By Guy Kashtan, co-founder and CEO of Rewire
This is an exciting time to be in fintech. Innovation is accelerating, and new products and services are making financial services more accessible than ever before. Once complicated processes can now be completed with the swipe of a finger and open banking has put customers in the driver’s seat.
This ability to change people’s lives for the better is what puts fintech in such a unique position to have a positive, long-lasting impact on society. Yes, we’re in the business of making money – but we can do that and be purpose-driven at the same time. Private companies have a crucial role to play in shaping our lives both individually and as a society.
Building fintech with a purpose
Environmental, social and governance issues are becoming more and more important for businesses and consumers. People want to know their hard-earned cash is safe with companies that invest and operate ethically and sustainably. But these are standard ESG requirements, and fintech has the potential to make a difference way beyond these tick-boxes.
Purpose-driven organisations are establishing a foothold in many markets, following examples of well-established brands such as Ben & Jerry’s or Patagonia. And it’s exciting to see so many fintechs taking on important causes from the off, such as Wagestream, which is committed to financial wellbeing, and Treecard, which uses 80 per cent of its profits to plant trees.
When you’re building a business from scratch, you can place social purpose at its core. After all, entrepreneurship is about finding solutions to problems, and there are still many social and environmental problems that governments are failing – or at least dragging their heels – to address.
Inequality is one such problem. And it’s ubiquitous. The UN’s 10th Sustainable Development Goal is to reduce inequalities, and governments worldwide are working away, implementing programmes and incentives to drive equality within countries and across borders. And yet progress has been slow.
Enter fintech. Our industry has already made huge inroads into democratising finance, putting banking into the palm of your hand, opening up financial markets and investment opportunities, and simplifying remittances. Add to this a clear purpose – such as financial inclusion or reducing poverty – and you have a social entrepreneurship-based company with the potential to reduce inequality, make a positive impact and grow its fiscal worth at the same time.
The secret is to focus on the individual while keeping an eye on the bigger picture. Focus on the needs of each customer and make them your number one priority. Design your services around them – and do so with empathy.
Big banks have done a great job of serving huge populations, but they cannot be all things to all people. The mainstream services offered by traditional banks can’t meet the unique needs of minorities such as migrants. That’s one of the reasons why we have marginalised groups who are still, today, underbanked. Some of these minorities have also been excluded because they lack the financial knowledge needed to make use of the services that are available.
Opportunities exist to niche down. This is why we are seeing the emergence of more and more vertical neobanks and specialist financial services providers, who are filling in this gap and delivering increasingly tailored solutions to meet the needs of all customers. Financial services have been set up to serve freelancers, the LGBTQ+ community, people with disabilities and teens, as well as many other underserved markets.
At Rewire, we aim to serve migrants from developing countries who find themselves managing finances in more than one country – the one they originally come from and the one in which they currently reside. We make cross-border financial services accessible to them and assist with financial literacy. Our purpose is to promote financial inclusion, and to do that, we need to run a successful business. In other words, our success is based on a double bottom line.
The double bottom line
The concept of a double bottom line was developed at Harvard Business School by Jed Emerson. As well as financial growth, businesses measure performance in terms of their positive social impact. Two great examples of companies doing this are TOMS, which donates shoes and other goods for every product sold, and MicroGen Biotech, which aims to reduce heavy metals in crops.
These businesses have taken on a social responsibility, and their success is aligned with the positive impact they have on the world. Of course, they are developing tools and products that are profitable, but their focus is equally divided between profitability and positive social impact. And they are certainly not in it to tick a corporate social responsibility box. They’re committed to a cause that’s important to them, because it’s the right thing to do.
Make it count
The task of reducing inequalities worldwide is undoubtedly the responsibility of the political system. But private sector companies can play a critical role in accelerating change and disrupting the status quo.
Fintechs are in a unique position to be able to drive a more equal society, level access to financial products and services and, perhaps most importantly, educate people on better financial management, so they can start to build a better future for themselves and their families.
The key is to focus on better serving those that have been underbanked. Create products and services that make their lives better, but above all, do it with humanity.