The FINANCIAL — On March 13, fintech companies are making significant progress in promoting financial inclusion through innovative business models, products and use of emerging technologies such as digital identity, Internet of Things (IoT), Artificial Intelligence (AI) and machine learning, says a new report co-authored by IFC, a sister organization of the World Bank and member of the World Bank Group.
The report, Financial Inclusion in the Digital Age, was launched today during Money20/20 Asia in Singapore.
The report is co-authored by Kai Schmitz, Investment Lead for the Global FinTech Investment Group of IFC; Anju Patwardhan, Managing Director at CreditEase Fintech Investment Fund and 2016 Fulbright Fellow at Stanford University; and Kenneth Singleton, Adams Distinguished Professor of Management at Stanford Graduate School of Business.
Over two billion unbanked adults in the world, representing 38 percent of all adults globally, do not have access to basic financial services and another 57 percent have basic accounts, but do not have access to diversified investments, low-cost payments systems, core household and business insurance, or credit. Financial Inclusion in the Digital Age explores some of the central frictions that prevent greater financial inclusion and financial well-being, and associated technological innovations that are fostering creative new approaches to mitigating these frictions for individuals and small businesses globally.
The report also includes a list of 100 fintech companies globally that are supporting ‘Financial Inclusion in the Digital Age’ across four main “verticals” of impact: payments, lending and related ecosystem, savings and financial planning, and insurance. These companies are mission-driven but are also focused on providing attractive risk-adjusted returns to their investors. These companies are but one key component of an evolving financial services ecosystem. “As we evolve towards increasingly digital and open banking systems, I envision many of the companies highlighted in this report as becoming central players in bundled, more inclusive services from major bank and market-place platforms,” says Ken Singleton.
The innovations and models outlined in this report highlight different solutions to three common core problems that limit financial inclusion across countries at different stages of development and different parts of the population: access to financial services, product market fit and affordability. The report calls on concerted efforts from multiple players: entrepreneurs, regulators, investors, policymakers, large incumbents, and consumers, to sustain the efforts of the growing private sector to improve financial inclusion.
“At IFC, we are committed to expanding financial capacities of individuals and businesses. We believe one way to achieve this is through the use of technology, in particular in financial services,” says Giri Jadeja, IFC Global Head of Financial Innovation. “IFC’s FinTech strategy is to promote innovative solutions that expand financial services and help banks and other existing providers to expand their markets. This is exemplified by the companies mentioned in the report, and many others we support across the world.”
CreditEase’s Fintech Investment Fund has invested in 26 Fintech companies globally in the last two years. “In the past 11 years, CreditEase has grown from China’s first marketplace lending platform to a full-service Fintech company with a global footprint.” says Ning Tang, CEO and Founder of CreditEase and China’s Fintech pioneer. “We have innovative products across lending, savings and wealth management, and insurance verticals. As a firm believer of an innovation-driven new economy, we welcome this report that explores innovative solutions for promoting inclusive finance and we look forward to continuously contributing to this worthy cause in the next phase of our journey.”
IFC has made financial inclusion one of its top priorities, and to date, the IFC FinTech Group has invested in 38 fintech companies in emerging markets. Rana Karadsheh, IFC’s Country Manager for Singapore added, “As a leading emerging markets investor, IFC can help build a strong fintech ecosystem together with the private sector, and our presence in Singapore will help widen financial inclusion in the region. We look forward to engaging with more fintech partners in the region and globally, as we support their digital transformation and expansion to new markets.”