Now, with a focus on social and environmental impact, the term “fintech for good” has evolved from its initial meaning of charity. But it doesn’t stop there. This July, we’re on the hunt to discover how the fintech sector is doing “good” for local communities and the world, revealing current and future plans to make changes.

Lack of access to credit and finance can cause problems for people all over the world, no matter what country they live in. However, where the problem is most acutely felt is typically in developing countries, so we are now shining a spotlight on them to see how they are coping with improving access to finance.

In many ways, developing countries do not face the same barriers as developed countries in doing this, which means it may even be easier to make positive changes, he explains. My Friend Nicky SenyardCEO of Fintel Connection.

Nicky Senyard, CEO and founder of Fintel Connect

“Developing countries are actually great places for new ideas because they often don’t have traditional banks. In many African countries, most people use their phones to go online instead of having a regular home connection. This shift has led to a number of great advances in mobile banking and financial apps, making it possible for financial services to reach even the most remote areas.

“For example, in Kenya, the mobile banking solution M-Pesa has radically changed the way people access financial services, offering them a safe and convenient way to save, transfer and receive money without having to open a bank account.

“In Brazilthere is Nowa shining example of fintech innovation. Since many Brazilians don’t have access to traditional banks, Nu used digital technology to offer fee-free credit cards and a completely digital banking experience. This really caught on and now millions of Brazilians have an easy and efficient way to manage their money.

“Nu’s success demonstrates how developing markets can find financial solutions that address local problems and attract more people into the financial system.”

Troubleshoot data issues

Second My First Encounter with Nick Maynardvice president of fintech market research at Juniper SearchThe lack of reliable data sources has made improving access to finance a problem in developing countries.

Nick Maynard, vice president of fintech market research at Juniper Research

“In developing countries, the typical challenge to accessing finance has been the lack of credit scores and other third-party data that make lending easier in developed markets. As a result, it has been difficult for banks and mobile money services to offer credit.

“One important development we are seeing is that other data is being leveraged to make up the shortfall. For example, where mobile money services are provided by telecom companies, these services are using AI models to use their existing data to expand their lending operations. These kinds of initiatives, as well as formal government programs to improve access, will go a long way toward improving this situation.”

Improving financial inclusion

Mitchell DiRaimondo, Founder and Principal Project Manager of SteelWave Digital at SteelWave

Mitchell DiRaimondofounder and main project manager of SteelWave Digital at Steel Waveexplains how developing countries hope to reach the unbanked: “Developing countries are taking a multifaceted approach to improving financial inclusion. Governments are promoting digital payment systems and mobile banking services to reach unbanked populations.

“Regulatory frameworks are being adapted to support fintech innovations and foster an enabling environment for the growth of financial technology. Public-private partnerships are crucial, with initiatives such as digital identification systems (e.g. India Aadhaar) enabling easier access to financial services.

“Microfinance institutions and digital lending platforms are gaining traction, offering credit to small businesses and individuals who lack traditional collateral.”

Using mobile applications

“Developing countries are making great strides in improving access to finance,” he says. Mila Khrapchenkoco-founder and co-CEO of Ametee.

Mila Khrapchenko, co-founder and co-CEO of Ameetee

“They often progress more rapidly in financial inclusion than developed nations due to more acute financial accessibility issues, lower living standards, and lower market entry barriers. As a result, mobile applications and various payment methods are more widespread and growing rapidly.

“For example, mobile banking penetration is remarkably high in countries such as China, Kenya and Tanzania. These nations are adopting financial technologies to fill market gaps, leading to flexible and adaptable regulatory frameworks, unlike rigid systems in developed countries.

“Additionally, developing countries sometimes see substantial growth in microfinance services. Traditional banks struggle with high-risk borrowers, so microfinance companies step in, providing credit to individuals and small businesses. These institutions thrive in less regulated environments with high demand for financial services, addressing critical gaps in the banking system.”

Innovative solutions

Naeem SiddiqiSenior Risk Advisor at SASIt also states that developing countries are improving access to finance in several ways:

Naeem SiddiqiSenior Risk Advisor at SAS

“1. Create less regulated fintech playing fields that allow fintechs to lend with fewer restrictions than larger financial institutions. Because these fintechs tend not to be deposit-taking institutions, the systemic risk is seen as lower. They also tend to be micro and nano financiers, targeting low-income segments that are most in need of financial inclusion.

“2. Encourage the inclusion of non-traditional data in credit reporting agencies. This includes data from BNPL, rent payments, utility bills, online streaming services, any service or product that involves regular payments. Lenders can see a history of meeting payment obligations and are therefore more comfortable making small loans. This is not just happening in developing countries: in the United States, the inclusion of utility and rent payments will help millions of unbanked and underbanked people access credit.

“3. Using nontraditional data for lending. Micro- and nano-lenders often deal with borrowers who do not have bank accounts or credit reporting agency records. In these cases, many micro-lenders use mobile phone data to inform lending decisions. For example, variables such as screen resolution, presence of banking apps, and number and duration of calls have all been shown to be predictive of credit risk. There is also the use of “social capital,” i.e., endorsements from friends and neighbors, to make loans to microentrepreneurs.

“4. Opening branches and installing ATMs in remote locations and low-income neighborhoods can improve access to credit for underserved residents of those areas.”

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