By Paul Miller, Partner at Bethnal Green Ventures, September 15, 2017.
Never let a serious crisis go to waste. In the midst of the financial turmoil of 2008 we decided to try something new. We wondered what would happen if we brought together technologists and engineers with people who worked at the sharp end of social and environmental problems. We called the events ‘social innovation camps’ and they were always a lot of fun.
The technologists were often people who had worked at banks and financial services companies which had been thrown into turmoil by the crash – the fintech startup scene had yet to emerge. The people who worked in the social sector were youth workers, nurses, environmental activists and teachers who spent their days frustrated by the pace of change and the clunky technology that they were given to try and manage things. Over the course of a weekend they would hack together prototypes of services to meet the needs of people who had been overlooked.
Fast forward almost ten years and a lot has changed. Now there is a huge startup scene in the UK and the tech for good community has mushroomed with thousands of people putting their technology skills to use, solving problems in health, education, the environment and democracy.
The financial sector has poorly served whole swathes of society, particularly low-income households, people dependent on care, former prisoners, migrant workers, homeless people, refugees and asylum seekers. Many of them have suffered discrimination directly or because financial services haven’t been properly designed with them in mind. In a report on Access to Financial Services in the UK from May 2016, the Financial Conduct Authority (FCA) painted a bleak picture of how well the existing financial services companies are rising to the challenge. The truth is that innovation is going to have to take place outside the traditional financial institutions which leaves a big opportunity for startups.
At Bethnal Green Ventures we want to invest in these new ventures tackling financial inclusion and income inequality. We’re interested in ideas that could:
We’re not alone at BGV in wanting to see more action in this arena. The Money and Mental Health Institute has been raising awareness how financial products are linked to our mental health which in turn is having a huge detrimental effect on the economy. And Big Society Capital and the Joseph Rowntree Foundation are supporting new ventures that are ‘Fair by Design’ and tackle the so-called Poverty Premium that is charged by buy now pay later retailers or pre-pay electricity tariffs from big six energy providers. Companies like Fair for You and Ebico show that alternatives are possible.
If the fintech sector is to avoid the social pariah fate of the financial services sector following the 2008 crisis, it needs to take creating a positive social impact seriously. It’s not just about ‘doing good’, we believe that it presents a brilliant business opportunity as well.