The inclusive fintech sector has made great strides leveraging technology to expand access to financial services. However, 1.7 billion people still remain unbanked, and 3 billion individuals and small businesses are considered underserved by the formal financial system.
The COVID-19 pandemic has increased the need for fintech solutions that enable remote, digital transactions and logistics, as well as a range of innovative financial products that can support resilience among vulnerable populations. The pandemic has further aggravated the persistent gender gap, and endangered the financial health of families around the world. In all, though progress on financial inclusion has been impressive, financial technologies can still go much further in improving people’s lives, especially in today’s uncertain, turbulent world.
As we continue to expand our horizons to support solutions that improve the well-being of low-income households and small businesses, we see three significant areas of opportunity for fintech startups over the next three years: 1) Financial health, 2) Access to essential services, and 3) Platforms for the digital economy. These briefs explore the opportunities we see to leverage fintech innovation to extend access and benefits in each of these three areas.
For startups and other financial service providers, financial health means a deeper consideration of how customers use financial products and what value those products are providing. Available evidence highlights the importance of accessing a broad range of financial products that are tailored to people’s circumstances and daily needs, which customer-centric startups are well-suited to provide.
Households around the world need services like energy, water, and sanitation to improve their quality of life, but gaps in access to essential services are still enormous. These services have traditionally been offered as utilities, involving large, upfront infrastructure costs, which make access for remote, low-income households unfeasible. Fortunately, fintech innovations are changing these cost structures via new technologies like lock-out systems, and financial products like Pay-as-you-go (PAYGo) contracts.
Although half of the world is still offline, digital platforms are rapidly expanding access to opportunities for both small businesses and informal, non-salaried gig workers. However these platforms can also leave them vulnerable to inconsistent incomes, competition from bigger players and without access to benefits. This brief outlines opportunities for fintech startups to leverage digital platforms to create products and services that improve working conditions for and protect digital workers, and expand opportunities for income generation.
Together, these briefs describe the breadth and depth of Catalyst Fund’s interests and ambitions to further progress and innovation in inclusive fintech. We hope to source, select, and support fintech startups in these areas over the three areas as we accelerate inclusive fintech in our target markets, and to share our learnings from these engagements with the broader fintech community.