A Solution for Inclusion..
I was always of the opinion that every single one of us should try to make a difference with whatever means available. Give back to your community, help your neighbor and progress is inevitable via a win win model.
We are well aware of the way that our society is built and the way money goes around and we have all witnessed what happens during a credit bubble or when a banking institution collapses. Banking institutions provide credit in a conservative way, in an effort to turn the risk — return interplay to their favour. Banking institutions operate like every other business. They work towards risk mitigation and profit maximization, because at the end of the day what matters most is the increase in their shareholders’ value.
The outcome of the practice described above refers to many society groups being excluded from the game. Young people are a major portion of the excluded, given the fact that they did not have the chance to provide enough data that could determine their credit-worthiness for a financial institution. The excluded youngsters, mostly millennials, could be entrepreneurs or university students, to name a few categories. Considering the entire world, it is worth to notice that a significant portion of the population does not possess a bank account, a fact that signifies immediate exclusion from the financial system, as we know it up until today.
So the problem is obvious and it refers to financial exclusion with major social implications for the affected social groups. In my view it is unacceptable for our society, that has made so many steps towards evolution in so many fields in life, to not have found “a solution for inclusion”.
In any case and in order for my introduction to make sense, I believe very much in fintech’s work towards financial inclusion. The way that this new type of companies disrupts banking should be capitalized in order to assist fellow social groups to get a hold and make good use of financial products.
The fintech offerings up to now are very promising. Crowdfunding (Indiegogo, Kickstarter) disrupted the way we can fund and promote an idea that is still on paper. Peer-to-peer lending platforms enabled loan provision without the involvement of financial institutions. Student loan refinancing was another useful application and refers to a total market of $1 trillion debt. M-Pesa enabled mobile phone-based money transfer, financing and micro-financing services and provided significant assistance to underbanked parts of the world. Microfinancing applications initiated access to finance for entrepreneurs or small businesses that were excluded from the banking system and even awarded a Nobel prize to its creator. These are only some of the available fintech solutions with positive social impact. There is still much room for evolution in the fintech field and the constantly growing capital invested there confirms it.
I believe that fintech players should have in mind the power invested in them by the nature of their business. And we all, as part of fintech industry, should work within a context of helping our fellow-citizens by including them in our offerings. Taking advantage of technological advances in order to create a more financially inclusive society should be one of top priorities for fintech industry going forward.