The power of partnerships for tackling financial inclusion
Kate Sutton, Nesta: traditional approaches to tackling big social issues are not working
There is a growing consensus that to tackle the pressing problems the world is facing, we need to combine the unique resources and skill sets of multiple sectors.
Traditional approaches to tackling big social issues are not working, so we need to find new and innovative ways of solving these problems. One such way is using a partnership model, which brings together parties from multi sectors to work together to bring fresh ideas and new solutions.
Bringing together groups that may not usually work together can deliver important synergies. The Inclusive Economy Partnership, run by the UK government in partnership with Nesta, is one of the initiatives spearheading using multi sector partnership to solve social challenges. The Inclusive Economy Partnership brings together innovators, large businesses, government and civil society to develop solutions to three specific challenges, one of which is financial inclusion and capability.
The challenge is big and the statistics are stark – according to a 2016 study by the FCA, over 5.5 million people in the UK are in an unfavourable debt situation. A significant number of indebted people are not getting the financial advice and support they need because there simply isn’t enough available. The Money Charity recently reported people in the UK owed £1.576 trillion at the end of January 2018. Helping individuals manage problematic or persistent debt, to gain access to affordable credit options, and to create a savings buffer as part of healthy day-to-day budgeting can dramatically change not only a person’s lifestyle but their mental wellbeing.
A partnership model has a promising chance of tackling these challenges. As an Innovation Foundation, part of Nesta’s role is to identify organisations doing great work in financial inclusion and to support them to amplify and scale their work to take on more ambitious problems. In the Inclusive Economy Partnership, this means nurturing partnerships between six social innovators and established large businesses and civil society organisations, with the idea that these partnerships will help the emerging businesses to scale. Exposing established businesses to new ways of thinking should impact their approach to financial inclusion and encourage the spread of new ideas and ways of working.
The fintech sector has great potential to help tackle the challenge of financial inclusion and capability. By not only developing disruptive products and services, but also working in partnership with banks, there is strong potential for regulators, large businesses and charities to fully integrate solutions and use technology for good social outcomes such as giving people greater control of their finances and access to specialised services to ease financial distress.
As part of the Inclusive Economy Partnership, fintech technologies are looking to improve financial inclusion and resilience. For example, Neyber offers an alternative lending platform with repayments coming straight from an employee’s salary, while Credit Kudos is a fintech solution using financial behaviour data to measure creditworthiness. Through the Inclusive Economy Partnership, both Neyber and Credit Kudos have formed relationships with established businesses in the banking and finance sector and are exploring how, through partnership, they can support each other to have a greater impact.
Under the Inclusive Economy Partnership banner, Nationwide Building Society has announced an Open Banking for Good challenge that will launch in September this year and capitalise on the fintech revolution to develop new products and services for those financially underserved. Open Banking for Good will convene some of the brightest minds in established fintechs and start-ups, through to innovators, and debt and money charities. The selection panel members include Nesta, Money Advice Trust, Doteveryone and Accenture.
The pool of talent currently dedicated to making finance work better is deep and growing. Public power, private money and entrepreneurial innovation need to be bought around these big societal issues. Now is the time to harness the power of partnership to bring together the fintech community to make a positive change.
By Kate Sutton, inclusive economy lead, Nesta
