Digital payments: An "on ramp" to financial inclusion

We sat down with Marianne Mwaniki, Global Head of Social Impact at Visa Inc., to learn more about the global payments provider’s efforts to support financial inclusion.

 

What drove Visa’s desire to create a global competition focused on early-stage fintechs?

Fintech companies are building products that are fundamentally changing the way people use, understand, and benefit from financial services. Yet, for a number of reasons, many high-potential startups – particularly those committed to financial inclusion – are unable to attract the investment and knowledge required to scale their businesses and reach more customers. After sitting down with our friends at MetLife Foundation, Accion, and IFC, we saw a clear opportunity to draw attention to the fintechs that might be flying under the radar because they’re not yet well-connected to existing investor networks. Ultimately, the Inclusive Fintech 50 competition can generate greater awareness of fintech as a major pathway to financial inclusion and more sustainable, inclusive economies.

 

What makes fintechs different from traditional financial services providers?

Well, for one, fintechs do not have legacy systems which gives them the freedom and ability to better address the needs of underserved segments and adapt to changing behaviors and expectations. The near ubiquity of mobile phones along with other advancements in technology and alternative data have made it possible to reach and serve populations that were previously seen as either too costly, too risky, or both.  

Additionally, as with many technology startups, a hyper-focus on the customer is ingrained from the earliest stages of the product development cycle, which can result in significant value creation for customers and a strong product-market fit. In many ways, fintechs are able to start from a blank slate – they’re less constrained than some of their counterparts. But that doesn’t mean that traditional providers can’t develop their own solutions or partner with fintechs, quite the opposite. In fact, we’re hoping our efforts to demonstrate the unique value created by early-stage fintechs encourages more traditional financial service providers to identify potential fintech partners to expand their reach and product offering. After all, with nearly 2 billion people still unbanked, this isn’t a zero-sum game.

 

Why is Visa, itself a digital payments provider, working to spotlight early-stage fintechs?

The migration to digital financial services improves the lives of individuals, supports stronger businesses and spurs economic progress and prosperity, all of which align with Visa’s social impact goals. In fact, Moody’s reported that digital payments add $983 billion in global economic growth every five years.

Because of our global network, our experience, and technical knowledge, Visa is in a position to ensure that everyone can use financial products and services to meet their everyday needs and long-term goals. And with fintechs so often leading the way in pioneering new products, services and delivery innovations for underserved consumers and businesses, it’s natural for Visa to look at how we can partner. It all leads back to our corporate mission to enable individuals, business and economies to thrive.

 

How does the digitization of financial services more broadly offer new pathways to reducing the number of financially underserved individuals and businesses?

Fintechs are testing and scaling innovations which reduce transaction costs, build credit histories, make payments more secure and efficient, and bake in nudges, gamification, and other methods of applying behavioral economic insights into better product design. Ultimately, digitization opens up new channels to reach the financially underserved with products and services designed for them.

In 2015, as part of the World Bank’s call for Universal Financial Access by 2020, Visa made a public commitment to provide payments accounts to an additional 500 million unbanked people. We’re well on our way to meeting that goal but it’s only the first step; we see digital payments as an “on ramp” to financial inclusion.

We see the Inclusive Fintech 50 as an important way to advance financial inclusion through partnerships with the private sector, government, and non-profits. 

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Inclusive Fintech 50 is funded by MetLife Foundation and Visa, with support from Accion and IFC. Winners will be announced on June 17, 2019.

 

Nikhil Gehani