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Financial inclusion is about access, affordability and active usage, says Cambridge scholar

Ni Tao • 2018-11-22 • Hot: Share

Summary: Miguel A. Soriano, Research Affiliate at Cambridge Centre for Alternative Finance, spoke to Blocksina during the Singapore Fintech Summit on November 15, to share his views on Fintech and blockchain and their impact on promoting financial inclusion around the world. Soriano is concurrently Digital Financial Services Specialist at International Finance Corporation (IFC).



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Blocksina: Can you say something about your research work at Cambridge University, where you lead studies on Fintech and financial inclusion globally?

 

Soriano: Cambridge University has a Centre for Alternative Finance established about three years ago. It does a tremendous amount of work on alternative finance. That's a very broad topic but it includes everything from peer-to-peer (hereafter referred to as P2P) lending, blockchain, financial inclusion, digital payments, AI, so the whole Fintech environment if you will.

 

We have been doing a lot of work initially on P2P lending. So we published reports on a regional basis over the last few years, tracking how P2P lending has been growing in the market and the policies around it.

 

To date, we have a database of more than 3,000 Fintechs in P2P lending in over 150 countries. So that has been our area of focus, now we are expanding a lot more in financial inclusion.

 

My work as a PhD student was looking at Fintech startups that were helping the unbanked in the emerging markets. I'm bringing that research agenda to Cambridge and now we are leading different projects.

 

One of them is doing an encompassing study in the ASEAN region and Fintech in all different areas. But we also recently published two different reports on blockchain. So we see that blockchain definitely is a big enabler of financial inclusion. That has also been a focus for us.

 

Blocksina: In terms of the degree of financial inclusion across the globe, what have your studies indicated? Can you share some interesting findings?

 

Soriano: Financial inclusion has been initially thought of as providing access to bank accounts. But ultimately, I believe financial inclusion is about 3As: access is definitely a first step. But you also need to have affordable products. It's the second A. The last A is the most important one. Active usage, which is what I mentioned today in conference.

 

If you do not have active usage, you are really not impacting people. And active usage means that you have to make sure people actually adopt these products, and see the value of it.

 

Currently today, only 30% around the world are actively being used in terms of Fintech products. Which (means there) is still a lot to be done. That's a big issue that needs to be tackled. Now the World Bank and other develop organizations are looking at this issue now, but ultimately there is even more that needs to be done.

 

Ultimately the idea of financial inclusion is to help lift people out of poverty. Financial inclusion by itself is not the end goal. Lifting people out of poverty is the end goal.

 

So that also involves financial literacy, educating people to make sure they understand what they are doing and the products they are using.

 

And ultimately, it is for them to be able to understand how you can make yourself more financially healthy. So financial health, if you will, should be the ultimate end goal.

 

Blocksina: What are the criteria of World Bank and IFC in deciding what Fintech projects to undertake?

 

Soriano: I'm gonna leave that question and answer, because my answer is from the Cambridge side if you don't mind. There is a tremendous amount of work that they do. Ultimately I work for them on a consulting basis, so I am not privy to all the great things they are doing. But I'm a huge fan of the work they do.

 

Blocksina: How have blockchain or other Fintech technologies contributed to the digital transformation of small banks in Latin America?

 

Soriano: I have to say one of things I have also looked at quite a bit is how to transform the banks, the smaller players. The smaller players are in an interesting spot today. And it's not just in Latin America but around the world.

 

Smaller players unfortunately don't have enough resources to do their own technology. And therefore, they are competing against bigger organizations. The smaller players, however, are the one serving the underserved.

 

So how can we help those guys? Many different programs have been started by different development organizations, but ultimately, how do you teach them to become digital? How do you go through this process? One of the ideas is how do you make them partners with Fintech.

 

Fintechs have the innovation, they have the knowledge and capability, but they don't have the resources. Banks have the resources and customers, but they don't have the technology. So it creates a win-win situation by having that partnership.

 

Now different models are emerging from different places, whether you are using blockchain, to be able to have Fintech startups to have blockchain to help, because it creates an environment where in a lot of places you can do even cheaper than maybe using traditional technologies.

 

But ultimately, it is (down to) how you create these partnerships and how you change mindset and the culture of your organizations for them to think about being digital. That's, I think, one of the biggest challenges.


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Blocksina: How has blockchain enhanced the efficiency of IFC's partnership with private sector players?

 

Soriano: I'll answer more generally, because I want to do that from the perspective of Cambridge. Blockchain has really allowed you to remove intermediaries and be able to do a lot of these things in a much more efficient manner.

 

We are still at a very early stage of blockchain in my view. But we are seeing a lot more progress in permissioned private blockchain, but ultimately, the end goal should be public open blockchains.

 

A lot more work has to be done. The biggest challenges I see are around interruptability, and making sure that a lot of these protocols can talk to each other better. Because there is a tremendous amount of innovation coming from all of them, but no set standards make it difficult for people to adopt it.

 

Blocksina: You lived in Singapore before and were involved in the country's transition toward a Fintech future. How do you see this technological shift?

 

Soriano: It's impressive. I live and breathe it every day even though I'm outside of Singapore. What I have seen now, having the perspective of living in Singapore for three years and moving to the US, is that Asia is at least five to ten years more advanced than the rest of the world.

 

And to tell you the truth, that's great news, because where the growth is happening and where you see the most need is in this region.

 

For me I think it is extremely fascinating and I want to continue doing this for a very long time, because I'm a firm believer that technology is a big equalizing force. And Fintech, through financial inclusion, is going to help those who really need it.

Source:Blocksina.com Author:Ni Tao / Editor:Blocksina.com

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