Financial Inclusion is the first step
Recent reports estimate that 2bn (including 6.5% of the US population) adults continue to live without a bank account. Even more are regularly denied access to ancillary services such as loan credit and financial planning advice. These services are more than merely convenient: they allow us to absorb unexpected losses, save for the future, and be financially mobile.
The unfortunate truth, then, is that far too many people remain in poverty through lack of access to the basic financial tools that many of us take for granted.
The future of Fintech
2016 saw a total of $36bn invested in Fintech startups, with regular participation from Tier 1 banking institutions. While this Fintech boom - fuelled by disruptive innovations in mobile and Blockchain technology - continues to overwhelmingly benefit select demographics and geographies, many have been attracted to the social and financial opportunities presented by a forgotten Fintech sub-sector.
Following in M-pesa's footsteps
The rise of Vodafone’s mobile banking solution M-pesa is a perfect case study in how technology can deliver economic empowerment. The start of this year marked the service's 10th anniversary, at which point it counted 29.5m active users who completed 614m transactions through 2016.
But beyond being an incredibly successful business, recent reports estimate that the service has lifted a staggering 194,000 Kenyan households out of extreme poverty, with positive side effects including increased financial stability, and decreased corruption.
It's therefore no surprise to see the world's brightest minds being increasingly drawn to the economic empowerment movement.
So, let's take a moment to showcase 8 of the leading startups that are using technology innovation to champion financial inclusion:
Abra connects users with local, physical ‘tellers’ in order to enable mobile cash transfers. Users convert cash into bitcoin at the point of sale, and use the blockchain infrastructure to securely transfer to other users. With investment from American Express Ventures, and a growing userbase in the Philippines, the startup provides growing flexibility and security in what is largely a cash economy. The potential impact could see many bypass the traditional banking infrastructure altogether.
Branch founder Matt Flannery looked at the worryingly intimate consumer data telecoms capture, and democratised it to empower users. With access to users telecoms data, including GPS data, or call & SMS logs, Branch provides credit to those without a traceable credit history. Their mission is to support emerging markets, by helping users access credit between $2.50 - $500, which can be paid back over a 2 week - 1 year period.
Humaniq uses biometric ID technology (facial and voice recognition) to replace lengthy verification processes around banking access. This could make the experience more inclusive for those without full documentation, and people with low literacy. The short-term aim is to increase access to core banking services, with long term ambitions to facilitate access to insurance, small business loans, and pensions. Their Alpha launched earlier this month.
In a direct response to the refugee crisis, Taqanu is on a mission to mitigate the challenges around standard documentation, fixed addresses, and residency. Using blockchain technology, the service is able to securely authenticate people and use a digital identity to onboard them into a holistic banking solution. This could allow refugees to maintain financial autonomy, and achieve some level of stability, in an increasingly volatile macro environment.
Amply, one of the first 5 companies to receive seed investment from UNICEF's new innovation fund, combines mobile and blockchain technology to give children a digital identity. This ensures governmental accountability in providing children with the services they are entitled to, whether financial, educational, or social. They are currently live in South Africa, where real-time personal profile data is used to guarantee subsidised pre-school education.
Wisebanyan touting itself as the “World’s First Free Financial Advisor”, wants to assist everyone in reaching their financial goals, regardless of economic situation. The service is directly targeting a sector that has, to date, been prohibitively expensive to access; instead providing minimum requirements of $1 account balance, and annual management fees of 0%. The robo-advisor service has promising potential to deliver long term economic empowerment to those unable to participate in the financial markets.
Socure uses complex data science to deliver identity verification for unbanked, underbanked and thin-file customers, such as those in developing regions. The approach combines online user profile information scraping with sophisticated machine learning, so that users are able to securely access online financial services that deliver economic empowerment. Proven to increase consumer online trust by over 35%, the service could be effective in addressing those who remain unbanked due to lack of financial education.
The Aire service leverages machine learning that emulates human intelligence, in order to generate credit scores. Authorised by the FCA last October, it now acts alongside the “big three” bureaus in the credit scoring sector. Aire.io could providing invaluable support to those seeking economic empowerment: particularly to young adults, the self-employed, and immigrants who are unable to provide traceable documents that can prove identity and credit history.
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Originally published on 10 April 2017