Nadeem Shaikh, the co-founder of Anthemis and now CEO of NEEM Exponential, is on a mission to address financial inclusiveness in Pakistan: “Gender and the inclusiveness of particular communities is a huge issue in Pakistan. Pakistan has one of the most under banked female populations in the world. It is not because there is no demand, it is because the way we are providing products is very male orientated.” That maleness extends from the physical location of the old banks to the challenges of digital access for open banking: “If you want to do a top up on your wallet at an old bank, you have to go to a crowded male marketplace, where as a woman you do not want to go. And you are meant to go there carrying cash or you get cash and take it home.” Open banking changes that by placing the products online and tailoring them to the needs of consumers and if the customer has to meet or interactive with someone, it is about providing women as customer service representatives. That kind of simple idea. It is the next frontier of banking and within it lies the possibility of a more inclusive finance sector.
Inclusive finance is still in its infancy, but it is one of the biggest multi-sector trends in open finance and open banking because its potential to shape and challenge patriarchy by systematically changing consumption patterns is immense: As Shaikh puts it, warming to his theme – “The reality is that in market after market we know that lending to women makes sense. There is a much better bad debt ratio by far then when lending to men. Women are much more conscientious at savings and paying attention to long term investments.”
“Inclusiveness is central to the model.” That inclusiveness extends beyond gender. Aside from the buildings, the most obvious physical impact of old style banking which was terrible for the environment, were the endless stream of letters and the statements that went to every customer, often once a month. Levels of literacy in Pakistan have been barriers to accessing traditional products in part because of this text based bias. But open banking’s fintech applications reverses that paradigm. If you can get the design right, then everyone can access products in their own way. “If you use WhatsApp, and almost everyone in Pakistan uses WhatsApp, almost everyone uses Facebook, everyone’s using YouTube. It is not just about saying something in English or Urdu, most people do not read Urdu. It is not about local language. If I provide a WhatsApp product with a simple voice based messaging system that works and I can increase access to financial products.” Moving the operating interface to verbal and visual keys changes the way people access products and moves the entire paradigm towards universal access. For example, “We have a farming platform where we have thousands of videos providing guidance and information, that kind of initiative works very well. We are seeing voice oriented products at the design stage, which allows people to consume information and issue instructions with their voices alone. Simplified, accessible product design is the key to inclusiveness.”
Efficiency of design is also the key to reducing carbon footprint, and AI making use of shared data will always make the most accurate decisions on how to deploy your finances in the most environmentally friendly way possible across a number of different variables. Open banking payment systems allow consumers to manage their spending to an extensive degree. One of the benefits of this is a reduction in use of fuel for deliveries by ensuring that only essential consumables are purchased. Additionally, a cohesive picture of finances acquired through open banking can include the environmental impact of financial decisions, information which previously may not have been as easily accessible. As such, the move to open banking helps to incentivize sustainable consumer behavior. The personalisation of products through shared data prevents superfluous services being, offered and consumed or wasted. AI powered banking and purchasing linked to bespoke manufacturing of one off items as required will massively reduce inventory and over production. It can also learn patterns of behavior and simplify functions so that only those you really need are available making the experience easier to master.
But we have to get people onto these platforms and there are real digital divides in emerging markets like Pakistan. That means there is a responsibility on providers to cut costs: “One way of addressing the digital divide is to reduce costs of smart phones and minutes, including reasonable financing without any interest rates, to encourage greater take up and multiple phones in households. At the moment a lot of households can’t afford it, so they only have one phone and the man is watching YouTube on that phone! And the women does not have it or she has a shared use of it.” Two major changes are needed, according to Shaikh “Firstly, Increase the supply of smartphones, make them cheaper and cheaper and you increase inclusiveness at a stroke. Secondly, there are so many biases around in the product design that exclude whole communities completely. People always assume that people who are underbanked are not educated, or they are not informed.” That is not the case with many of the communities that are underbanked, it is that the traditional banks have simply not tried to reach them. Nadeem Shaikh and Neem Exponential are set to change that forever.