Developing Purpose-Driven Fintechs to Create a Better World

Discover why it's more necessary than ever to establish fintechs into purpose-driven vehicles to make the world a better place

Lady Justice

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 how 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, over 25,000 startup companies are integrating technology and finance, driven by young people with a strategic vision that goes beyond business and investment to sustainability. They aim 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 left out of the financial system. And it can help to reduce corruption and promote transparency in financial institutions.

Furthermore, fintech can make real sustainability progress while monetising positive change.

The story of Advyzon:

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.

The story of Kuda Bank:

Kuda Bank is a Nigerian fintech company that was founded in 2019. Its mission is to provide affordable and accessible banking services to all Nigerians, regardless of their income level. Nigeria has a large unbanked population, and Kuda Bank is working to change that by offering its services through a mobile app.

The fintech startup offers various services, including savings and checking accounts, loans, and bill payments. Its user-friendly mobile app allows customers to open an account in just a few minutes. Customers can also access their accounts, make transactions, and pay bills from their phones.

One of Kuda Bank’s unique features is its zero fees policy. Customers are not charged any fees for opening or maintaining an account, making transactions, or using their debit card. This makes banking more affordable for low-income Nigerians who cannot afford traditional banking fees.

Kuda Bank’s story is an excellent example of how fintech companies can use their technology to improve financial inclusion and provide affordable banking services to underserved communities. By leveraging mobile technology and innovative business models, companies like Kuda Bank make a real difference in 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
  • Reducing poverty
  • Supporting the healthcare industry
  • Enhancing the education system
  • Improving societal infrastructure
  • Combatting corruption and promoting transparency.

The future of purpose-driven fintechs

Fintech companies prioritising purpose are set to dominate the financial sector and enjoy tremendous success in the future.

By attracting the best talent, driving growth, and fostering agility and innovation, purpose-driven fintechs can positively impact the world.

According to a Pathward survey, fintech executives acknowledge the business benefits of purpose-driven organisations. 85% of respondents believe companies with a clear sense of purpose are likelier to succeed than those without, while 80% believe such companies are more innovative.

In conclusion, the future looks bright for purpose-driven fintechs, which offer numerous benefits, including attracting top talent, accelerating growth, fostering agility and innovation, and making a positive difference in the world.