The challenges of promoting inclusion in Fintech with SmallChange, Landmark and more
The need for diversity and inclusion in fintech has become a core element of the industry and is as integral to the success of its leading players as any other form of innovation. In recognition of its rising status in the recipe for success, this month, Fintech Times will be groundbreaking for the topic through a month-long investigation into how equality is really delivered.
Fintech Times dedicates the month of April to showcasing the fintech industry’s smartest and boldest initiatives aimed at championing equality, diversity and inclusion for all.
A world where such initiatives can be implemented with immediate success is a world we want to live in. But with any level of innovation in the fintech industry, the road to delivery is not always smooth.
After discussing some of our favorite success stories in pioneering such initiatives, we now toss the coin to discuss and identify the challenges that often arise along the way.
Promote inclusion in property
There are not many areas in the financial industry that do not struggle to promote inclusion. Indeed, it is a problem that is significant and alarmingly widespread; especially in the real estate industry.
To begin our investigation of this problem is SmallChange.cothe equity crowdfunding platform for fair property development.
Talking to the platform’s founder and CEO, Eve Pickingreveals how widespread the problem is within this specific sector.
As a female real estate developer, Picker admits she has faced “a lot of challenges” around the idea of achieving inclusivity.
Describing her unique position as “a lonely existence”, she confirms that “exclusion from funding opportunities” is at the top of the list of challenges she faced.
However, this battle ultimately served as the catalyst for Picker to launch an equity crowdfunding platform focused on inclusiveness.
“On my platform, SmallChange.co, anyone over 18 can invest. We embrace new developers and new neighbourhoods, she explains.
However, Picker also admits that “the odds are against me,” adding that “statistics reflect the magnitude of the obstacles that I and many female and minority colleagues face.”
Currently, only 1.9 percent of the venture capital funds invested last year invested in women-owned companies. Furthermore, only one percent of the funds went to Black entrepreneurs.
“Statistics about the commercial real estate industry are equally alarming,” comments Picker. “According to a new report, only 1.7 percent of real estate companies in the United States are black-owned. And of the 383 real estate companies that gross over $50 million, not one is black-owned. Only one is Latino-owned.”
‘The playground of the oldboy network’
So how could this problem persist in such a widespread industry? Well as Picker explains, “Commercial real estate has long been and remains the playground of old boys’ networks.”
“Like any club, the members of the old boys club invest where they feel most comfortable – in the same people and the same projects over and over again,” she says.
With this, Picker advises that “We need to break that cycle to raise more for each project listed on SmallChange.co and so we can grow.”
Rest assured that change is coming. Picker emphasizes how “We are slowly overcoming the odds, as are the projects listed on our platform to date, over 60 of which are minority and/or women-owned.”
“We have been growing steadily, adding projects, account holders and investors on a daily basis. We have helped developers raise a significant amount of funding, she continues. “Our project pipeline is large and we have a national presence and reputation.
“SmallChange.co is exactly what everyone is clamoring for – a place where inequality in the real estate world doesn’t exist,” concludes Picker.
When Kenya’s financial system met Sopra Banking Software
While achieving equity in inclusion may initially appear to benefit from a one-size-fits-all approach, as this next speaker perfectly demonstrates, recognizing the individual needs of those you wish to include is of the utmost importance.
Sopra banking software is a global financial technology software company that is reshaping the role of banks. Since 2012, Sopra Banking Software has worked with more than 1,500 financial institutions in over 100 countries to digitize their offerings and innovate the banking experience.
Through its platforms, the company is transforming how and where financial services are offered to customers, by extending banking services to traditional industries.
As the company’s renowned global director of corporate social responsibility and sustainability, Nelly Kambiwa works closely with Africa’s leading banks and fintechs to digitize their offerings and expand financing to a larger group of consumers.
Here she immerses herself in the company’s extensive work with Kenyans KCB Bank, which sparked a revolutionary wave of financial inclusion across Africa; identify the various challenges that must be overcome in the process.
Banking the unbanked
“Sopra Banking Software started working with KCB Bank in 2017 when 75 percent of the country was unbanked,” she explains.
“At the time, the local government was working to change this by making mobile loans more accessible to all residents,” continues Kambiwa, going on to acknowledge how this necessity for change ultimately ended up creating a sharp increase in loan requests as banks that KCB struggled to keep up.
As with others hoping for success in the financial field, KCB first had to transition its loan services into the digital era to accelerate the delivery of mobile loans and keep up with growing consumer demand.
But as Kambiwa explains, what was perhaps even more important was “KCB’s need to create a completely new financial offering that catered to the majority of Kenyans who had never had a bank account before.”
“With this new financial offering,” she continues, “KCB had to address a wide range of individuals, from those in busy cities where banks are a short drive away, to rural farmers who have to travel hours to visit their bank in person. “
Financial inclusion for all
“These people also have very different loan needs. For example, a rural entrepreneur who needs a small mobile loan of €10 to €20 every week to buy vegetables for his farmers’ market business has different needs than a young professional in Nairobi who gets a larger lump sum loan for a new business venture .KCB needed to reach them both – quickly, says Kambiwa.
In this, Sopra Banking Software ultimately helped KCB deliver a digital financial platform that not only enhanced its existing financial offerings, but introduced a whole new set of banking, payment, savings and lending options.
“These new offerings also made it possible for KCB to reach populations that the banks did not have access to before – and those that did not previously have access to banks either,” explains Kambiwa.
“KCB has now distributed over 40 million loans to Kenyans, helping the country increase access to financial services to more than 80 percent of the population,” she concludes.
Waiting for a hero
So far, the narrative of this conversation has established that the main challenge to delivering inclusion for all is to fully understand exactly what the needs of the target audience are.
As moderator of this discussion, it is our humble opinion that our next speaker does an excellent job of consolidating the opinions of his predecessors.
Flour Ochoa is a general partner at Landmark Ventureswho specialize in creating authentic relationships that are built on trust.
Our readers will be right to assume that the company looks familiar, since it is the creator of the highly famous Social innovation meeting, a two-day, purpose-driven gathering that brings industry leaders together to engage in thoughtful discussions on critical issues; including the challenges of promoting inclusion in fintech.
Ochoa is responsible for internal operations, talent initiatives and strategic projects at Landmark and serves as an industry leader on issues related to the education technology and social innovation sector (particularly helping to produce the firm’s Social Innovation Summit).
As part of corporate leadership, his role includes operations, HR, recruiting, shared strategic initiatives, talent development, executive team coordination, organization-wide programming, brand management/PR and corporate social responsibility initiatives.
Let’s not get ahead of ourselves
“When you think about challenges or barriers to promoting inclusion in fintech, it would be easy to jump ahead and think of a ‘hero’ product for the underserved that will build equity and expand the middle class,” explains Ochoa.
But as Ochoa sees it, a hero product won’t succeed until we address access and connectivity. Elaborating on this, he says: “Without broadband and access points – such as a telephone, library terminal or other vessels – the opportunity gap widens exponentially and becomes more difficult to close.”
“Once that barrier is overcome, financial inclusion products should ‘meet communities where they are.’ Often this requires developers to start in the first place. For example, fintech lending solutions are meaningless when people do not have a credit score or are unbanked, he continues.
“Meeting communities where they are really requires understanding what individuals need when they sit down at the kitchen table: Do they need access to a financial advisor? Do they need access to tools for credit building? Do they need access to a bank that suits their lifestyle?
“As leaders in the financial industry, our challenge is to take the fintech products that work for the wealthy and adapt them for many different needs,” concludes Ochoa.
