MyFintech Week 2019: Fintech may empower the underserved, but also risks leaving them further behind

• Collaboration between digital and incumbent services addresses local pain points
• Fintech needs to be inclusive, focused on helping the underserved

FINANCIAL technology has tremendous ability for the empowerment and betterment of people’s lives, but it can also marginalise others.

If anything, this will be one of the most important things to take away from MyFintech Week 2019 (MFTW) from June 17 to June 21, Malaysia’s flagship fintech event happening this week.

Held in conjunction with the Malaysia Digital Economy Corporation (MDEC)’s Malaysia Tech Week 2019 from JUne 17 to June 21, the conference is aimed at promoting growth and diversity in the local fintech ecosystem, as well as spurring digital transformation and driving responsible innovation.

Encouraging and hastening the growth of fintech is a good, potentially important thing, yet anything moving too fast is bound to leave groups of people behind.

This issue was brought up during one of MFTW’s feature panels, “Digital is King”, which brought together industry experts to discuss the role of fintech in the digital age, as well as the opportunities and risks.

“Fintech has enormous potential to change how financial services are delivered, particularly to the underserved – all three billion people around the world who do not have access to financial services or have limited access to them, and facing challenges in managing their financial lives,” says data and intelligence platform MIX Market CEO Camilla Nestor, who moderated the panel.

Nestor further noted that innovation can also cause the underserved to be side-lined, in that while the underserved may be the central piece driving fintech solutions, the excitement around innovation and technology can cause people to lose sight of what’s important. 

Digital is king

The consensus of the panel is that we certainly can’t deny the potential and power of fintech when it comes to the betterment of consumers.

Panellist Shafid Begum, who is Amazon Web Services (AWS) Singapore’s market insights lead, points out the ways in which cloud adoption has allowed financial services to innovate further, such as, by using AI to identify and analyse risk factors of customer segments and lower their insurance premiums.

Ant Financial international operations head and senior vice president Douglas Feagin, another panellist, added that fintech and insurtech have provided people access to borrowing and insurance in greater ways than before, heavily impacting their financial lives.

This impact, Feagin notes, is even more profound for businesses. In China today, people can easily access businesses that range from enterprises to mom-and-pop stores. Businesses of any size now also have access to easy forms of (cashless) payment through mobile phones as well as financial services that can support their businesses, where traditional services like banks won’t.

Yet there needs to be a pause for thought. Panellist Christopher Davison, chief executive officer of AirAsia-owned BigPay, says that fintech – and technology in general – needs to be built on the focus on improving people’s lives. Fintech is the answer to the efficiency argument – using tech to make traditional financial services more efficiency by way of being faster, cheaper and generally better for everyone.

United Nations Secretary-General (UNSG)’s Task Force on Digital Financing director Tillman Bruett, another panellist, says that in this digital age, it’s more on how “we make the citizen king.”

“When we’re thinking about the roles digital and digital finance play in our lives, I don’t think we should think of us as being governed by it, but how do we actually take control of it,” he says. For him, rather than a king, digital financial services should be “a knight in shining armour. It serves and protect us and also help us conquer.”

The importance in collaboration

The panellists all agree that, going forward, partnerships and collaborations are important in the realm of fintech.

An example would be Ant Financial (Alibaba Group’s mobile payment affiliate), who takes a partnership approach when going into different markets. In Malaysia, for instance, Ant Financial decided to partner with Touch N’ Go to develop their e-wallet rather than break in with Alipay.

The reason, Feagin says, is because Touch N’ Go would have the biggest access to Malaysian customers. In turn, TnG needed the benefits from the technology that Ant Financial could provide. With a local team, they can both develop better solutions for Malaysians and address Malaysian pain points.

Interestingly, in a poll conducted during the panel among the attendees that asked about what the future of digital financial services look like, a large majority (about 68%) believes it will be dominated by a partnership model between local incumbent providers and super-platforms (like Ant Financial).

Bruett adds that partnerships shouldn’t just stop at the private sector, but also extend to partnerships between fintech companies and regulators. Bringing fintech and regulators together will allow the fintech companies to tackle local challenges and launch their services while the regulators can clear away regulatory policies and issues.

Data as a commodity

The panel discussion also touched on data, specifically on how data is important for fintech to develop, yet there are privacy issues to consider.

Davison says that financial services are inherently businesses of managing risks, and data is an important aspect to risk management. “Yet, fundamentally, this data is also customer data,” he stresses, adding that there needs to be nuance in handling it.

Begum agrees that data is important, especially in insurtech services that use customer data from their wearables to lower premiums and encourage healthier lifestyles, but there needs to be clear regulations on it to facilitate the changing paradigms.

Ownership of data becomes something to consider. At what point is data something that is owned by the customer or the organisation? Bruett says that it’s a debate that’s not even close to being resolved, and that there needs to be honest conversations about the customer benefits of giving data away versus what they have to sacrifice.

Bruett adds that, in the near future, data will be a commodity like oil. In this context, refined oil is just as, or even more, valuable. Some countries may be oil rich, but have no way to refine the commodity – similarly, datasets are valuable, but you need human skills to refine it.

For less-developed countries, creating data will be just as important as getting the talent to refine them. “It’s also how you create the data you need, to do it in a fair way that is transparent. Not stealing data, but creating it ethically,” he says.

Acknowledging the divide

While fintech is meant to bridge gaps within the financial industry, they may also be capable of deepening the digital divide. People who may not have access to the technology or infrastructure needed to benefit from fintech may be further marginalised.

Bruett says that to be inclusive, we need to look at those who designed these services. “If you don’t have the thought in how it [the fintech solution] can help people, you won’t go anywhere. You need to have that thought to start with.”

Begum adds that the partnership process can drive better inclusivity – by working with locals who are more familiar with the plight of the region, they will be able to provide the human touch needed to aid people.

“Training will be a big part in that. It’s how you democratise knowledge and skillsets and make it prevalent across the board,” she says.

Feagin says that regulations are put in place to help people. Yet, there needs to be a balance with how the regulations are conceived. Unreasonably strict, and people will be driven away from those services.

“Regulations are put in place to minimise the risk of loss, but we should be more flexible to adapt it to be more inclusive,” he concludes.

All in all, fintech should remained focused on what matters most – the marginalised that require their help beyond what traditional and incumbent services can do. Losing sight of them will be losing sight on the point of fintech altogether.