Sibos 2021: Banking beyond Covid-19
Most countries across Europe are no longer under strict lockdown conditions, although the scientists tell us we are not quite out of the woods from the threat of Covid mutations.
The medical industry and healthcare professionals have seen us through the pandemic, and we know that without vaccines, the devastation of lives would have been far greater.
Government support for people and businesses through changes in regulations, quantitative easing and financial support has similarly saved many from financial desolation. Banks stepped in to help with payments and loans to businesses and mortgage holidays for homeowners.
In the midst of all of this, we have seen some of the worst climate changes ever, with bush fires, floods and storms. More recently, we’re seeing an energy crisis with many gas suppliers unable to cope with increased prices and fuel costs rising due to the shortage of HGV drivers.
From a consumer perspective, costs are rising, inflation is rising and so is unemployment. Covid is still causing delays to treat those with medical and mental issues, and suicides are at an all-time high. I really feel uncomfortable painting such a bleak picture, but one thing that life has taught me is that you can find answers much faster when you acknowledge there are issues.
So, what can our industry – banks, fintechs and technology companies – do? Here is where I see a lot of hope, as during Covid the benefits of digitisation came to the fore. Many businesses were saved and many were created through the use of technology. By stripping out the need to pay in physical cash or be present at a physical location to work, many lives were made easier and better through digitisation.
As we were forced to interact through screens, most of us began to value and appreciate others more, rather than being caught up in work and the day-to-day bustle we previously engaged in.
The strongest companies now have “purposeful visions” to improve the planet or people’s lives. Companies that have self-centred visions like being the biggest or the best in their space, or reaching a certain financial size, are frowned upon.
The most forward-thinking companies have invested in becoming more focused on ESG issues. Growth at any cost is no longer in vogue. Sustainable growth, socially responsible approaches and diverse/inclusive workforces are the new paradigm for success, as customers and investors look beyond the balance sheet.
A few banks have started to include “carbon statements” for their customers. A calculation of the carbon footprint for every transaction is provided, allowing customers to understand how their spend impacts the environment.
Others are working on AI to help those with mental illnesses to manage their money better and to protect them. One early example has been gambling blocks that a number of neo and high street banks have put in place. Some banks have made it easier for refugees to get access to bank accounts.
Following these threads, there are many more customer niches that banks/fintechs could help with.
We have seen technology companies promoting “tech for good”. Now is the time for financial services to “bank for good”. The industry should focus on niches that have not been given enough attention and find creative business solutions that leverage the burgeoning possibilities of technology.
In the UK, it is great that Nationwide has set up (with 17 charities) Open Banking for Good (OB4G) for the 12.7m people in the UK that are “financially squeezed”, but there is a “niche” of 300,000 people who start every month knowing that their income doesn’t meet all their basic needs, such as food and shelter.
Digital allows us to reach the smallest niches, and these are generally the areas that need the most help because the “numbers” don’t justify focus on them.
Thinking about inclusion, DaviPlata in Colombia is a great example to others. It’s a free banking service that has over 12 million customers (from an adult population of 37 million), of which more than half are women. By partnering with the government to make social payments, it has dramatically increased the number of banked households.
Triodos has already stated its vision to “Bank for Good” and has backed up that statement with £8.2bn worth of loans given to companies that look to benefit people and the planet.
Lloyds Bank has recognised the scale of the mental illness problem and has provided some useful content and support for appropriate charities, but how do the products/services provided by banks cater for these people? This is certainly an area that demands more focus.
Some £26bn annually in the UK is lost by businesses due to staff sick days. Maybe this is a niche that isn’t so small? Maybe there is a solution that helps businesses to help their own staff as well as those outside of their organisations?
Covid has changed the world and its impact has not yet been fully realised. Now we have to pick up the pieces and deal with the aftermath.
In the financial industry, we hear regularly how much money is going into fintech investment and how much banks are investing in technology. I’m not saying that companies need to become charities. I’m just saying that there are purpose-led organisations and investors that are serving a broader need than to appease shareholders while still turning a profit.
About the author
Dharmesh Mistry has been in banking for 30 years and has been at the forefront of banking technology and innovation. From the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions.
He is CEO of AskHomey, which focuses on the experience for households, and an investor and mentor in proptech and fintech.
Read all his “I’m just saying” musings here.