Fintech for Good – A feasible dream or just pretty posturing?

One of the hardest thing to appreciate as a business mind is that, sometimes its good to leave monies on the table for long term sustained benefits. The long term view could be a strategic partnership or relationship, employee loyalty or sustained social impact.


However, except on a very few occasions, I have really not seen a high street financial services player focus on social impact. They all have a CSR capability, but that’s not the point. We also have several social impact focused businesses, but they are seldom household names.

I believe, since the Fintech Uprising, that trend has changed. Many Fintech firms I come across have sustainability and social impact at the heart of what they do. Incidentally, at least four of my portfolio Fintech firms can be categorised as socially impactful. However, I must admit that, at the time of investing into those firms, we weren’t planning to have such a high ratio of sustainable investments.

I recently came across a report on Fintech for Good – probably the first of its kind. It was good to see many familiar names like Banqu, Wala and Humaniq. I have touched upon some of them in my previous posts. However, I couldn’t resist the temptation of writing about a few of them.

OmiseGo: Omisego have a Blockchain based use case, focused on Financial Inclusion in South East Asia. They offer users a mobile eWallet that runs on the OmiseGO decentralized exchange (DEX) to send, buy, sell, or trade fiat currencies, digital assets, and cryptocurrencies.

South East Asia has about 500 Million unbanked people, however, most of them have a mobile phone. But they lack basic payments infrastructure – and the existing payment providers don’t interact well with each other.

Small businesses can now use OmiseGo platform to transfer value across payment networks. They offer interchain committed proofs so that transactions can happen across different tokens, and funds can be held in different digital currencies. From a world, where these businesses didn’t have a bank account and most of their transactions were cash based – this is quite a leap.

Konfio: Konfio are based out of Mexico, the second largest Fintech market in LATAM. They are focused on unsecured SME lending delivered digitally. About 95% of businesses in Mexico are considered Small based on their revenues (<$700k Annual revenue), and Konfio are focusing on the top end of this spectrum, which itself is a $45 Billion market.

While the market is huge, it is a challenging space to operate in, as traditional banks do not have the bandwidth and are reluctant to lend to SMEs. And SMEs that are largely family run businesses are thin-file customers, who do not have a credit file that lenders can use to make a decision.

Konfio uses analytics on social media data, online payments information and traditional data to make real-time approvals of loans. As of the end of last year, they had already lent to 50,000 family businesses.

Humaniq: Humaniq were originally based out of Africa, and have most of their customers in the continent. They are a blockchain based firm who have been quoted across several reports and publications as leaders within the financial inclusion space. The All Party Parliamentary Group (APPG) on Blockchain recently identified Humaniq as leaders in Bio-identification.

The Bio-Id capability that Humaniq have developed act as the stepping stone for many in Sub-Saharan Africa to access financial services that they desperately need for survival. The issue (for the unbanked) is more pronounced in woman headed households, despite the efforts of the World bank and other international organisations.

The lack of access to capital and markets for women farmers, who make up the majority of small-hold farmers has kept these nations poor. Women farmers have smaller areas to cultivate, lower yields with their land and fewer women growers were taking their crops to market. Users of Humaniq view them as their window to new-age capital markets. Humaniq recently hit a key milestone of 400k customers across 16 African nations.

BIMA: BIMA is a Swedish-British startup, focused on providing affordable insurance to consumers in the developing world. They offer micro-insurance type products that costs 60 cents per month, and provide life and accident cover for customers. They already have 24 Million customers across Asia, Africa and LATAM.

BIMA have collaborated with mobile operators to ease their interaction with their customers. Traditionally these customers were largely underserved by Insurance firms due to cost of underwriting. The size of these underserved markets is estimated to be about $40 Billion based on a Swiss Re research.

With Fintechs and Insurtechs creating new ways to serve these customers, the cost base could be reduced. As a result, Allianz recently invested $100 Million into BIMA that would value the firm at roughly $300 Million.

These are certainly not the only “Fintech for Good” use cases that are worth talking about. I picked the ones that resonated the most. However, it goes to show that there are genuine problems that have created huge untapped markets across the world. Fintechs are using non-traditional business models supported by new-age technology and markets to serve the underserved and tap the untapped.

Arunkumar Krishnakumar is a VC investor focusing on Impact investments, a writer and a speaker.

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One comment

  1. omiseGo does not stop there. Through SDK it will allow any organization which issues some unit of value (such as a fiat currency, cryptocurrency or reward points) to create their own branded wallets which interact with the OMG network. If OmiseGo successfully implements Plasma along with its other features, they could theoretically become the ultimate payment processing solution.

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