What would the world be like without financial technology? Most likely, it would be a much more complicated place to live.
The modern world would feel almost dystopian, having to deal with coins and notes to buy the simplest of things without the option to buy anything online.
Fintech has revolutionised the way people do business, make payments, and manage their finances.
No question fintechs also have the power to significantly impact the world, improving efficiency and bringing more people into the financial system. But what if these fintechs could do more? What if they could also help to create a better world and society?
This article explores the importance of developing purpose-driven fintechs and how they can make a real difference in the world.
Using fintech to create a better world
There are numerous examples of how fintech can be used to create a better world. For instance, mobile money has been incredibly successful in emergent nations, where it has helped reduce poverty and improve financial inclusion.
According to Chris Skinner, a seasoned fintech expert, “Over the past decade, there has been a major change where technology has reshaped finance. Within that, there are over 25,000 start-up companies integrating technology and finance, driven by young people with a strategic vision that goes beyond business and investment to sustainability. Their aim is to improve society and the Earth we live upon.”
“This is not just about ESG, but more around how to deliver returns to stakeholders and not just returns to shareholders. It has a higher level and a higher purpose. The result is purpose-driven finance, driven by technology, to create a better society and a better planet.”
This notion is a powerful example of how fintech can be used to make a real difference in the world beyond the ESG criteria. By focusing on social good, fintechs can improve people’s lives worldwide.
Disrupting the status quo to make a positive change
There is no way to change the world without disrupting the status quo. And that’s what fintech is good at – it’s disruptive by nature. It can potentially upset the traditional financial order and help to overcome essential issues.
It can also help to level the playing field for people who have been left out of the financial system. And it can help to reduce corruption and promote transparency in financial institutions.
As an example, John Mackowiak, Advyzon‘s Chief Business Development Officer, shared his company’s story of being a successful disruptor:
“Some industries are ripe for disruption – taxi cabs, for example. In our little corner of fintech, disruption has been a bit more difficult, as our clients depend on Advyzon as the backbone of their businesses. In our early years, the main hurdle to overcome was proving that the technology worked as advertised. Thousands of calculations taking place behind the scenes, and one bug could throw results off considerably. If a financial advisor is putting numbers in front of an investor, accuracy is a must.”
“As we’ve grown, we’ve continued to disrupt by listening to our clients, learning where we can improve, and continually enhancing down to the smallest detail. Put simply; our mindset is that both our product and our service must set the standard in our industry. As we look forward, the foundation that we’ve built will enable us to continue to add features and services that truly enhance the daily workflow of the financial advisors we’re privileged to work with.”
Advyzon’s story is a perfect example of how fintech can be used to disrupt the status quo and improve people’s lives.
Fintech can also be used to tackle societal problems, such as crime
Although financial technology is like a double-edged sword in that it can be used to solve societal problems or create them, it is more often than not the former. Take for instance, crime.
“Money laundering crimes have surged in parallel with the increase of cryptocurrencies and decentralised finance. And money laundering is fueling heinous crimes including human trafficking, the narcotics trade and much more,” said Andrea Vucetich, Senior Product Manager, AyasdiAI. “Financial institutions and regulators can’t turn a blind eye – and this has made the ‘Social’ portion of ESG a bigger challenge and bigger obligation.”
Numerous fintech startups are working hard to tackle the issue of crime. For example, most cryptocurrencies are designed to be translucent, where every transaction is recorded on a public ledger. This paper trail makes it more difficult for criminals to conduct illegal activities using cryptocurrencies when compared with cash.
“There are steps being taken towards mitigating the crime occurring via DeFi transactions, but as with almost all financial regulation, it’s always going to be at least a few steps behind what the criminals are currently doing,” added Vucetich. “While new technologies like DeFi bring a lot of potential and opportunity, fintech professionals also must not lose sight of their social obligation in helping ensure these solutions aren’t also enabling terrible crimes. Adopting AML and KYC strategies is a key first step to mitigation.”
Startups such as Jumio are also working on solutions to prevent credit card fraud. Their technology uses facial recognition software to verify a person’s identity making the purchase.
Using financial technology to tackle crime is just one example of how fintech companies can use them to impact society in a positive way. Other ways fintech can be used to create a better world include:
Promoting financial inclusion
Tackling climate change
Supporting the healthcare industry
Enhancing the education system
Improving societal infrastructure
Combatting corruption and promoting transparency.
The future of purpose-driven fintechs
Purpose-driven financial technology companies will have the most success in the future. Poised to become the new financial sector and with billions of dollars in funding, fintechs have the potential to change the world for the better.
In conclusion, the potential for impact is enormous, and the opportunities are endless. With the right approach, fintech can be used to create a better world for more people.