Philanthropy 2.0 – FinTech, the responsible inclusion revolution

{mosads}This dynamic shift in investment and participatory interest is captivating, especially against the backdrop of many more traditional banking institutions presently going through an existential predicament of sorts, one often associated with a lack of innovation, a conservative nature and opaque infrastructure. Indeed these institutions are seen as in need of clear and present philanthropy or a tangible methodology of giving back.

And this shift permeates from the industry of finance to the business of giving back; to philanthropy itself.

Policy-makers, economists and global authorities on the subject have begun espousing a new school of thought regarding public or private charitable organizations and their ability to affect lasting change. Unfortunately and all too often, funds from these enterprises set to be relegated to pertinent issues such as the alleviation of extreme poverty, gender empowerment and financial illiteracy (as but examples) are not efficiently reaching their target communities in practice.

This deficit in accountability and social impact occurs for reasons that vary, but nonetheless stirs controversy and perpetuates these global problems.

And while leading banking institutions and such charitable enterprises look to shift gears and re-evaluate approaches in their service offering, the revolution goes on. Recent analytics indicate that FinTech companies are estimated to capture 17 percent of banking revenues by 2023; this is not-coincidentally happening at a time when American and European banks are cutting back on the number of physical branches that they offer. Approximately six out of ten long-established institutions have stated that they are interested in partnering with a FinTech provider, on a collaborative basis or through acquisition.

The rationale for this dramatic shift is simple, compelling and one in which we speak from experience  – you can be successful in business while also tangibly transforming lives. And while FinTech’s deployment across Africa, for example, is an offering attractive to international partnerships, the service is also and more importantly, a CSR exercise in and of itself, if undertaken responsibly.

In Africa for example, FinTech provides empowerment, equality and ‘a fighting chance’ through financial inclusion, while allowing Opportunity International, its FinTech partner MyBucks, and others, to develop in reach and scale.

And the needs are inherent – Research published by McKinsey shows that approximately 2 and a half billion adults worldwide don’t use formal banks or semiformal microfinance institutions to save or borrow money. Almost 2.2 billion of these adults are in Africa, with many disillusioned as excluded by the traditional financial system and as they are unable to contribute to or benefit from the global financial marketplace due to lack of sheer access.

Yet a good majority of these individuals, both affluent and poverty-stricken alike, are still able to take advantage of technology’s global penetration and actively dialogue via social media or SMS text in their daily lives. And, with the arrival of solar-powered Wi-Fi hotspots and government or private sector-backed e-libraries bringing greater connectivity, more and more prospective FinTech consumers are coming online.

However, many users believe that they would still not be able to benefit from Financial Technology, as they have never banked before. Fortunately, cutting-edge Artificial Intelligence (A.I.) is correcting this, allowing them to ‘start from scratch’. Credit is granted through A.I. procedures that provide detailed background analysis, offering the prospect of building up loan capital incrementally. This service is an endeavor backed by technology yet wholly rooted in goodwill.

Certain traditional banks and social enterprises alike have led by example and taken notice of FinTech’s development and deployment, acknowledging the multifaceted pros and limited cons to integrating with providers. They are also attracted to a system that offers a built-in marketplace due to the budding advent and vast dissemination of ‘Big Data’ and its intrinsic philanthropy. These FinTech endeavors provide access to a diverse customer base one cannot always cater to ‘on the surface’ – however, these are millions of families, small businesses and rural communities across the continent and each ready to contribute to the global financial sector.

Indeed financial transformation in Africa can come without fine print or ‘customer’ exclusion. The unbanked and under-banked, long denied today near-fundamental admission to financial autonomy, now have tangible and lasting opportunities via technology, including real-time loans, the provision of insurance and virtual bank accounts, as pilot examples.