Michael Schlein will speak at TNW Valencia 2023 about how fintech innovation can drive inclusive growth. Watch this discussion on the Impact stage on Thursday, March 3.

The world has changed so much in recent years. The global pandemic, the war in Ukraine, the worsening of climate change, widespread social unrest – all of these challenges have had a profound impact on families, small businesses and communities around the world. For the first time in our lives, poverty and hunger are increasing worldwide and the economic climate remains uncertain and unstable.

As challenges evolve, so do solutions. While today’s challenges may seem overwhelming, we also see powerful opportunities to build a fair, inclusive and resilient economy. According to the Findex 2021, more than a billion people have gained access to formal financial accounts in the past decade – thanks to a digital revolution accelerated by the pandemic. This is very encouraging progress.

But 2 billion people remain excluded from the global financial system – and they will be much harder to reach. They are small farmers, micro and small businesses in remote areas, and more often than not women.

As more people have access to basic financial tools, they can use them to improve their lives – and access a wider range of tools to build resilience. A farmer can buy insurance to protect against climate disasters, a small business owner can get revolving credit to manage supply chain issues, and an aspiring software developer can save money and gain new skills to boost her income.

Inclusive fintechs are uniquely positioned to maximize these opportunities and address challenges. Accion helped pioneer inclusive fintech by launching one of the world’s first global fintech funds for underserved groups, and nurturing innovators with funding and support. We’ve seen how they can disrupt the status quo to drive meaningful social change.

Today, we are particularly excited about three fintech innovations that have the potential to facilitate this momentum and address the challenges that are disproportionately impacting underserved communities worldwide:

1. Integrated Finance

While traditional finance often requires clients to jump through hoops, embedded finances makes it possible to offer services to customers in advance and use their data to anticipate their needs and credit risk.

For example, Accion’s inclusive fintech investor Accion Venture Lab has invested in Cash invoice in India, which levers small business data to embed supply chain finance products into large platforms that small businesses already use, such as inventory suppliers for fast consumer goods stores. This innovative practice has the potential to seamlessly equip millions of underprivileged people with the financial tools they need to improve their lives.

As more financial tools integrate with every aspect of the digital economy, we look to scale innovations that create new entry points for embedded finance in platforms our end customers already use, such as retailers selling seeds to small farmers. We believe that embedded financial solutions aimed at reaching farmers, small businesses and women have great potential to promote resilience and inclusion.

2. Agtech Financing

Two-thirds of the world’s working poor live on agriculture and they are becoming increasingly vulnerable to climate change. By equipping farmers with new financial tools and digital capabilities, we can help them build resilience. And in the relatively new field of agritech, we’ve seen exciting innovations emerge in recent years that have great potential to generate societal impact.

We have already seen encouraging results our work with agtech fintechs like PULA And Apollo Agriculture that use technologies, including satellite imaging and mobile apps, to equip smallholder farmers in sub-Saharan Africa with crop insurance, tailored advice and credit. Through digital transformation and fintech integration, we also have the impact of microfinance providers such as Fundacion Genesis Empresarial in Guatemala and Dvara KGFS in India who provide credit and other financial services to farmers.

As agtech financing continues to evolve, we are particularly interested in other service providers within the agricultural value chain, including aggregators, farmer-affiliated intermediaries and distributors, to help them serve farmers and their communities more effectively.

3. Future of job finance

Increasingly, people earn a living through non-traditional work models, including gigging or informal work, and are particularly vulnerable to financial shocks. By nurturing financial services companies that target these populations, we can help them gain a stronger foothold in the economy and strengthen their resilience.

For example, our fintech partner MyRobin has made a digital platform that gives workers in Indonesia access to fair job opportunities, training and financial services that strengthen their resilience and advance their careers, and our partner UGAFODE is in Uganda to help refugees start businesses and gain access to financial resources.

In the near term, we are exploring opportunities to support workers transitioning from casual to formal work through gig work platforms, prioritizing platforms that target women. In the long term, we can also think about the global implications of automation, migration and displacement on the workforce – and how solutions such as cross-border payments and upskilling can help these workers build their financial health.

Accelerating change through knowledge and collaboration

Sharing our knowledge is crucial to creating systemic change. Meetings like TNW Valencia are essential to share insights and explore the impact of new innovations, including those in embedded finance, agtech, and the future of work — to better measure the effectiveness of our own work and promote demonstrators that help providers better serve their customers.

I look forward to working with our team — and with partners in the public, private and social sectors — to increase our impact. The future is uncertain, but the challenges of the past have given us new lessons, powerful tools and greater determination to support those with the most pressing needs.

Would you like to know more about inclusive fintech and Accion’s work in this area? Watch Michael Schlein’s FT Power Hour talk on how fintech innovation can drive inclusive growth at TNW Valencia 2023 on Thursday 30 March from 13:05-13:25 on the Impact stage.