The Future of Finance?

FinTech is changing what we can do in banking. It enables greater product diversity and customization, almost regardless of scale. It offers new channels for delivering services to clients. It offers viable connections to non-banking services hitherto unavailable except to a very narrow group of large-ticket customers. But what, in particular, can FinTech offer to improve banking services for women clients? What can it do in each of these different aspects of banking? Which are most promising? What is restricting further innovation in these areas? Finally, are there risks that come with some of these technological developments? How can they be mitigated by both bankers and policymakers?

Key Points

• Lending via FinTech platforms could have disproportionate benefits to women, as technology platforms are gender neutral.
• Payleven offers a way for the unbanked and very small businesses to accept payments made with cards. They pay a monthly rental to purchase a card reader. 59% of Payleven’s clients are women, and 87% of them had never accepted a card payment before. As 50% of all transactions in Brazil are already by card, these business owners say they were losing sales by not accepting card transactions.
• In Brazil, these micro- and small-business owners are also often working as employees at other organizations. They tend to be banked when it comes to their salaries but not for their business activity. Payleven started out offering them this payment facility and now offers loans as well.
• Strands offers an intelligence interface between banks and customers so that customers can understand their financial behavior. The software allows bank customers to categorize their expenses, to establish goals and manage their finances more effectively. It can create financial reports, and send alerts regarding expenditures and achievement toward savings goals. There is also the ability to link to a community, so women can use the tool to compare themselves to other women or businesswomen.

• Itaú is on top of many of the opportunities that technology brings to banking, from lowering transaction costs for customers through smartphone banking to investing in CUBO, an incubator that supports tech start-ups. They have supported 28 start-ups so far, but only one of them is founded by a woman.
• There may be disruptive things coming to the banking industry, but banks have a great deal of data on customers already. They can use it to get ahead of the curve and start developing solutions their customers need. There are also opportunities for banks to use a variety of sources to get more data, which is what FinTech companies have been doing for a significant amount of time.
• Banks need to be humble and recognize that they can learn from FinTech. Banks tend to want to do things in-house, and innovation departments can do amazing things for banks on this front. But with FinTech we need to create partnerships, to invest and sometimes acquire.