Last year was a challenging one for the inclusive fintech ecosystem, from end to end. Venture capitalists, startup founders, and customers were affected by rising inflation, devalued currencies, supply chain disruptions, and destabilization. At the same time, these groups showed resilience as they adapted to these challenges.

While many predict an uptick in activity among investors in 2024,  the need for inclusive financial services has never been more urgent. Poverty and hunger are on the rise, compounded by the effects of climate change and conflict. Inclusive fintechs are uniquely poised to help the most vulnerable populations access the digital tools they need to address these challenges.

Here are five fintech trends we’re watching in 2024:

1. Expanding inclusion with embedded finance

Across the world, we’re continuing to see the power of embedded finance in expanding access to financial services for populations traditionally locked out of the global financial system, especially microentrepreneurs. Responsible embedded financial products can generate income opportunities for underserved small businesses while developing the data ecosystem that helps financial service providers better serve these excluded populations with solutions tailored to their needs and habits.

For example, our portfolio company, Kuunda, leverages embedded finance and data analytics to solve the liquidity challenges faced by small businesses and consumers across Africa. Kuunda works with partners to create borrower profiles that are built on real-time behavioral data so these groups can gain the responsible capital they need to improve their livelihoods. For example, Kuunda can enable a mobile money agent in Tanzania to access short-term credit so they can complete more transactions for their customers, who typically live in low-income communities in rural areas, while also earning more commission.

2. Creating solutions for the next generation of workers

We’ll also look at companies addressing challenges related to the future of work in emerging markets, especially in Africa. As CGAP CEO Sophie Sirtaine recently pointed out on our podcast, 82 countries will experience a net increase in their youth populations (ages 15 to 24) through 2050, leading to more than 150 million people entering the labor market. The vast majority of this increase will occur in Africa—and this population is already digitally savvy.

How do we create enough jobs for this rapidly growing population? How do we create a financial safety net that allows young people to reskill and upskill to meet job market needs? And how do we ensure that companies fairly treat contractors, informal workers, and gig workers, and provide them with crucial benefits like insurance and savings? While other questions around education and remote work are still important, we can’t discuss the future of work without creating a more inclusive financial system.

Our portfolio company MyRobin, based in Indonesia, is helping blue-collar and gig workers find work opportunities through their app by vetting and matching them to jobs in hospitality, construction, sales, manufacturing, and more. Through MyRobin’s platform, both employers and employees can be sure of the other’s legitimacy, and an in-app CV records the workers’ job history. MyRobin also tracks hours worked and provides on-time payments into digital accounts, making additional financial solutions available to these workers based on their needs.

3. Building resilience to climate change

Climate change is top of mind for anyone working in emerging markets since these communities will be most affected by weather events like storms and droughts, climate migration, extreme heat, and similar climate-related shifts. Inclusive fintech offers vital solutions that help the most vulnerable groups, including women, migrants, and smallholder farmers, adapt to these challenges. These solutions include crop insurance to protect against disasters and banking services for those who are forced to relocate across borders.

One of our newest portfolio companies, Verqor, is working to create a more resilient future for farmers in Mexico through digital technology. More than 90 percent of farmers in Mexico can’t access formal financing, although these small and medium size farms are vital to the food supply of Mexico and the broader region. Verqor has created a digital platform that allows farmers to access financing, high-quality supplies like seeds and fertilizers, buyers for their products, and opportunities to advance their digital literacy and sustainability.

4. Unlocking the economic potential of women

Nearly 2.4 billion working-aged women across the world lack the same economic opportunities as their male counterparts, and 178 countries have legal barriers in place that prevent women’s full economic participation, according to the World Bank. Yet, when women are given opportunities to earn income and start businesses, they reinvest in their families and communities and jumpstart healthy economic growth.

Inclusive fintech is providing women and women entrepreneurs with the financial solutions they need to take control of their financial lives. Showroom, another of our newer additions to the Accion Venture Lab portfolio, is working to economically empower micro, small, and medium-sized garment manufacturers and retailers in India. India’s apparel sector employs 45 million people, the majority of whom are women. Through its digital B2B platform, Showroom connects small retailers to manufacturers and provides them with tools to digitize and streamline their business operations, intending to save them time and effort and increase profits. 

Going forward, we’re interested in cultivating solutions in similar industries where women are overrepresented, especially those solutions that take into account the unique needs and circumstances faced by women clients.

5. Exploring the inclusive potential of AI

We’re continuing to see new ways that AI (particularly generative AI) is revolutionizing industries and work patterns, but its utility for underserved populations is still becoming clear. AI applications and data analytics can help us see the financially invisible, but hastily deployed solutions also run the risk of worsening bias and discrimination since underserved customers have unique data footprints that can make them appear like credit risks.

Accion Venture Lab portfolio companies are already leveraging the power of AI to uplift the underserved. In Kenya, our portfolio company Apollo Agriculture uses predictive analytics to synthesize satellite and weather data, and ultimately provide crop insurance and financing to small farms. Apollo also connects their clients with data-driven advice and agricultural inputs to help farmers boost their crop yields.

We’ll explore AI’s potential for inclusion in the next season of our Fintech for the People podcast. This technology is exciting, but as an investor focused on creating a more inclusive financial system, we will continue investigating the real utility of AI for vulnerable and underserved groups. Innovation can have unintended consequences, and it’s on us to fully understand the opportunities and risks facing our end clients.

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