There is great expectation that digital financial services is the panacea for financial inclusion, customer wellbeing and even sustainability. But digital on its own does not ensure a better outcome for society.  

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The digital transformation of financial services has been hailed as the way to solve many societal challenges, including financial exclusion, poverty and climate change. This desire to do good and fix such problems is what has driven many fintech founders to launch new offerings and “disrupt” traditional banking services.

Our Tech Talk video series provided numerous examples of purpose-led fintechs. For example, Sara Dhewanto, founder of Duithape, launched the Indonesian mobile payment and remittance platform in 2011 to deliver aid to the unbanked population in Indonesia through the use of facial recognition. Sara Koslinska and Ka Lim co-founded Limitless to helps millennials better manage their money, while Tunde Kehinde, co-founder of Lidya, wanted to address financial barriers faced by Nigerian small and medium-sized enterprises (SMEs).

Recently, the world witnessed an impressive and immediate response by the fintech community to the war in Ukraine. For example, FuelFinance, a Ukrainian fintech whose mission is to prevent SME bankruptcies by unlocking finance, launched a separate emergency page to help businesses navigate the crisis. Revolut is offering payment services to refugees fleeing Ukraine, while bunq is letting displaced Ukrainian citizens open a free account to make payments outside the country.

This trend of revolutionising financial services for the betterment of society continues to grow stronger. Chris Skinner, author of our monthly Shaping Tomorrow column, has tackled this phenomena in his latest book, Digital for Good.

The book brings together the great and the good from across — and beyond — the global financial services industry to challenge the traditional mindset and address the big societal issues being tackled today. It contains wide-ranging interviews, from Brock Pierce, chair of the Bitcoin Foundation, to Derek Baraldi, head of the banking industry at the World Economic Forum, to Gail Bradbrook, co-founder of Extinction Rebellion (XR), an environmental movement that uses civil disobedience to compel government action on climate change and biodiversity loss. Interestingly, XR has launched Money Rebellion to have “a grown-up discussion” about the political economy, according to Ms Bradbrook.

Leaders from the far reaches of the industry, including banks, contribute their thoughts as to the state of play today, the forces of change including technology and behaviour. For example, Guga Stocco, founder of Brazilian digital bank Banco Original, envisages how algorithms will replace banks; Margarida Mendes da Maia, digital product manager at Portuguese neobank Banco CTT, outlines her thoughts in banking product design for sustainability-focused generations; and Charles Savage, CEO of South Africa’s EasyEquity, talks about the impact of investor populism on traditional markets.

A common theme that permeates the anthology is the question of purpose: an unfettered explosion of fintech is not going to solve social and environmental crises on its own. As Jesse Griffiths, CEO of the Finance Innovation Lab, points out in his essay: “fintech growth does not necessarily lead to financial inclusion”.

Banks and fintechs alike are bringing purpose to the fore; some have been forced to re-evaluate their purpose for the emerging paradigm. The collection includes contributions from, among others, Roland van der Vorst, head of innovation at Rabobank, whose mission is “growing a better world together”; Corin Millais, head of socially responsible banking at Australia’s Teachers Mutual Bank, which he believes is the “epitome of stakeholder capitalism”; and Viola Llewellyn, co-founder of Ovamba Solutions, an African tradetech company that creates culturally attuned technologies to serve formal and informal African SMEs.

Mr Skinner succinctly sums up the importance of purpose for the future of financial services: “We need a higher purpose. We need to be driven by stakeholders to do good for society and for the planet. We need to stand for something; if we do not, we will fall down.”

Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight

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