In recognition of the increase in investment opportunities and the rising risk faced by investors in the fintech and financial inclusion spaces, a set of guidelines for investing in responsible digital financial services have been launched by an international network of over 50 fintech investors and innovators.
Explaining the importance for such move the signatories to the guidelines stated that “financial services mattered because by 2025, emerging markets’ GDP could increase by $3.7 trillion and create 95 million jobs across all sectors.”
They equally noted that funding for financial inclusion recently reached a historic high of $37 billion, another $31 billion total are invested in fintechs globally each year.
“We see evolving opportunities and risks in digital innovation for inclusive growth, and the guidelines seek to provide a framework to support would-be investors in identifying where to best invest their time, energy, and money.”
The guidelines which are to promote fintech funding by providing a framework for evaluating investment opportunities and risks, comprise 10 touch points that financial investors and their fintech investees can use to evaluate opportunities, mitigate risks and contribute to a more responsible and inclusive digital finance ecosystem.
These include promoting fair and transparent pricing and better disclosure of terms and conditions for customers, preventing people taking on more debt than they can comfortably manage, increasing their financial literacy, establishing customer identity, data privacy and security standards, fostering a proportionate legal and regulatory framework, and enabling the interoperability of digital financial services.
The signatories in Amsterdam, noted that any investment organisation can subscribe to the guidelines and join the community of investors via responsiblefinanceforum.org.
In return, they are asked to use them as the basis for due diligence and monitoring of their fintech investments, and to share new insights with their fellow investors as the fintech revolution spreads across the globe.
“By teaming up with other leading investors, we want to create a community of practice around responsible fintech that will give more low-income customers easier access to better and more affordable financial products,” says Wim van der Beek, managing partner of Goodwell Investments, a co-founder of the guidelines.
“As an active investor in digital financial inclusion, we saw a growing need in the marketplace for a framework that could support investors and operators in building sustainable and trustworthy products and services. We’re proud that so many investors have joined us in our efforts to develop the guidelines that we are launching today,” he further said.
Other investors active in Africa to have signed the Guidelines include the International Finance Corporation (IFC), the Global Innovation Fund, Accion, Quona Capital; as well as innovators such as Nomanini, Paga, Musoni and Jumo.
The initiative is the work of an alliance of over 50 leading development banks, investment funds, family offices, private equity firms, debt fund managers, service providers and industry organizations focused on fintech and the financial sector; spanning Europe, the US, Africa, China and India.