When Financial Innovation Is Done Right, It Helps Those Who Need It Most
Insight As financial technology continues to evolve, it increasingly empowers those who have traditionally been the most disadvantaged by the financial system.
When talking about financial innovation, it is easy to imagine that it is all about the top 10 percent finding ways to increase their own wealth. This singular viewpoint is a mistake. As financial technology, or fintech, continues to evolve, there are a great many ways in which it empowers those who have traditionally been the most disadvantaged by the financial system.
Everyone in our society has need for financial services, whether it’s a small business owner who wants a loan of $100,000 to launch their online business or a newcomer to Canada who would like to send money to support their parents and grandparents back in their home country. For the single parent who starts work before the banks open and finishes after they close or the person who has disabilities and can’t drive to their nearest bank, getting access to traditional financial services can be gruelling.
“Financial technology companies often in collaboration with banks are combining innovative business models and technology to enable, enhance, and make financial services more accessible, affordable, convenient, and secure for everyone,” explains Paul Parisi, President of PayPal Canada.
Harnessing the potential of an online society
The ubiquity of cellphones, computers, and the internet means there's no longer a reason for digital financial services to be difficult or inaccessible. Many of the comparatively small financial tasks that can be a burden for underserved populations can be made easy, and much more affordable. With over 5 billion mobile phones in the hands of consumers around the world, the fintech industry has an opportunity to deliver solutions that instantly impact global populations.
For a single parent with two jobs, it's hard to overstate the value of fintech services. Depositing paycheques, sending money to the babysitter, and paying for utilities from a phone while the kids are sleeping means more money in their pocket while avoiding late fees, ATM fees, unnecessary interest, and time off from work.
For the entrepreneur fighting to get their business off the ground, fintech provides easy digital payments, phone-based debit or credit card processing, automated payroll, and access to additional capital channels that can mean the difference between success and failure. These innovations are levelling the playing field between the large, established businesses that staff sizable finance departments and the entrepreneurs who know every hour they spend managing finances is an hour not spent on growing their core business.
A rising tide should lift all boats
When properly empowered, small businesses and underserved individuals lift each other up. And that's good news for everyone. “Financially healthy individuals and families spend their money at local shops and businesses and start companies of their own,” notes Parisi. “They invest in their education and the education of their children. Financially healthy businesses create jobs that pay good wages and offer solid benefits, and they support the economic and cultural life of their communities.”
The more accessible it becomes for people to engage with the financial system, the more time and money we all have. By democratizing finances, fintech is making our society more equitable, from the bottom up.
“Only by empathizing with our customers and collaborating with regulators and other industry players can we truly achieve fintech’s untapped potential to make money more accessible to everyone,” adds Parisi. “There's a need today to build empathetic products, hire empathetic workforces, and always challenge existing paradigms to drive growth for our industry, and to create long-lasting societal change around the globe.”