THE FINTECH MAGAZINE: How – and how far – has fintech extended financial inclusion for the unbanked people of the world over the last few years? EDWIN CHONG: One way that technology has tremendously helped is by lowering cost, so that more people could be reached. Another way it has played a role is with data – providing access to alternative types of data and ways to analyse it, which allows you to evaluate different financial situations and include them in the mainstream financial system. So, people could be offered loans based on their use of mobile phone data or their contact list. These digital footprints are also valid ways of evaluating someone’s situation. DIANE BROCKLEBANK: Fintech is about flexibility, scalability, and bringing solutions to markets very quickly; fintechs are unencumbered by legacy systems, which has been an enormous driver in helping to bring the financially excluded into the financial system. DAVID POPE: Fintechs solve problems that mainstream financial services weren’t even aware existed and hence weren’t catering for. Fintechs isolate a problem, then develop and build features to solve that problem. That’s particularly true in the emoney and prepaid space for financial inclusion.
TFM: And it’s not just individuals, is it? Even some sectors are underserved? EC: Apart from foreign nationals living in the UK, there are high-risk industries, such as crypto, gambling, or CBD [medicinal use of the cannabis plant] that tend to be shunned by traditional banks. They are eager to find solutions that let them move money normally. They could be a completely legitimate business but just because of the industry they’re in, everyone looks at them suspiciously. These are people who don’t fit standard credit assessments or usage patterns and, because of that, they miss out on opportunities. In general, at Muniy we’d like to get more people into the economy. By getting an account to people who primarily use cash, we can help them start establishing their digital footprint. And, once that happens, it’ll allow us to get a fairer picture of their situation and a credit record, so that they can take advantage of other services like loans, financial products or a better user experience.
TFM: Much of the problem stems from people not having traditional forms of ID that allow for the normal know-yourcustomer and anti-money laundering checks. How can that be addressed? DP: HooYu verifies customers in a way that a traditional approach TFM: It’s difficult to believe that there can’t. The old method of checking a are people who are still unbanked, database to confirm a name, address, even in a mature fintech market like date of birth, etc, is no longer the defence that of the UK. Who are these people? it used to be against fraud, and it also doesn’t work for everybody. It actually DB: There are lots of socioeconomic creates financial exclusion. HooYu is and cultural reasons why people are designed to verify the identity of anybody, unbanked. Many are left out because of the from any country, no matter design of financial products. Fintechs solve where they are, no matter what These are people who may problems that kind of ID document they’re have been discriminated mainstream financial using, and we make that against, may be marginalised services weren’t process easy for them. Let’s or belong to some very even aware existed suppose you’re Polish and vulnerable consumer groups, you’re in London, applying for and may not have the ID to David Pope, an account with a company open a bank account. They HooYu that’s using HooYu. It will may be temporary or migrant automatically detect the settings on your workers, or they could be people who device and serve you the HooYu user don’t have access to the technology, interface (UI) in the language you’re using. such as a smartphone. A lot of people We’ve also been doing a lot of work on who live on the periphery of society are in accessibility and we’re about to release a dire straits; they rely on very informal ways new UI that offers screen readers that of banking, like doorstep lenders, putting read out relevant parts of a screen to help cash under the mattress and borrowing users through a process without confusing from friends and family.
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them, and, for those unable to use the mouse, take them from start to finish by tabbing through each field. TFM: How can prepaid technology help to transfer some of the unbanked or cash sectors to digital? DB: Prepaid technology is an enormous fintech enabler. It allows fintechs to bring new solutions to market, very, very quickly. Use cases vary – from traditional travel money products to products that are designed for students going on their gap years, to offering an alternative to a business bank account . We’re seeing a lot of growth in this area, especially with very small businesses, freelancers and sole traders. In the context of COVID-19, it’s allowed companies that were formerly relying on cash to rapidly digitise their payments. Also, in the charity sector, we have members that have been working with charities, right through the pandemic, to bring their products onto a prepaid solution. So prepaid is not only about serving the underbanked. In the context of financial inclusion, there’s an enormous opportunity for fintechs to leverage that technology. TFM: What can the financially underserved expect once they join the digital mainstream? EC: I think that will lead us past thinking in terms of ‘OK, we made you a wheelchair that can climb stairs’, to ‘forget about stairs – here’s an elevator’. The future is more about meeting people where they are in their daily interactions, and figuring out how to be there to help them. DP: As the high streets become a less attractive place to go, the elderly generation who are digitally underbanked, will not only be using digital financial services, but a broader range of them. DB: The pandemic has accelerated the shift to digital and there’s a huge opportunity for fintech to now tailor products and services for a generation that have suddenly become digitally savvy. My mum, who refused to go near online banking, now wants a smartphone and online banking! If we look at some of the products out there for small businesses, too, where it’s not just about a means of payment, but a suite of other things that can be brought in to help them manage their business more effectively. Issue 17 | TheFintechMagazine
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