“Financial services are the lifeblood of an economy and serve a wider purpose in addressing issues of inequality and poverty, and in building opportunities for all,” said Her Majesty Queen Maxima of the Netherlands while addressing delegates at the Singapore Fintech Festival conference .
Her speech mainly centred around three topics about how Fintech could potentially help achieve global financial inclusion, risks associated with Fintech need to be addressed and finally on the need to build the right infrastructure for Fintech to thrive and drive financial inclusion.
The UN Secretary-General's Special Advocate for Inclusive Finance for Development, Queen Maxima, said, “Having access to basic financial services can reduce hunger, increase education and generally improve the quality of life. However, 40 per cent of the world’s adults, or 2 billion people, are locked out of the financial system. With the development of FinTech, we see governments and leaders recognising the tremendous business opportunity in providing financial services to these excluded people.
She stressed that Fintech could potentially help achieve global financial inclusion. Giving an example of a young Chinese couple, she said, “In 2010, they started a small business on Taobao, an e-commerce platform owned by Alibaba. In the business’s early days, the couple’s income was so low they had trouble affording a meal in local restaurants. By 2014, the business grew and employed 50 people and generated close to USD7 million a year. Key to their success was FinTech which enabled the business owners to access to affordable loans via an commerce platform.”
While this is a success story, Her Majesty said that even though financial services provided more than USD120 billion in non-guaranteed, unsecured loans to over five million micro, small and medium-sized enterprises (MSMEs) over the past five years, there are still close to 50 per cent of MSMEs in developing and emerging countries that do not have access to the financing. Yet, these MSMEs account four out of every five new job positions created.
Queen Maxima said, “The link between financial inclusion and technology is not new. Products like Smart Money introduced 15 years ago in the Philippines and M-Pesa introduced in Kenya a decade ago are now serving millions of people. These technology-based products started a mobile money revolution in the less developed countries, allowing access to financial services. FinTech companies, like those that produced Smart Money and M-Pesa, typically leapfrog traditional financial services and provide the people with affordable financial services products and tools.
Her Majesty strongly believes that cutting edge technology ideas that are currently being developed in the financial services sector are the best tools to serve the financially excluded. She added, “FinTech companies have an opportunity here to better understand customers’ needs, preferences and experience to provide them with genuinely useful services.”
Her majesty also highlighted the risks associated with FinTech that needs to be addressed. She said, “Technology can be a double edged sword. FinTech needs to address existing problems such as data privacy, cyber security, fraud and discriminatory or predatory lending. Protection is needed, particularly for the poor and those with limited digital or financial knowledge.”
Citing malware hacks and pyramid schemes, she acknowledged that while the nature of these risks are diverse, all of them should be addressed.
Queen Maxima also emphasised on building the right infrastructure for thriving of Fintech. She highlighted nine pre-requisites for Fintech to flourish and be all-inclusive. They are data privacy, cyber security, digital literacy, financial literacy, digital ID, connectivity, interoperability, fair competition and physical infrastructure.
In her concluding remarks, Queen Maxima said, “Fintech is uniquely positioned to create transformative opportunities for millions of people. Fintech innovations can make it possible for those who do not have access to financial services of any sort to leapfrog into a set of digital services that address their needs. These millions of people represent a valuable opportunity for business and Fintech solutions can change their lives.”