Biz Tips: Finance Starts Having a Heart: How Fintech Fosters Financial Inclusion and the SDGs

Biz Tips: Finance Starts Having a Heart: How Fintech Fosters Financial Inclusion and the SDGs

Biz Tip:

Finance Starts Having a Heart: How Fintech Fosters Financial Inclusion and the SDGs

Finance acquires a heart. Fintech companies innovate financial services with empathy and sustainability in mind. Financial inclusion can become a reality. The finance digitization flight continues, exciting and much-promising.

Photo by Tim Mossholder on Unsplash

A heartless, money-making machine — this is how a traditional banking system has been portrayed through the decades. Hidden fees, credit denials based on racial identity, refusals of an insurance claim to female entrepreneurs, restricted access to financial services for seniors… Themes of racial, gender and age injustice were common for a traditional financial system since its inception. Social values and problems were mainly ignored. Have things changed since then?

The try to make a change is now going on. Fintech companies all over the world contribute a lot to it. Financial technology helps debunk the myth that a for-profit financial company cannot have a social impact as a key priority and objective. Heartless and chaotic finance becomes more empathic. Fintech innovations born amid economic crises and social movements aim to make financial services more inclusive, accessible and affordable for different segments of society.

Fintech Enables Financial Inclusion

Historically, financial institutions were trying to sell services to economically active social classes, missing the financial needs of people with a lower income level. Over time, banking has become accessible for a greater swath of society. However, financial exclusion still is present and obvious today, gradually varying from country to country. To say that traditional banks have done nothing to fight this problem would be unfair. Age-friendly programs, microfinance initiatives, in-branch assistance and overall customer experience significantly evolved in recent years. However, it appeared not enough to progress financial inclusion on a larger scale.

At the intersection of financial issues and technological disruptions, fintech emerged as a path to next-gen finance: more inclusive, accessible, and sustainable. It has gained unstoppable momentum amid social distancing during the COVID-19 lockdown when people and businesses have started adopting digitization more actively. Cashless operations and digital banking have become preferred and often the only options during stay-at-home life. The digital economy exponentially evolves and requires us to rapidly learn to benefit from technologies, particularly from those in financial services.

How Fintech Helps Reach The UN Sustainable Development Goals

First of all, what are those 17 Sustainable Development Goals? Many may be thinking that SDGs are about climate change. However, they are more inclusive and refer to societal and economic benefits as well. The SDGs targets the following areas:

  • Overcome poverty and hunger
  • Reach gender and racial equality
  • Foster equal opportunities for education
  • Provide access to clean water and sustainable energy
  • Decrease social inequality locally and between countries
  • Ensure access to inclusive institutions in different industries
  • Take immediate action toward environmental protection
  • Nurture innovations and create a resilient infrastructure.

Let’s now consider financial technology in action. These six innovative fintech startups and initiatives offer solutions and products that significantly contribute to achieving the UN Sustainable Development Goals.

Hennii fosters financial inclusion using conversational AI

Hennii is a fintech startup that created a personal financial assistant with conversation AI. It’s a self-driving personal financial management app designed to help people achieve financial inclusion and empower everyone to build wealth and financial independence. What’s most amazing about Hennii is that its AI-powered coach provides financial advice based on the user’s spending habits, budget and financial goals. Hennii’s primary goals are to empower Gen Z and Millennials to overcome a student loan crisis, pay off credit card debt, build financial security and increase financial literacy.

Alipay provides trade credits to small businesses

Another fintech example is Alipay, a Chinese mobile and online payment platform. In order to support small businesses in China, the company has provided credit to vendors operating on Alibaba. The company does this by gathering data from vendors’ transactions on online platforms like Taoboa, a Chinese e-commerce website.

Ant Forest created financial gaming to stop deforestation

Ant Forest is the green fintech mini-project within Alipay app oriented at environmental protection and tree-planting. Its main idea lies in rewarding users with “green energy points” each time they take a step to decrease their carbon emissions (for example, by biking to the office or going paperless). Later, these points grow into a virtual tree, which Alipay matches by planting a real tree partnering with local NGOs.

Building Blocks (BB) distributes humanitarian cash using Blockchain

Building Blocks (BB) is a World Bank Food Programme designed to distribute humanitarian assistance to around 28 million people in 64 countries using blockchain technology. This fintech initiative contributes to reaching the first and second SDGs to overcome poverty and hunger.

Wise offers low-cost digital money transfers to encourage economic growth

Wise, formerly TransferWise, offers low-cost digital payments and the opportunity to store funds online. By reducing fees for money transfers, the company tries to encourage everyone’s financial growth. The Communications and Multimedia Minister in Malaysia Gobind Sign Deo praised Wise for supporting Malaysia’s economy and contributing to reaching financial inclusion.

CarbonChain helps companies reduce carbon emissions

CarbonChain is a fintech startup that provides carbon accounting products and creates openings for industries to access green financing. The company measures the carbon footprints of organizations’ trade finance portfolio to detect transactions which create the highest risk in terms of increasing carbon costs.

The Road Ahead

Fintech innovation is based on an ambitious idea to combine technology with financial services to reinvent the financial industry with a human focus. It is a relatively new field that actively evolves and promises significant changes in finance. Today, many fintech startups deliver on a mission to make financial services more inclusive and accessible for millions of people that have been underserved financially to date. This transition to the next-gen finance just started, but it has a big potential, and we expect it to blossom soon.

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