Siddharth Mehta, Bay Capital Founder: Social Fintech Inclusivity is expanding the Business Efficiently

With the start of the 2008 financial crisis, the financial services sector has undergone significant upheaval. Part of what aided the growth of the FinTech sector was general dissatisfaction with traditional financial institutions and their failure to adjust to changing client requirements. A third of all digitally engaged people utilize fintech products, up from 15% in 2015, according to EY Fintech Adoption research. The sector is projected to keep expanding in the years to come as more individuals accept the digitization of banks and receive access to essential financial services via technology. As per Siddharth Mehta IL&FS former director “in terms of potential for short-, mid-, and long-term growth, FinTech is one of the most popular sectors today”.

It's important to distinguish between organizations that are de facto socially conscious and those that have robust social corporate responsibility (CSR) practices while discussing social FinTech. Social businesses, on the other hand, are those whose main goal is to use market processes to resolve a critical social or environmental issue. On the other hand, while any firm can include CSR practices into its fundamental business strategy, their main goal is not to bring about social or environmental change. So, compared to typical businesses with a social edge, such as Siddharth Mehta Bay Capital CIO & Founder claims social FinTech enterprises have a significantly greater potential for transformation.

The misconception that for-profit financial institutions cannot prioritize social impact as a goal is also disproved by the social FinTech industry. According to a recent report, over 70% of "impact" enterprises make more money than conventional businesses, and impact investment has increased by roughly 10% points since 2012. So, it is feasible for a business to participate in conventional financial operations, make money, and benefit society at the same time.

The major factor drawing more and more clients to social FinTech goods each year is their "social" appeal added Siddharth Mehta IL&FS former director. Studies indicate that social FinTech enterprises will continue to increase in number and most likely establish a greater presence in impoverished countries, despite the fact that there is a shortage of data in the field due to its recent emergence. China, India, and Brazil are among the top five countries in the world for FinTech adoption rates, despite having extraordinarily high proportions of underbanked and unbanked citizens.

Social FinTech companies are prevalent all around the world, however they are primarily concentrated in underdeveloped countries. The traditional banking services currently provided by established financial institutions, such as money transfers, insurance, and internet banking, as per Siddharth Mehta Bay Capital CIO, are the focus of most fintech startups in the Global North. On the other hand, those in the Global South concentrate on helping the unbanked. They often offer crowdfunding, payments, and microfinance services. FinTech businesses that operate in underdeveloped countries frequently give their consumers access to financial services for the first time. They are consequently largely found in the continents of Africa, Asia, and South America because to their specific attractiveness to these regions.

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