I’ve been thinking about words that trigger us and the context in which they cause the most ‘ick’. Lately, for me, that word has been ‘underserved’. My cringe-quota was on high alert as I read through ‘The Future of Global Fintech: Towards Resilient and Inclusive Growth’ report produced by the Cambridge Centre for Alternative Finance at Cambridge Judge Business School and the World Economic Forum launched during the 2024 Davos Annual Meeting.
It’s a shame because the report is mostly optimistic, and my flinching at the findings has nothing to do with the methodology, facilitators nor intentions of the report. It is the disconnect between the promise the report presents — the stories that fintech and the wider innovation financial complex tells about itself — and the cold hard reality of how banking and finance impact and influence people’s lives.
The announcement of the report dutifully describes it as a “46-page study” that “reveals that the global fintech industry is maintaining growth momentum driven by strong consumer demand, demonstrating resilience in a challenging fundraising environment, and making meaningful inroads to extend financial services and products to underserved consumers and businesses around the world” (emphasis mine). So far, so standard PR language. Why was I triggered?
Again, I don’t think it was the report itself. It gathered data from 227 fintech companies across five sectors, including digital lending, digital capital raising, digital payments, digital banking, and savings and insurtech. The 277 companies were across six regions (Asia-Pacific, Europe, Latin America and the Caribbean, the Middle East and north Africa, the US and Canada, and sub-Saharan Africa).
Six areas were investigated: fintech business demographics, market performance, market growth factors, regulatory perceptions, customer engagements and fintech activities with societal and economic benefits.
Key findings were optimistic. The global fintech industry is described as “strong”, with customer growth rates averaging above 50% across industry verticals and regions, while 55% found the development of digital regulatory and supervisory infrastructures effective in supporting growth.
Other findings weren’t that surprising. Fifty-one percent of surveyed fintech companies cite consumer demand as the main growth driver, while 56% cite macroeconomic factors as the top hindrance to growth. In addition, 70% cite artificial intelligence as the most relevant topic for the development of the fintech industry in the next five years, which should be of no surprise to anyone.
However, this is where I stopped. The report found that “Fintech companies are expanding the provision of financial services and products to underserved segments, with female (39%), low-income (40%), and rural or remotely located (27%) customers constituting a substantial portion of fintech customer bases” (again, emphasis mine).
How many times have we, as an industry, heard that women, those on a low income and rural communities are underserved by the industry? (All three, always packaged as a group. No wonder funding-rich investors and tech leaders often dismiss these sectors as ‘social projects’ or charities, but that is a post for another time.)
New fintech companies outside the traditional finance space tend to go after segments of the market that are — you guessed it — not well serviced by the incumbent providers. Small and medium-sized enterprises (SMEs) and micro businesses are also part and parcel of each of those groups mentioned above.
Bryan Zhang, executive director and co-founder at the Cambridge Centre for Alternative Finance, did his best to answer some of my internal ‘ick’ during the press conference in Davos.
He commented that the report represented two main questions for the industry: one, can fintech “fulfil its promise and potential to widen the access to finance for unbanked and underbanked populations, for SMEs and for women entrepreneurs,” he said. “Especially in emerging markets and developing countries.”
The second question he mentioned was whether fintech, and the role it plays in the wider financial community, be considered “transient or structural”.
And this is my issue (you knew I’d get there eventually). Fintech has been promising to serve underserved industries for over a decade. There have been some inroads towards better support for SMEs, but can anyone actually point to substitutional, measurable change towards supporting female entrepreneurs on parity with men, or truly ‘democratising’ (another ‘ick’ word in this context) finance for society at large?
The words used in Mr Zhang’s questions were telling. Can fintech ‘fulfil its promise’, while we are still asking if it is ‘transient’?
I’m a middle-aged woman, who has spent 30 years writing about this industry, and I’m getting tired of waiting.
You can connect with Liz on LinkedIn, or follow her on Bluesky.
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