BANKS AND FINTECH STARTUPS ARE WORKING TOGETHER TO ACCELERATE FINANCIAL INCLUSION

The newest report from the Center for Financial Inclusion (CFI) at Accion and the Institute of International
Finance (IIF) discusses the value of partnerships between fintech startups and financial institutions and begins
with an African proverb: “If you want to go fast, go on your own. If you want to go far, go together.”
The financial inclusion movement has to go far. Around the world, three billion people live in poverty and have
little to no access to high-quality, affordable formal financial services. Providing them with the financial services
they need to build better lives and creating a financially inclusive world demands that we find the most effective
ways to work together, create better products, and refine new ways of delivering them.
As the new CFI/IIF report, “How Financial Institutions and Fintechs Are Partnering for Inclusion: Lessons from the
Frontlines” explains, partnerships between financial service institutions can be tremendously effective in
expanding access to the formal financial economy to the unserved and underserved, particularly in emerging
markets.
Produced with support from the MetLife Foundation, the report is based on 24 in-depth interviews with firms
and experts from around the world, and highlights 14 partnerships in as many countries that combine fintech
innovation with commercial banking expertise.
The report identifies four key financial inclusion challenges in emerging markets that mainstream financial
institutions address through fintech partnerships:
 gaining access to new market segments
 creating new offerings for existing customers
 data collection, use, and management
 deepening customer engagement and product usage
The report’s case studies reveal how partnerships are helping banks and fintech startups overcome those
challenges and harness innovation to accelerate inclusive finance. In one instance, Accion partner DemystData
worked with a large Philippines-based bank to expand credit products to customers with little to no formal credit
history. Their partnership has helped the bank verify customers in real-time and assess credit risk, all while
learning more about how to tap online, social, and external data to make better decisions.

Financial institutions and fintechs can both benefit from partnerships with one another.
Another case study discusses a partnership between MicroBank, a subsidiary of Caixa Bank, and Entrepreneurial
Finance Lab (EFL) Global, which is using a psychometric scoring model and machine learning to improve risk
modeling and assess creditworthiness. The new model led to a 70–80 percent approval rate of credit requests, up
from a 10–20 percent approval rate with traditional risk models.
Win-win-win for startups, banks, and customers
The various case studies throughout the report demonstrate that there is any number of reasons why fintech
startups and financial institutions should work with one another.
For startups, partnerships with financial institutions allow new companies to scale their technology and access
the capital they need to grow.
For banks, collaborating with fintech startups allows them to improve product offerings, increase efficiency, and
lower costs, all without making significant investments in creating new solutions themselves: banks, insurers, and
payment companies noted that it would take three to four times the resources to develop the same technology
that fintech startups do in-house.
Finally — and most importantly of all — partnerships help the world’s three billion financially underserved people.
By creating better products, delivering them more efficiently, and cutting back-office costs, fintech startups and
banks can work together to create a financial system that works for everyone.