Digital Insurance Agenda

Create Impact by Reimagining Financial Inclusion

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Oct 12, 2021

The financial system is often presented as the utility system of the economy. Obviously, it does not reflect the sector’s importance. Beyond any doubt, money is the lifeblood of the economy and society. Consequently, the financial system is the cardiovascular system. Although most people may not realise it, financial services are at the heart of the daily lives of individuals and businesses. An ever-growing part of medical costs is covered by insurances. A vast number of businesses is financed by banks. The use of money is an essential part of daily life; it is a key to protection and to a better future. But here’s the twist: unfortunately, most people do not have access to these kinds of financial services.

The consequences for the absence of financial services in rural villages, slums or on the streets where low-income people live are immense. If you don’t have access to, for instance, health insurance, it is more difficult to stay healthy. And when one of your family members would get seriously ill, there is a fair chance to be thrown back into poverty. It is these kinds of vicious circles that keep billions of families across the globe from building a better life (yes – billions!).

The issue is the financial system; the laws and regulations, the written and unwritten rules, the assumptions and industry conventions. Most probably all developed with a good intention, aimed to provide protection. But at the end of the day, the resulting procedures are not geared to the daily lives of low-income people. Consequently, they are working against inclusion, in fact even excluding the majority of the people on our planet.

A key issue of the formal financial system for instance, is that many rules are products of mistrust. Mistrust distracts from the main purpose. It is therefore preferable to take the principles as the single most important point of departure, rather than the rules. It is inspiring to see how thinking results in different solutions with almost immediate impact without compromising the core principles.

The book Reimagining Financial Inclusion names 13 game changers that thought outside the current system to solve or bypass the flaws, creating an alternative and effective pathway to financial inclusion. Specifically, the book decodes what makes all of them so successful and reveals the essential keys to success they have in common.

About the book ‘Reimagining Financial Inclusion’
In Reimagining Financial Inclusion , author Erlijn Sie points at flaws in the financial system, but not just that, “because that won’t fix it”, she argues. Instead, she handpicked 13 social enterprises from across the globe, each giving access to financial services to sometimes millions of customers already. Customers that were previously considered unbankable and uninsurable. The book Reimagining Financial Inclusion is about breakthrough innovations, courageous entrepreneurs on a mission, about immaculate execution and success at scale. A recipe for change with massive impact, changing the lives of billions of low-income people.

In general discussions about innovation in financial services, industry executives seem to always look at ‘the usual suspects’, like Ping An and Lemonade in insurance, and DBS and N26 in banking. The companies featured in Reimagining Financial Inclusion definitely make a fine addition to the list of examples we can really learn from. They offer a new perspective on successful business models; with truly being part of everyday life, customer empowerment, ecosystem thinking, open innovation and continuous loops of learnings in their veins. Moreover, they are missioned to have massive impact.

More and more established financial institutions are looking for ways to increase their social and economic impact. Some by planting trees to reduce the carbon footprint, others by already leveraging the sometimes hundreds of billions of euros of assets they have under management. Virtually all incumbents realise that all great challenges we are faced with in the coming decades – from climate change, water and energy to providing health care for ageing populations – require solutions in which financial institutions play a key role. And they also realise that their customers are longing more than ever for institutions that care.

Having said that, it is remarkable that financial inclusion is not top of the agenda at most financial institutions. Which is a shame in view of so many people who could benefit. Unlocking the potential of billions of people also unlocks massive new markets for financial institutions – which should be a compelling strategic incentive to give financial inclusion much more emphasis. Just imagine using a small part of all the creativity, intelligence, manpower and financial means that incumbents have on board to work together with these social entrepreneurs and create an impact for the billions that are part of the bottom of the pyramid worldwide. The world would be a better place.

Interested in learning more about this subject? Click here to read the book Reimagining Financial Inclusion or check out the panel discussion Financial Inclusion For All presented by Erlijn Sie on DIA TV.

This editorial is part of The DIA Impact Series. Stay tuned for our next editorial!

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