Now encapsulating a focus on societal impact and the environment, the term ‘fintech for good’ has evolved from its initial meaning of charity. But it doesn’t stop there. This July, we are on the hunt to find out how the fintech industry is doing ‘good’ for local communities and the world, revealing current and future plans to make change.
As we conclude our ‘fintech for good’ focus at The Fintech Times, we reflect on how organisations are making a difference. For a long time there has been a misconception that in order for a fintech to do good, it must be selfless. That in order for it to truly make a change, it cannot benefit and make money off of its services. This is simply not the case. In the final article of our ‘fintech for good’ monthly focus, we explore how organisations can properly balance a good purpose with profitability.
Combining purpose and profitability
Erik Severinghaus, founder and CEO, Bloomfilter
So, what is the real meaning of ‘fintech for good’? Erik Severinghaus, founder and CEO of Bloomfilter, the process miner for software development explores how combining profitability and purpose is the way forward and that focusing on just one of them too much is not the best way forward.
“It means to use our technology not only to earn profits but also to create a positive difference. By reducing the cost of financial services and investing in projects for clean energy, these activities are not just additional tasks. They form the central part of how we run our businesses, drawing in clients who pay attention to where their money goes.
“‘Fintech for good’ doesn’t mean you have to pick between making money or having a meaningful cause; it’s about combining them into an approach that benefits all parties. It demonstrates that a successful company can be both financially rewarding and hold strong ethical values. As we progress, it’s thrilling to lead this trend and show that finance can really be a positive influence. Thank you for accompanying me on this path, and let us continue to create change with each new idea.”
Accessible finance will eventually lead to profit
Jon Edwards, director at Thinks Insight & Strategy
For Jon Edwards, director at Thinks Insight & Strategy, the strategy and insights consultancy, focusing on environmental, social and governance (ESG) holds the key to finding the perfect balance between profitability and purpose.
“Fintechs should look at ESG as an opportunity for truly cross-sectional growth. Profit, purpose and customer outcomes are closely linked and driving standards across all three should be the goal in today’s competitive environment.
“Doing so will meet consumer expectations. Our research shows that most people (80 per cent) both want a better balance between profit and purpose and believe this is possible. Delivering this alongside great products and experiences clearly benefits everyone.
“Affordable ethical and sustainable financial products are where fintechs should start. Lowering barriers to entry (e.g minimum amounts) for green and ethical investments will:
attract more diverse investors who are looking for this balance of profit with purpose (younger people, women) – itself a form of ESG – which in turn will…
]grow the business, and profits, by volume of customers, all of which will…
contribute to sustainable and ethical financial initiatives across the world.
Acting on purposeful promises
Nicky Senyard, CEO, Fintel Connect
Sharing a similar sentiment to Edwards, Nicky Senyard, CEO, Fintel Connect, the fintech partner marketing platform said: “Fintech companies have the potential to be profitable and have a positive environmental or social impact. A common misconception is that ‘fintech for good’ means sacrificing profitability. The reality is that it’s not an either-or situation; it’s about what comes first.
“What makes the difference is prioritising setting a company’s purpose and values that align with ESG standards first and then developing the business plan to generate profits.
“Whether you demonstrate your values with an ESG badge or through a PR campaign, the critical part is acting on them at every level, even when no one is looking. A couple of our values are collaboration and contribution, which means we work as a team towards a common goal achieved through communication and support. We act on these values within our company, with our clients, and then our community.”
Treating stakeholders and shareholders alike
Kristen Castell, managing director of the Delaware-based company, Center for Accelerating Financial Equity (CAFE), the nonprofit advancing financial health and wellness to low-income communities, notes how organisations must focus on the impact they are having on people’s lives when looking to make a profitable business.
“More than ever, fintech companies are being judged on how they treat their stakeholders, not just their shareholders. The last few years – there has been an accelerating focus by the market, fueled by investors, on understanding how a company treats its people (i.e supply chain, employees) and the environment (i.e efficiency of operations) because those risk factors are important to long-term (financial) value of a company. Take the politicised acronym ‘ESG’ out of it!
“Bottom line is it’s good business for fintechs to provide both shareholder and stakeholder value. Especially now with the globalisation of information through the internet and social media, companies have a spotlight on everything they do – and cannot just sell products anymore but need to focus on providing what’s important for the quality of people’s lives. All of us, especially the large low-to-moderate-income (LMI) populations throughout the world demand it.”
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