How Financial Inclusion Initiatives will impact industries
Josh Gosliner, senior director of market strategy, Juvo, discusses the impact Financial Inclusion Initiatives will have on enterprises and industries in 2020.
In my role as Senior Director of Market Strategy for Juvo, a company that works with emerging economies to create financial identities for previously anonymous individuals, I’ve had a front row seat into how the term “financial inclusion” has shifted over the last few years. It’s long been assumed that technology companies held the key to unlocking real and lasting financial inclusion, but for too long inclusion initiatives have been considered a social responsibility. While we can all agree that doing good is a noble effort, unless companies can translate those efforts into bottom-line results they’ll never move forward to make a long lasting impact.
It’s been exciting to watch the opportunities that unfold when we can connect alternative data sources to those who are inhibited from making decisions due to a lack of data. In my view, these opportunities represent a transformative movement for the business of financial inclusion. It’s not necessarily about creating new service providers to drive financial inclusion but enabling existing institutions to better serve the market. Below are a few predictions, based on conversations I’ve had with telcos, financial service providers, enterprises and regulators around the world, as well as my own firsthand experience, as to what we can expect to see in 2020.
Financial inclusion will transition from a CSR initiative into a massive market opportunity
Financial Inclusion has traditionally been seen as a benevolent initiative for companies. Important, yes, but relegated to Corporate Social Responsibility (CSR) teams and not considered part of the main business goals.
Thanks to advances in technology, including cloud scalability and big data, individuals previously anonymous to formal financial systems are gaining identities. This opens a significantly larger percentage of the addressable market, on a global scale. Recent research has attempted to quantify the economic impact of addressing the problem of financial identity for the world’s underbanked, revealing an uplift of US$250 billion to global GDP each year. What’s more, financial inclusion has the potential to boost household credit by more than $400 billion and lead to a $512 billion uplift in global household savings.
These numbers represent only the tip of the iceberg however - trying to quantify the financially underbanked is a problem in and of itself, as there exists no reliable, global measure of underbanked individuals around the world. Still, simply using a subset, as defined by the World Bank’s FINDEX database, yields impressive results.
Financial service providers, spearheaded by mobile operators with deep access in emerging economies, will recognize the power and potential of financial inclusion as a way to increase the customer base and build new revenue streams.
Neobanks will proliferate in all economies
Digital banks, challenger banks, neo banks - however you refer to them, we’ll see them gain significant traction in 2020. In established markets, digital banks will put pressure on traditional and brick and mortar banks to improve customer service through better digital and mobile engagement. These challenger brands will also attract a new type of customer, appealing to younger generations and establishing a foundation for long term customer loyalty.
In emerging markets, neo banks will prove even more disruptive. These banks recognize financial inclusion as a huge business opportunity. By entering the market at a lower cost basis, without the heavy burden of infrastructure and capital costs, they can take advantage of cloud technologies to scale quickly and alternative data to reach previously anonymous populations.
Well established markets for neo banks, such as Brazil and Mexico, will be the proving ground as the trend spreads to other parts of Latin and South America and APAC. In response to this transformational movement, governments would be wise to make digital banking licenses easier to get and encourage competition among the players. Digital banks have the potential to dramatically shake the financial industry, driving innovation while driving down costs and reaching billions of new consumers along the way.
Telcos will orchestrate a shift toward B2B revenue
Until now, the consumer has been king with telecom operators. But ongoing pressures, including competition from OTT players, consistent pushback on price and a market that is all but saturated has made it challenging to maintain, let alone increase, B2C revenue streams.
The capital investment made into physical 5G networks, as well as the systems overhaul required to maintain them, will be the catalyst for pushing telcos toward better enterprise use cases in 2020. These revenue streams will be varied as telcos expand their information and communication technologies (ICT) offering to include everything from security, to cloud services, to internet of things (IoT) and managed services.
One of the more creative, and lucrative, ways for telcos to increase B2B revenues is through the B2C business - specifically, data monetization. Just as telcos gain better traction on consumer data and work with financial service providers to address previously unknown consumers, telcos will also find new ways to monetize their proprietary data and unlock other key partnerships within the enterprise community.
Data Privacy Laws Will No Longer Be Considered ‘One Size Fits All’
GDPR will round out its second year even as other privacy legislation, such as the California Consumer Privacy Act, takes effect. To date, privacy legislation has proven a feeble attempt to try and reign in the misuse of data. The issue at hand is the attempt to create laws that have a global impact from a regional point of view.
In 2020, as emerging economies grow more technologically sophisticated, data privacy will be seen as a deeply personal choice. After years of a Wild West, anything-goes mentality for corporations, the pendulum initially swung too far in the direction of control and compliance. As consumers recognize the value of their own data, the pendulum will once again fall to the center, allowing individuals to make more informed choices around how best to share and use their data, while companies will deliver real and transparent value. Technology will aid in this transition, as data is better anonymized and aggregated to deliver value.
In addition, the movement of data across country borders will be under scrutiny as regulators attempt to address cloud technologies and scalability while working to protect their citizens. Ideally, regulators will settle toward an opt-out rather than an opt-in mentality, helping to reduce friction and giving individuals more choice and less restrictions on a global scale.
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How changing your company's software code can prevent bias
Two-third of tech professionals believe organizations aren’t doing enough to address racial inequality. After all, many companies will just hire a DEI consultant, have a few training sessions and call it a day.
Wanting to take a unique yet impactful approach to DEI, Deltek, the leading global provider of software and solutions for project-based businesses, took a look at and removed all exclusive terminology in their software code. By removing terms such as ‘master’ and ‘blacklist’ from company coding, Deltek is working to ensure that diversity and inclusion are woven into every aspect of their organization.
Business Chief North America talks to Lisa Roberts, Senior Director of HR and Leader of Diversity & Inclusion at Deltek to find out more.
Why should businesses today care about removing company bias within their software code?
We know that words can have a profound impact on people and leave a lasting impression. Many of the words that have been used in a technology environment were created many years ago, and today those words can be harmful to our customers and employees. Businesses should use words that will leave a positive impact and help create a more inclusive culture in their organization
What impact can exclusive terms have on employees?
Exclusive terms can have a significant impact on employees. It starts with the words we use in our job postings to describe the responsibilities in the position and of course, we also see this in our software code and other areas of the business. Exclusive terminology can be hurtful, and even make employees feel unwelcome. That can impact a person’s desire to join the team, stay at a company, or ultimately decide to leave. All of these critical actions impact the bottom line to the organization.
Please explain how Deltek has removed bias terminology from its software code
Deltek’s engineering team has removed biased terminology from our products, as well as from our documentation. The terms we focused on first that were easy to identify include blacklist, whitelist, and master/slave relationships in data architecture. We have also made some progress in removing gendered language, such as changing he and she to they in some documentation, as well as heteronormative language. We see this most commonly in pick lists that ask to identify someone as your husband or wife. The work is not done, but we are proud of how far we’ve come with this exercise!
What steps is Deltek taking to ensure biased terminology doesn’t end up in its code in the future?
What we are doing at Deltek, and what other organizations can do, is to put accountability on employees to recognize when this is happening – if you see something, say something! We also listen to feedback our customers give us and have heard their feedback on this topic. Those are both very reactive things of course, but we are also proactive. We have created guidance that identifies words that are more inclusive and also just good practice for communicating in a way that includes and respects others.
What advice would you give to other HR leaders who are looking to enhance DEI efforts within company technology?
My simple advice is to start with what makes sense to your organization and culture. Doing nothing is worse than doing something. And one of the best places to start is by acknowledging this is not just an HR initiative. Every employee owns the success of D&I efforts, and employees want to help the organization be better. For example, removing bias terminology was an action initiated by our Engineering and Product Strategy teams at Deltek, not HR. You can solicit the voices of employees by asking for feedback in engagement surveys, focus groups, and town halls. We hear great recommendations from employees and take those opportunities to improve.