Maximise the potential of fintech to do good for society

Susanne Chishti

CEO & Founder, FINTECH Circle

Glenn P Burgess

CMO, FINTECH Circle

The financial and fintech sectors have a huge responsibility towards society — having to move from ‘doing no harm’ to ‘doing good.’

The current cost of living crisis has sweeping effects on the day-to-day lives of UK consumers. This will impact financial firms — from how much money customers will have at any point to how SMEs will react to potential cash flow issues.

Cost of living Crisis

The priority is to create a financial system that caters to all. Financial inclusion is not a buzzword — but it starts at home, where 4 million people in the UK have no bank account.

The cost of living crisis has drawn into focus the need to better equip the increasing numbers of vulnerable people across the UK. With more households running deficit budgets, we can expect a huge increase in late payments, mortgage defaults and bad debts that will drastically change the personal finances of millions for years to come.

The pension time bomb

This year, the UK Government published research that compared state pension systems globally. It showed that the UK is providing less pension than most other advanced economies. Across OECD countries, governments normally contribute almost 80% to people’s pensions when citizens retire — while in the UK, it’s only 50%. So, 50% of pension income in the UK should come from company pensions and private pension schemes, but many people don’t have enough money saved in their company pension and cannot afford to personally save for their old age.

By cutting out middlemen, many payments will be completed at fewer costs through a decentralised, open-source network.

That’s why the fintech sector must provide people with solutions to help with savings and investments that are easy to set up and maintain from a young age until retirement. Financial services’ contributions to society’s safety net in this high inflationary environment can make ‘fintech for good’ a reality.

Low-cost transactions via Decentralized Finance

Consumers and small to medium-sized businesses have a collective impact as well. Technology like decentralised finance (DeFi) is a huge opportunity for financial services to make transactions more transparent. By cutting out middlemen, many payments will be completed at fewer costs through a decentralised, open-source network. Decentralised lending and cross-border payments are the beginning which will allow global payments at almost zero costs settled in real-time, every day of the year.

DeFi can also democratise access to finance in emerging markets, helping with financial inclusion. Eventually, it will create a digital exchange ecosystem where money and value are transferred on blockchains using smart contracts just as information and data are transferred today.