driving financial inclusion for all, leveraging on open banking, we can empower industry players to better support those previously underserved by the financial system.”
Recognising financial divides
Urging fintechs to place purpose over profit, Ahmed F. Karslı, founder and chairman of the fintech company Papara, emphasises how ‘fintech for good’ must exist within every facet of a company in order for it to deliver meaningful and long-lasting change.
Karslı explains: “It sounds obvious to say, but the pursuit of creating genuine, meaningful change over profit needs to be at the heart of any ‘fintech for good’ company. Often, I take a look at businesses, not just fintechs, that are launching marketing campaigns talking about how they are helping underdeveloped communities or solving critical societal issues and it feels ingenuine. Creating positive change isn’t something that’s simply a tick-box exercise, it’s something that needs to be at the very centre of your business, your driving force and everyone in the business needs to be behind it – otherwise, the chance of success becomes too slim to overcome.
“Taking Papara as an example, whenever we develop a new product or offering, sign a new partnership or create a new piece of content, we ask ourselves ‘how does this actually help underserved or unbanked communities?’, if it doesn’t, we don’t proceed. Talking to customers also massively helps with this, often those in the tech world get lost in their own echo-chambers and think that they’re onto a great idea, but in reality, it’s something that customers don’t want or wouldn’t use.
“Another important element to look at is those that you surround yourself with – i.e. your partners and investors. It’s all well and good creating meaningful societal change as a business, but if you’re backed by those who have differing viewpoints and are facilitating wider economic and financial divides, then you’re misaligned with your own mission.”
Truly transformative services
Here Nkosi Moyo, head of global payments and mobile sales, and Duarte Pedreira, head of international development client coverage at Crown Agents Bank, analyse how the building pressure from investors is pushing fintech companies towards more sustainable, tangible outcomes of good.
“Fintech, at its core, is technology which enhances financial services. It facilitates opportunities for innovation and creates new channels to deliver financial services and products. However, fintech for good is about harnessing the power of this technology to provide end-users, partners and other stakeholders with sustainable and truly transformative services that address key challenges within the financial landscape, such as financial inclusion.
“What sets a ‘fintech for good’ company apart from the rest is not just an intent to actively and sustainably address the biggest challenges in finance, but the ability to demonstrate positive impact. Plenty of fintechs purport to be ‘good’ but only a few can provide real-world examples of that good in action.”
Pedreira and Moyo go on to describe the role of international investment in fintech becoming a force for good: “One key factor at play here is how fintech has become a particularly attractive investment opportunity, with total funds of $210billion being invested globally in 2021, and $37.3billion in the UK alone. As a result, fintechs face pressure from investors to ensure they are either making strides towards profitability or remaining profitable to ensure a substantial return for the venture capitalists. This means that ‘fintechs for good’ must balance serving their customers ethically while meeting their own commercial and business goals. And the two often do not sit easily together.
“Equally, ‘fintech for good’ companies are paying close attention to the latest regulatory shifts and ensuring they comply whilst meeting their own business goals, at the same time as ensuring their clients receive true, educated financial inclusion.
“Fintechs are facing pressure from multiple angles – whether that’s from investors or regulators, or the responsibility to ensure their services are truly addressing their customers’ needs. Amid these pressures, a ‘fintech for good’ is one that shows resilience in difficult times, staying true to its purpose, vision and mission.”
The lending perspective
Neil Kadagathur, CEO and co-founder of responsible lender Creditspring, provides a fascinating view of what fintech for good means to the lending industry.
“In its most basic form, a ‘fintech for good’ is one that views the wellbeing of its customers as equally as important – if not more so – than its own commercial gain. These are organisations that identify a problem and dedicate resources to building innovative solutions designed to solve it,” Kadagathur explains.
“Take the lending sector, for example. Historically, lenders have been perceived with scepticism and mistrust by UK consumers – four in ten (43 per cent) people believe lenders encourage them to take out more money than they can afford and fewer than one in five (17 per cent) see lenders as responsible businesses that care about their financial wellbeing.
“There is a significant opportunity for fintech to disrupt the status quo here. Using new technology – open banking in particular – they can take a different, fairer and more responsible approach to measure affordability and in doing so, build services that cater to a wider range of people, including those with thin credit files who may struggle to access mainstream credit.”
A unified proposition
Varun Mittal, head of digital and ecosystems at Singlife with Aviva, describes the relationship between innovation and social responsibility in achieving fintech for good.
Mittal tells us: “Fintech is paving the way forward in product innovation in today’s world and is quickly becoming the norm in the financial services sector. A ‘fintech for good’ company would be one that realises the need for technological innovation, while simultaneously focusing on its social responsibility, sustainability and financial inclusion efforts, and is actively creating value propositions around these core values.
“As a homegrown financial institution, Singlife with Aviva has recently launched a cross-industry collaboration, A Better Odyssey, which will help start-ups and SMEs in Singapore to digitalise and scale their operations. It is the first open architecture programme by an insurance company in Singapore, helping to provide a one-stop shop for local SMEs to access a wide range of solutions, including business management, operations and payments. With digital transformation continuing to define today’s world and digital systems becoming more complex and fragmented, it has become increasingly important to establish a unified proposition that can help emerging businesses find a better way to grow and for the industry support them in addressing their pain points.
“Singlife was recently recognised as an official signatory of the United Nations’ Principles for Sustainable Insurance, only the second insurance company in the region to achieve this. The trend of more businesses adopting ‘fintech for good’ does not manifest in any one segment but across the various product propositions. For instance, wealthtechs and lending start-ups have found innovative ways to identify potential customers and improve financial literacy amongst all demographics. The applications today have now gone beyond their core service to introduce educational aspects for their user base to cultivate a strong foundation of financial awareness.”
Good to the core
Concluding our discussion, Sashank Rishyasringa, founder and CEO of the Indian digital consumer finance platform axio, reminds the fintech industry that being a force for good begins and ends at the core of your business.
“For me, it always comes back to a business’ founding purpose and reason to be. In order to truly be a ‘fintech for good’, helping people, especially those who have been overlooked by traditional financial systems, has to be at the very core of what you do and what you stand for,” comments Rishyasringa.
“Being a fintech for good is about deploying technology to solve the problems created by outdated systems and committing to do things better. This, in turn, should also mean making more people’s lives better.
“Looking back to 2013 when I first started, I can genuinely say that, while the products and services axio offers have evolved, our core mission of making credit worthy through technology has remained the same. The business has grown remarkably, however, we’ve remained focused on that mission, and to me, any business that classifies itself as a ‘fintech for good’ must be able to show that all the decisions they’ve made have been in the interest of creating a better financial ecosystem.
“Underneath all the marketing jargon and flashy campaigns, is the business having a truly positive impact on people’s lives? Is it really helping those who are in need? Fintech, at its core, is about disruption with the purpose of doing things better.
“There’s clearly a greater role for fintechs to play in ensuring that people from all backgrounds, no matter their situation, feel included and can take advantage of this innovation.”