Look East: Financial inclusion for a country of over 1 billion people

By Theodora Lau, great article about why we need to look East, where there has been rapid strides towards financial inclusion for a country of over 1 billion people.

The path toward broader inclusion — especially financial inclusion — starts with acknowledgement of structural impediments within our lives, our communities, and our cultures. Financial inequality is a human created problem that can be solved. While there are 1.7 billion adults worldwide that are truly unbanked — without any access to the formal financial services system — the advent of mobile phones, mobile money, and mobile credit systems has enabled many of these economies to leapfrog the West, and bring more people into the traditional economic system.

Look East: Financial inclusion for a country of over 1 billion people

When you analyze the data around financial inclusion, what is happening in China and Southeast Asia should be seen as a model for success as efforts go beyond access. And with the rise of technological ecosystems from Baidu, Alibaba, Tencent, and JD.com, the East should be viewed as the heart of financial services innovation. With the rapid creation of superapps — an intersection of payment, credit, commerce, and services — countries such as China has steadily improved both access and optimization of financial services the past fifteen years, especially impressive as to how it has helped small businesses thrive.

Small and medium-sized businesses form the backbone of most economies, and China is no exception. As of February 2020, there were over 83.53 million individually-owned businesses registered in China, employing more than 200 million people in total. Over the past few years, SMEs have contributed to more than 60% of China’s GDP and 80% of urban employment. The importance of deployment of digital finance as a tool to power these types of businesses cannot be understated. And China’s two prominent tech giants, Alibaba and Tencent, have both made great strides to create ecosystems that enable these small enterprises to thrive.

Alipay, with over 1.2 billion users globally, is an online payment service launched in 2004, which has since evolved into the world’s largest payment and lifestyle platform. At the center of it all is an open technology platform, that allows Ant Group to collaborate with external parties.

MYbank, the online private commercial bank under Ant Group, for example, has served 29 million SMEs in China, including over 8.2 million women-operated businesses. Most notably, the majority of them (80%) had never received business loans from a bank previously, and women-operated SMEs have a lower default risk compared to those operated by men.

As a technology giant with 60 percent of its employees in tech, it should come as no surprise that much of Ant Group’s operations are heavily powered by artificial intelligence and cloud technologies. As part of MYbank’s collateral-free business loans, for example, AI is used to determine interest rates and credit limits, which significantly helps to speed up the loan processing: it takes less than three minutes to apply for on a mobile phone, less than one second to approve, and with zero human intervention.

Ant recently announced a formal name change from Ant Financial Services to Ant Technology Group. For those who have been following the company, this should come as no surprise. While the Alibaba affiliate is known for its popular mobile payment platform via QR Code, it is better described as a technology company providing financial services (techfin) for the masses and small businesses alike — rather than a financial services company with a technology platform (fintech). According to the Wall Street Journal, the company “expects more than half of its revenue to come from technology services in 2020, up from 35% in 2017.”

The operating model of the BAT (Baidu, Alibaba, and Tencent) offers a blueprint for fintechs in the West. To succeed, fintechs do not need to “eat the bankers’ lunch” after all – if we can make the pie bigger. There is another way: through collaboration.

Our global society is far from a level playing field. While other industries drive greater efficiencies to deliver basic needs — food, water, and shelter — helping us access savings, payments, investments, capital, credit, and the financial security they build across generations is primarily catered to by one industry — banking. As the industry’s business model evolves — especially given the influence on fintech startups and companies of scale like the Ant Group, we can only hope to see more banks taking action to meet the needs of every community and to contribute to the common good.

Financial inclusion should not be an afterthought – but part of the DNA of our industry.

_______

Tune in for a new episode of One Vision via iTunes and Spotify with Chenni Xu, Head of Comms for the Americas for Ant Group, as she chats with Theo and Bradley of Unconventional Ventures about the financial inclusion efforts at Ant Group and Alibaba. Listen to every episode of One Vision podcast on your favorite player. Thank you for listening and for helping bend the arc toward the common good.

_______

Unconventional Ventures helps drive innovation to improve systematic financial wellness. We connect founders to funders, provide mentorship to entrepreneurs, strategic advisory services to a broad set of corporates, and broaden opportunities for diversity within the ecosystem. Our belief is that anyone with great ideas should have a chance to succeed and every voice should be heard. Visit unconventionalventures.com to learn how you can partner with us today.

More about Irish Tech News and Business Showcase here

FYI the ROI for you is => Irish Tech News now gets over 1.5 million monthly views, and up to 900k monthly unique visitors, from over 160 countries. We have over 860,000 relevant followers on Twitter on our various accounts & were recently described as Ireland’s leading online tech news site and Ireland’s answer to TechCrunch, so we can offer you a good audience!

Since introducing desktop notifications a short time ago, which notify readers directly in their browser of new articles being published, over 50,000 people have now signed up to receive them ensuring they are instantly kept up to date on all our latest content. Desktop notifications offer a unique method of serving content directly to verified readers and bypass the issue of content getting lost in people’s crowded news feeds.

Drop us a line if you want to be featured, guest post, suggest a possible interview, or just let us know what you would like to see more of in our future articles. We’re always open to new and interesting suggestions for informative and different articles. Contact us, by email, twitter or whatever social media works for you and hopefully we can share your story too and reach our global audience. We are agile, responsive, quick and talented, we look forward to working with you!

Irish Tech News

If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at [email protected] or on Twitter: @SimonCocking