Learn how to create and deliver financial products and services that are relevant, convenient, and valuable for your customers, while managing the challenges and risks of financial innovation.

Financial innovation too often focuses on the affluent while excluding the vulnerable. M-Pesa in Kenya exemplifies how financial innovation can promote inclusion rather than exacerbate inequality. Rather than target the affluent minority, Safaricom designed M-Pesa to make mobile money accessible to unbanked populations. They focused first on human needs rather than technology novelty, developing a simple SMS-based system requiring only basic mobile phones. By partnering with local networks, M-Pesa built trust and understanding of customer challenges. Regulation also enabled growth by initially allowing flexible agent networks. The results are staggering - over 40% of Kenya's GDP now flows through M-Pesa.

How can you make financial innovation accessible and affordable?

Financial innovation is the process of creating new products, services, or systems that improve the efficiency, effectiveness, or inclusivity of the financial sector. It can have positive impacts on economic growth, financial inclusion, and social welfare. However, financial innovation can also pose challenges and risks for consumers, regulators, and financial stability. How can you make financial innovation accessible and affordable for everyone, without compromising quality and security? Here are some tips to consider.

1 Understand your customers

The first step to making financial innovation accessible and affordable is to understand your customers' needs, preferences, and pain points. You need to conduct market research, user testing, and feedback surveys to identify the gaps and opportunities in the existing financial landscape. You also need to segment your customers based on their income, education, location, behavior, and other factors that affect their financial decisions. By understanding your customers, you can design solutions that are relevant, convenient, and valuable for them.

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JC Negri

VP of Growth at Intech Innovation Group
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Know your ICP This is the fundamental aspect of your company's approach. I will add up: - Financial Literacy Programs: Empower users to make informed decisions about adopting these solutions and managing their finances effectively. - Incentivize Adoption: Offer incentives or rewards for users who adopt and actively use innovative financial tools. This could include reduced fees, cashback rewards, or loyalty programs. Incentives can motivate individuals to explore and embrace new financial technologies. Additionally, regulatory frameworks should be designed to foster innovation while ensuring consumer protection and data security

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2 Leverage technology

Technology is a key enabler of financial innovation, as it can reduce costs, increase speed, and enhance quality. You can leverage technology to create digital platforms, mobile applications, cloud services, artificial intelligence, blockchain, and other tools that can improve the delivery and accessibility of financial products and services. You can also use technology to create new business models, such as peer-to-peer lending, crowdfunding, robo-advisors, and digital currencies, that can offer alternative and affordable sources of financing and investment.

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Ganesh Malani

Managing Partner at Apex Hatchers | Strategy & Innovation | Patron of Sustainable Development
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Financial innovation too often focuses on the affluent while excluding the vulnerable. M-Pesa in Kenya exemplifies how financial innovation can promote inclusion rather than exacerbate inequality. Rather than target the affluent minority, Safaricom designed M-Pesa to make mobile money accessible to unbanked populations. They focused first on human needs rather than technology novelty, developing a simple SMS-based system requiring only basic mobile phones. By partnering with local networks, M-Pesa built trust and understanding of customer challenges. Regulation also enabled growth by initially allowing flexible agent networks. The results are staggering - over 40% of Kenya's GDP now flows through M-Pesa.

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3 Partner with stakeholders

Financial innovation is not a solo endeavor. You need to partner with various stakeholders, such as regulators, banks, fintechs, NGOs, and customers, to ensure that your solutions are compliant, compatible, and collaborative. You need to engage with regulators to understand the legal and ethical frameworks, standards, and best practices that govern the financial sector. You need to cooperate with banks and fintechs to leverage their expertise, resources, and networks. You need to collaborate with NGOs and customers to gain their trust, support, and feedback.

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4 Test and iterate

Financial innovation is an iterative process that requires constant testing and improvement. You need to validate your assumptions, hypotheses, and prototypes with real users and data. You need to measure your performance, impact, and feedback using appropriate metrics and indicators. You need to learn from your successes and failures, and apply the lessons to refine your solutions. You need to be flexible and adaptable to changing customer needs, market conditions, and technological trends.

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5 Scale and sustain

Financial innovation is not a one-time project. You need to scale and sustain your solutions to reach more customers, markets, and regions. You need to develop a clear and compelling value proposition, a viable and scalable business model, and a strong and loyal customer base. You need to secure adequate and sustainable funding, resources, and partnerships. You need to monitor and evaluate your outcomes, risks, and challenges. You need to innovate continuously to stay ahead of the competition and meet the evolving needs of the financial sector.

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Thammy I. Marcato

Mass Challenge Global Judge | Startup Board Member | Advisor
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Scalability for finance innovation goes hand in hand with regulations. To be able to sustain new models, it's essential to work with two main players: 1- the regulator: work closely and build a roadmap with the regulator where all the doubts and risks regarding the innovation are answered or mitigated 2- the users: finance innovation can be complex and question the usability status quo. It is essential for the players to identify the experience gaps and teach the users the new patterns

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Anna Gross

Corporate Tax @ Implenia | MAS Corporate Finance
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It's important to consider the regulatory environment. Innovations must comply with financial regulations and standards, ensuring they are not only customer-centric but also legally sound and secure. This approach minimizes risks and builds trust among users.

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How can you make financial innovation accessible and affordable?

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2

3

4

5

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1 Understand your customers

2 Leverage technology

3 Partner with stakeholders

4 Test and iterate

5 Scale and sustain

6 Here’s what else to consider

Business Innovation

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How can you make financial innovation accessible and affordable?

1

2

3

4

5

6

1 Understand your customers

2 Leverage technology

3 Partner with stakeholders

4 Test and iterate

5 Scale and sustain

6 Here’s what else to consider

Business Innovation

Rate this article

Thanks for your feedback

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