A Vision for Inclusive Growth

Selected from a competitive pool of applicants, fifteen fintech startups from across the ASEAN region have been chosen to participate in this exclusive program. These entities stand out for their innovative approaches to enhancing financial access and sustainability within their communities. They are at the forefront of a dynamic movement, aimed at creating impactful solutions that address the unique challenges of their regions.

Luxembourg’s Legacy and Leadership in Global Development

For over a decade, Luxembourg has consistently allocated 1% of its Gross National Income (GNI) to Official Development Assistance (ODA), demonstrating an unwavering commitment to global cooperation and development. Luxembourg’s financial sector plays a pivotal role in this endeavour, hosting a significant portion of the world’s microfinance investment vehicles (MIVs) and facilitating a substantial share of global microcredit transactions. The Catapult: Inclusion SE Asia program is a testament to Luxembourg’s leading position in the financial inclusion domain, furthered by the collaborative efforts of the LHoFT Foundation and the Directorate for Development Cooperation and Humanitarian Affairs. Together, and with the support of a host of other incredible partners, 70 fintechs in emerging countries on the African continent have participated in the Catapult program over the past six years, with significant success.

The Program: A Conduit for Innovation and Collaboration

Scheduled to commence in Bangkok, Thailand, coinciding with the inaugural edition of Money 20/20 Asia, the Catapult: Inclusion SE Asia program offers participants an invaluable opportunity for growth and exposure. The curriculum is designed to enrich the fintech startups with a comprehensive suite of workshops, mentoring sessions, networking opportunities, and investor interactions. Following the initial week, ten of the selected fintechs will extend their journey to Luxembourg, further integrating into the global fintech ecosystem and benefiting from Luxembourg’s extensive financial services network.

Supported by the Directorate for Development Cooperation and Humanitarian Affairs and orchestrated by the LHoFT Foundation, the program is bolstered by over 30 esteemed partners from the financial services, microfinance, and fintech sectors, such as NIA, DEPA, the fintech associations from Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam Fintech Associations, ADA, InFiNe, LMDF, SPTF, Afi, Bamboo Capital Partners, Bitkub, Double Feather Partners, Do Ventures, European Microfinance Platform, GGGI, TFA, Luxembourg for Finance, VIISA, Money 20/20, ABD, Alliance of Digital Finance Associations, Amarante Consulting, Brankas, TechSauce. These partnerships reflect the collective ambition to enhance financial inclusivity and innovation across continents.

A Pivotal Moment for ASEAN-Europe Fintech Collaboration

The Catapult: Financial Inclusion SE Asia initiative aims to bridge and strengthen connections between the fintech ecosystems of the ASEAN region and Europe. Led by the LHoFT Foundation, this program not only showcases Luxembourg’s commitment to financial inclusion but also establishes a collaborative platform for fostering innovation and creating lasting impacts in the communities served.

Nasir Zubairi, CEO of the LHoFT Foundation, said:

“Through Catapult: Inclusion SE Asia, we are championing a more inclusive financial future that leverages technology. The LHoFT, with the support of our partners, aims to empower ASEAN startups to bridge the accessibility gap in financial services, fostering a world where finance empowers everyone. This program marks a critical step towards that vision, embodying our commitment to help transform financial landscapes globally.”

Mr. Xavier Bettel, Vice Prime Minister, Minister for Development Cooperation and Humanitarian Affairs, commented:

“The launch of Catapult: Inclusion SE Asia is a testament to Luxembourg’s resolute commitment to global cooperation and the advancement of sustainable development. By fostering innovation and collaboration in the fintech sector, the program aims to drive financial inclusion and promote economic growth and social equity across the ASEAN region to create a more inclusive and prosperous future for local communities.”

To stay updated on this program, follow us on LinkedIn throughout the entire duration of the program.

The Selected FinTech:

• AIFORESEE – Indonesia

Streamlined Financial Services Thru Innovative Credit Score.

AIForesee is an innovative credit score company that focuses on supporting lending institutions that target the productive segment (i.e.: MSMEs). They aggregate alternative data sources (i.e.: telco data, social media data, payment-related data, etc) and process them with their proprietary scoring engine by leveraging machine-learning algorithms.

• BLUE DUCK TECH SDN BHD – Malaysia

Eliminating cash rental deposits for residential & commercial tenants.

Their residential tenants: 90% are b40 tenants. They are the Risk management company specialised in underserved customers, being guarantor for them and helping them to achieve financial freedom. The idea is to assist tenants to save on rental deposits, giving them a chance to have mobility. For landlords, they are feeling safe because they verified all the tenants before approving them to use our Zero Deposit Program.

• EKKO FINANCIAL WELLNESS – Vietnam

B2B2C financial wellness package for workers.

Ekko is a b2b2c social impact startup on a mission to help workers in South East Asia achieve financial wellness by changing the way they are paid. They provide workers with real-time access to their earned wages through partnerships with employers with a goal to combat the reliance on predatory lenders and debt traps. At the heart of their ethos is financial autonomy, which they foster by offering increased liquidity, comprehensive financial education, and tailored financial planning tools.

• FARMVOCACY – Philippines

Sustaining Farms. Sustaining Lives.

Farmvocacy provides farmers access to financing using PALAYAN-Pawnshop digital platform as a form of commodity (grains) collateralized financing that enables farmers to optimise grain prices capitalising on the seasonality of commodity prices especially during the peak and off-peak harvest season.

• FINA FINTECH – Laos

Digital Financial Services Provider.

FINA is a modern finance institute using a digital system and an expert financial team. They are the first finance institute in Laos that uses the FinTech system to provide convenient financial services for customers and business partners.

• FINFRA – Indonesia

Digital Financial Services Provider.

FINA is a modern finance institute using a digital system and an expert financial team. They are the first finance institute in Laos that uses the FinTech system to provide convenient financial services for customers and business partners.

• GOODBANK – Philippines

Sustainable Finance Platform for Financial Institutions.

GoodTech is a sustainable financial technology company connecting farmers and homebuyers, merchants and gig workers, with rural financial institutions. Through strategic partnerships with established local financial institutions and the strongest players in the technology industry, they bridge the financing gap and make the livelihood of hardworking families more resilient to economic and environmental threats through savings and insurance.

• GLOBAL CREDIT PROS – Philippines

Getting people out of the cycle of debt and on to a path of retirement.

They provide a holistic suite of financial education, term insurance, access to credit, retirement plan, car and housing loan, and mental health services. They are a B2B t o B2C financial wellness provider. They have 11 partners which gives us access to approximately 40,000 employees. They provided world class customer service driven by our intense CX continuous training and invested in an OMNI Channel platform.

• ICARE GROUP – Singapore

iCare is a social enterprise focused on providing low-income women workers.

iCare Group is a social impact membership-based buy-now-pay-later service aimed at offering a long-term sustainable purchase cycle to women factory workers earning $100-400 per month in Cambodia and Lao. The business model is developed around making micro-value mass-retail commerce transactions through deferred payment over the long term with minimal cost-of-funding. These products are sold at competitive prices, when compared to authorised retailers.

• INVESTED PHILIPPINES – Philippines

InvestEd is a FinTech lending platform for Gen Z consumers.

InvestEd is a financing platform for the next generation. It lends directly to Gen-Z students and also operates youth lending services for institutions. It has managed $6M of funding to-date and achieved the lowest default rate in student lending through its algorithm-driven risk model.

• LANETH TECH COMPANY – Thailand

Providing complete core banking solutions to rural financial institutions.

They specialise in Core Banking Solutions tailored for microfinance institutions, rural banks, and credit unions worldwide. Their primary objective is to offer a highly scalable system suitable for both small institutions and large organisations.

• LAO MOBILE MONEY – Laos

Lao Mobile Money has already successfully onboarded over 600,000 registered users.

They offer a versatile platform for digital payments, remittances, and bill payments. Furthermore, their partnerships with local businesses and government agencies provide users with various services within our ecosystem. Their e-wallet has successfully addressed the problem of financial exclusion in remote areas by partnering with local convenience stores to serve as cash-in/cash-out points, extending their financial network to underserved communities.

• LTS VENTURES – Laos

FinTech for Financial Inclusion.

LTS Ventures enables villages to run banks by providing a digital platform and training. Their solution is able to bridge the last mile of financial inclusion, since they are working hybrid: on- and offline. They developed a methodology to set up village banks and to train villagers efficiently in only 3 months per village. They are using AI mechanisms to detect and prevent Fraud and to assess loan requests in a smart way. They are building credit scores for all account holders that have been approved by the Central Bank of Laos. Finally they can disburse money into very remote areas. And all of that happens on a platform that is scalable and easy to use for rural villages.

• NOBURO – Thailand

Financial well-being for your employees.

Noburo solves the problem of income inequality in society through fair credit access and financial literacy for low-income workers by using both humanistic psychology and data science to design digital financial products able to solve the household debt problem in a sustainable and permanent way.

• WAHINE CAPITAL – Malaysia

W Vault your personal digital vault designed for women by women.

Their mission is to create a future where women have the confidence, capability, and knowledge to secure a solid financial foundation for themselves and their communities. Their inaugural product, W Vault, was launched on May 28th, 2023. W Vault is a digital vault, offering a secure online platform where users can confidently store their important information and documents. With its user-friendly interface, W Vault allows users to efficiently organise their assets and liabilities, helping them manage their financial information effectively.

Building on the success of the previous editions of CATAPULT: Inclusion Africa since 2018, the LHoFT is excited to announce the 10 selected startups that will participate in the 6th edition of this unique program for Fintech startup development. 

This year, the CATAPULT: Inclusion Africa programme targeted African countries where the French language is predominant and over 140 high quality applications were received. For the first time, the bootcamp will be delivered in French and will take place in Africa, in Lomé, Togo from October 16th to October 20th 2023. The Catapult: Inclusion Africa programme will be run in conjunction with African Microfinance Week, providing unique networking opportunities for the selected firm.

Developed by the LHoFT Foundation and sponsored by the Ministry of Foreign & European Affairs – Directorate for Development Cooperation and Humanitarian Affairs, the program targets companies focusing on financial inclusion in Africa, aiming to build bridges with Luxembourg’s Microfinance and broader finance industry while highlighting their initiatives in alignment with the sustainability goals of Luxembourg’s finance center.

This 6th edition of CATAPULT: Inclusion Africa will once again leverage Luxembourg’s Inclusive Finance and Fintech ecosystem to support selected firms in developing their businesses and achieving their inclusion goals. The LHoFT team will be joined by high-profile key partners from Ada, Infine, Luxembourg for Finance, the Alliance for Financial Inclusion (AFI), the European Investment Bank (EIB), Luxembourg Microfinance and Development Fund, Bamboo Capital Group, MMD-Ventures, SPTF, LuxDev, Amarante Consulting, e-MFP, GGGI, CGAP, LMDF ,ACRC, and more, who will be working with the cohort throughout the program. 

CATAPULT: Inclusion Africa provides a tailor made program with intensive mentoring, coaching, peer to peer learning and dedicated workshops for the selected Fintech startups. The program will include sessions on business model mapping, investment readiness, funding and capital raising, social impact, scaling strategy, building teams and other strategic sessions. Several alumni of previous year’s programs will travel to Togo to share their experiences with the 2023 cohort.

The 10 Fintech startups selected to take part in the 2023 edition of CATAPULT: Inclusion Africa are:

AMIRA GLOBAL TECHNOLOGIES

Abidjan, Ivory Coast

http://www.paiementpro.net

Amira Global Technologies is a company specialising in digital transformation that has put in place a number of social impact solutions based on its online payment solution, Paiement Pro. This solution enables businesses and entrepreneurs to open up to new markets by accepting mobile payments in several African countries (Côte d’Ivoire, Burkina Faso, Mali, Benin, Niger, Senegal and Togo) and electronic payments (Visa and Mastercard). With Paiement Pro, entrepreneurs can sell online, collect money and apply for loans based on the cash flow generated.

CA PAY

Libreville,Gabon

https://capay.pro

CA PAY is a web-based payment platform. Its aim is to give people excluded from the traditional financial system and living in remote areas easy access to financial transactions. Through its Capay web platform, CA PAY enables companies to make their various payments of salaries, bonuses, subsidies, etc. using mobile money for their unbanked employees.

COVA AFRICA

Douala, Cameroon

http://www.cova.africa

Cova Africa is an insurtech dedicated to French-speaking Africa. The company uses technology, innovation and partnerships with sectors more popular than traditional insurance to facilitate the distribution of insurance in Cameroon and French-speaking Africa. It offers turnkey solutions for the digital marketing of tailor-made insurance products to various partners wishing to distribute insurance products to their customers as complementary cover to their basic products (microfinance and fintechs, health techs, agritechs).

DREAMCASH

Yaounde, Cameroon

https://www.mymiqo.com

MiQo is a neo-microfinance offering a SUPER financial app for mass financial inclusion, providing a fully digital bank account in less than 2 minutes to unbanked and underbanked people in French-speaking Africa with a smartphone. It comes with a contactless VISA card and an NFC-enabled mobile app, and aims to provide financial services such as instant credit lines and nano-loans in less than 10 seconds without collateral, contactless payments in shops via QRcode and NFC, multi-currency virtual cards for online payments, free national and cross-border money transfers, personalised financial education, savings and investment.

KOLA GROUP

Yaounde, Cameroon

https://kolagroup.io/

Kola is a digital microfinance company that helps unbanked individuals and small and medium-sized enterprises in sub-Saharan Africa access credit, payment solutions and manage their finances through digital solutions. To manage its risks, Kola uses a proprietary credit scoring model based on behavioural and financial data.

MICROFINANCE

Lomé, Togo

http://www.microfinancepro.com

Microfinance’s SAAS solution tackles the problems of collecting money for MFIs and enables MFI customers to easily access their current/savings account on their own mobile phone and easily transfer money to accounts, locally and abroad.

ORYA TECHNOLOGIES

Dakar, Senegal

http://www.oryatech.com

ORYA TECHNOLOGIES is an African fintech that positions itself as an API provider for financial services. Their business is building secure and inclusive technology for financial professionals in Africa. Their Fintra product automatically manages salary advance requests and provides employees with a financial management system, while maintaining control and without impacting companies’ cash flow.

RUBYX

Dakar, Senegal

http://www.rubyx.io

Rubyx is a data-driven fintech offering MSME credit solutions for service providers in emerging markets. With their solution, they aim to close the funding gap faced by informal entrepreneurs and small businesses to finance their operations. They have created a cloud-native, API-driven AI lending platform built around complementary modules including a cloud-based data warehouse / a decision engine and scoring algorithm / a flexible credit management system and a range of information access channels (API, web application, mobile application, external BI tools).

TOUMAI ANALYTICS

Rabat, Morocco

http://www.toumai-analytics.com

ToumAI offers a SaaS Data Analytics platform that collects and analyses local data in Africa, whether audio or written, whatever the local dialect of expression. In this way, the company is giving a voice and economic and financial weight back to local communities in Africa, while enabling international investors to better manage local risks thanks to more granular and robust data. They have deployed a citizen survey application that enables us to combine education (sustainable development and financial inclusion) and local data feedback, while paying respondents in the form of telephone credit. Their SaaS solution is fed by this data, as well as data from the media and social networks, and processes it while offering decision-making support mechanisms thanks to their generative AI and dynamic indicators.

WAJENZI

Luxembourg

http://www.wajenzi.fund

Wajenzi is a digital marketplace that enables African SMEs to raise funds from individuals and institutional investors in the EU and the US in exchange for an equity stake in their company.

Wajenzi’s mission is to promote financial inclusion by connecting individual investors such as the diaspora, European and American retail investors, institutional investors and governments with African SMEs seeking financing to develop their activities.

Any questions, please contact us !

S’appuyant sur le succès des programmes CATAPULT : Inclusion Africa depuis 2018, nous sommes ravis de lancer la sixième édition de ce programme unique de développement de startups Fintech du 16 au 20 Octobre prochain à Lomé – Togo.

Soutenu par la Direction de la coopération au développement et de l’action humanitaire et développé par la Fondation LHoFT, le programme cible les entreprises se concentrant sur l’inclusion financière en Afrique, visant à construire des ponts entre l’Afrique et l’Europe et soulignant l’alignement de leurs initiatives sur les objectifs de durabilité du centre financier du Luxembourg.

Pour cette édition, nous sommes heureux de délivrer le programme en langue française pour la première fois.  Nous allons accueillir les participants des Fintechs sélectionnées à Lomé, Togo. Le programme se déroule en même temps que la Semaine Africaine de la Microfinance (SAM), apportant une opportunité unique d’interconnection.

Cette édition de CATAPULT : Inclusion Africa s’appuiera une fois de plus sur l’écosystème luxembourgeois de la finance inclusive et de la Fintech pour soutenir les 10 entreprises sélectionnées et les aider dans le développement de leurs activités et la réalisation de leurs objectifs d’inclusion.

Postulez maintenant !

• Quand? Catapult: Inclusion Africa aura lieu du 16 au 20 octobre prochain;
• Où? Au Togo, pendant la Semaine Africaine de la Microfinance;
• Pourquoi et comment? Mise en relation des Fintechs actives dans l’inclusion financière d’Afrique avec des acteurs clés tels que les institutions de microfinance, les investisseurs et les experts de l’industrie et les aider à devenir plus efficaces pour atteindre les segments de marché mal desservis. Le programme se déroule en français avec la collaboration d’acteurs clés des secteurs de la microfinance, de la finance durable et de la finance traditionnelle.

Profitez de cette occasion unique pour vous plonger dans un programme exclusif qui vous aidera à améliorer l’inclusion financière et à développer votre entreprise !

Postulez maintenant !

Pour plus d’informations, visitez notre site internet dédié: Catapult:Inclusion Africa.

Regardez notre vidéo, un très bon aperçu de ce qui vous attend :CATAPULT: Inclusion Africa 2022 – Financial Inclusion Bootcamp from the LHoFT

Building on the success of the CATAPULT: Inclusion Africa programmes since 2018, we are delighted to launch the sixth edition of this unique fintech startup development programme from 16 to 20 October 2023 in Lomé – Togo.

Supported by the Directorate for Development Cooperation and Humanitarian Action and developed by the LHoFT Foundation, the programme targets companies focusing on financial inclusion in Africa, aiming to build bridges between Africa and Europe and highlighting the alignment of their initiatives with the sustainability objectives of the Luxembourg Financial Centre.

For this edition, we are pleased to deliver the programme in French for the first time. We will host the participants from the selected Fintechs in Lomé, Togo. The programme is taking place at the same time as the African Microfinance Week (AMW), providing an incredible and unique opportunity for networking.

This edition of CATAPULT: Inclusion Africa will once again rely on the Luxembourg inclusive finance and Fintech ecosystem to support the selected 10 companies in developing their business and achieving their inclusion goals. Apply now!

• When? Catapult: Inclusion Africa will take place from 16 to 20 October 2023;
• Where? In Togo, during the African Microfinance Week;
• Why and How? CATAPULT: Inclusion Africa will cover a range of broad topics, including business model mapping, scaling strategies, investability, business plan presentation, legal strategy, pricing, marketing strategy, and more. The selected Fintech will have the opportunity to connect with partners, sponsors, investors, Microfinance institutions (MFI) and Public Financial Institutions (PFIs).

A unique opportunity to be immersed in an exclusive programme supporting YOU to enhance financial inclusiveness and scale your business

APPLY NOW !

For more information, visit our dedicated website: Catapult:Inclusion Africa.

Watch our video, a great overview of what to expect: CATAPULT:CATAPULT: Inclusion Africa 2022 – Financial Inclusion Bootcamp from the LHoFT

For this Fourth Edition, the LHoFT team and jury partners selected 10 impressive Fintech ventures from a field of over 120 applications. The program will close on the 9th of December with a final pitching event at the LHoFT, in front of a highly credible jury, as well as investors and audience members .

Developed by the LHoFT Foundation and supported by the Luxembourg Ministry of the Economy, “Catapult: Kickstarter 2022 – Fall Edition” will support 10 amazing Fintech startups over the course of two weeks, with the aim to develop their business models, focusing on business scaling and risk management, and bring them connectivity with the Luxembourg Financial Services ecosystem. As the name suggests, the programme aims to kickstart business growth through expansion to Luxembourg leveraging outstanding mentors, tutors and through connectivity to the local ecosystem.

Over recent years, Luxembourg has built up a supportive and robust Fintech startup ecosystem through collaboration between key public and private decision-makers. Aligned with Luxembourg’s ambition to create a leading startup and entrepreneurial nation, the Catapult: Kickstarter program is dedicated to further catalysing Fintech innovation in Luxembourg and beyond.

In order to effectively leverage the strengths of Luxembourg’s community and capabilities, the selected firms focus on delivering services to financial institutions (B2B), with particular emphasis on Insurtech, Regtech, Fundtech, Cryptocurrencies and Digital Assets, B2C payments, Cybersecurity and Sustainability as ESG-related Fintech remains a key area of focus.

The two-week program is tailored to the particular stage of the participating Fintechs and is structured around classroom tutorials, customer discovery, challenges, one-to-one meetings, pitching sessions, entrepreneurs’ feedback sessions, and mentorship sessions.

The 10 participating Fintech companies will meet multiple partners across those two weeks, including Luxembourg For Finance (LFF), Société Générale, and Middlegame Ventures (MGV), providing advice on their business models, funding strategies, and industry product testing.

The program will begin on Monday 28th of November will close with a final pitching event on Friday, 9th of December. Five of the ten participating firms will be able to access up to 50,000 EUR in subsidies from the Luxembourg Ministry of the Economy, based on the fulfilment of eligibility criteria.

The 10 Selected Fintech Startups of the Catapult: Kickstarter 2022 – Fall Edition are:

Bilic – United Kingdom: Bilic is a London-based blockchain security forensics and data analytics startup offering products to help defence agencies, government agencies, intelligence agencies, and financial institutions investigate, detect and prevent insecurity on blockchain networks.

Byrssa – Czech Republic: BYRSSA is a trusted European digital execution platform for SAFE based seed funding and Security Token Offering. Byrssa is the first European licensed equity crowd funding platform based on standard SAFE contract for seed and on STO for priced funding. Byrssa’s mission is to simplify, accelerate and disintermediate the early stage start-up fundraising process.

Invoport – Luxembourg: Invoport helps the fund administrators digitally process the fund operations to increase productivity and quality in addition to providing the investors an online portal to monitor the fund performance. It is composed of (1) a cloud computing expert software where users can accomplish the funds operations via its online platform and (2) an interface for the investors where they receive the information shared by the fund such as capital call, distributions, and reports.

Lyyna Insurance and Financial Services – Switzerland: Lyyna empowers financial institutions to leverage their data to offer the right insurance to the right customer at the right time. Lyyna is a SaaS provider which empowers retail banks and other financial institutions to leverage their transactional data (e.g. payments, financing requests, etc.) as well as other customer-related data (e.g. chats, emails, existing contracts) to 1)- recognise the right signals indicating that a customer is experiencing an insurance relevant life moment and 2)- decide if they want to offer insurance for that particular customer.

Omnio – Bulgaria: OMNIO is a multi-platform solution that detects suspicious activity, generates assessments and recommends a course of action for your cases. It significantly reduces the risk of failure, resulting in less time spent on compliance and no additional costs for additional staff, external advisors, or regulatory fines. Designed for businesses of all sizes, it is a cloud-based/ on-premise solution that lets employees manage compliance, monitor transactions, detect frauds, assess risks, and more.

Paperless IO – Germany: Paperless lets the users create, sign, manage, and automate intelligent documents on a single platform and for more productivity and a better experience for everyone involved. In more detail the platform allows you to create Smart-Paperless-Documents that allow data input and real-time data validation, different signee workflows and are responsive for every mobile device. In addition, the Smart-Paperless-Document can be filled and signed on every language the document has been created in.

Pelt8 – Switzerland: Pelt8 is a B2B SaaS and suite of APIs powering the sustainability ecosystem by turning complex disclosures into clean data. We make it easy for small to large companies to deal with their growing disclosure requirements through our automated reporting while providing them with the processes and controls to do it in a clean and auditable way. Selected data points can then be shared with various stakeholders from system to system through machine readable formats.

RegTech Datahub – Denmark: To replace existing market data vendor for all MiFID II/MiFIR reporting needs, RegTech Datahub supply the customer with all instrument static data necessary to comply with the many different reporting requirements under MiFID II/MiFIR, i.e. – Pre & post trade transparency reporting – Transaction reporting – Best execution reporting – Cost reporting (running + annual) – Loss reporting – SI calculations/surveillance – ISIN Look-up/ ISIN creation.

SDG Assessment – United Kingdom: ©SDG Assessment is a sustainability, environmental, social and governance (ESG) performance reporting tool that assists SMEs and large businesses with benchmarking their performance in relation to UN Sustainable Development goals (SDGs) by encouraging organisations that complete the self-assessment process to commit to addressing pertinent UN SDGs. The ©SDG Assessment app aims to adopt a five-step approach outlined in the Sustainable Strategic Growth Model: Learn, Develop, Implement, Optimise and Sustain bolstered by blockchain technology that supports information security and enhances the company’s customers journey experience.

Symbiose Management – France: Symbiose Management is empowering people to address climate change from the bottom-up, by providing the first negative CO2 investment product based on tree plantations for investors, with their innovative platform and strong ecological commitment.

Building on the success of the previous editions since 2018, we are thrilled to launch the 5th edition, CATAPULT: Inclusion Africa, which will be delivered in Luxembourg.

Developed by the LHoFT Foundation, the programme targets companies focusing on financial inclusion in Africa, aiming to build bridges with Luxembourg’s Microfinance Industry, highlighting their initiatives and very much aligned with the sustainability goals of Luxembourg’s finance center.

This 5th edition of CATAPULT: Inclusion Africa will once again leverage Luxembourg’s Inclusive Finance and Fintech ecosystem to support selected firms in developing their businesses and achieving their inclusion goals. In addition, firms will get unique exposure while participating in the Arch Summit event focusing on exploring next gen technology innovation. 

This acceleration programme is a unique one-week bootcamp supporting 10 selected Fintech companies from all over Africa focusing on financial inclusion and keen to build bridges between Africa and Europe, highlighting their initiatives and very much aligned with the sustainability goals of Luxembourg’s finance centre, where the potential is huge.

• When? Catapult: Inclusion Africa will take place from 24th to 28th October 2022. 
• Where? In Luxembourg, a key leading Microfinance center.
• Why and How? CATAPULT: Inclusion Africa will cover a range of broad topics, including business model mapping, scaling strategies, investability, business plan presentation, legal strategy, pricing, marketing strategy, and more. The selected Fintech will have the opportunity to connect with partners, sponsors, investors, Microfinance institutions (MFI) and Public Financial Institutions (PFIs).

Get the chance to be immersed in an exclusive programme supporting YOU to enhance financial inclusiveness and scale your business

For more information, visit our dedicated website, Catapult:Inclusion Africa. 

You can also watch our video, giving you a great insight of what is to come:  CATAPULT: Inclusion Africa 2020 – Financial Inclusion Bootcamp from the LHoFT

A Fintech acceleration program for early-stage startups with up to €50.000 in subsidies for each of five winning Fintechs

Building on the success of both the 2021 Editions of Catapult: Kickstarter, the LHoFT Foundation is opening on Monday 20th of June, the third edition of this unique program of Fintech startup development. After receiving 180 applications, the LHoFT Team and jury partners selected 10 impressive Fintech ventures to enter the program. The program will close on the 1st of July with a final pitching event, in front of a highly credible jury, investors, and audience members at the ICT Spring . 

Developed by the LHoFT Foundation and supported by the Luxembourg Ministry of the Economy, “Catapult: Kickstarter 2022 – Summer Edition” will support 10 amazing Fintech startups over the course of two weeks, with the aim to develop their business models, focusing on business scaling and risk management, and bring them connectivity with the Luxembourg Financial Services ecosystem. As the name suggests, the programme aims to kickstart business growth through expansion to Luxembourg leveraging outstanding mentors, tutors and by establishing highly promising connections to the local ecosystem.

Over recent years, Luxembourg has built up a supportive and robust Fintech startup ecosystem through collaboration between key public and private decision-makers. Aligned with Luxembourg’s ambition to create a leading startup and entrepreneurial nation, Catapult: Kickstarter programe is dedicated to further catalysing Fintech innovation in Luxembourg and beyond.

In order to effectively leverage the strengths of Luxembourg’s community and capabilities, the selected firms focus on delivering services to financial institutions (B2B), with particular emphasis on Insurtech, Regtech, Fundtech, Cryptocurrencies and Digital Assets, B2C payments, and Cybersecurity. For this, the first of two 2022 bootcamps, ESG-related Fintech is also a key area of focus.

The two-week program is tailored to the particular stage of the participating Fintechs and is structured around classroom tutorials, customer discovery, challenges, one-to-one meetings, pitching sessions, entrepreneurs’ feedback sessions, and mentorship sessions. Coming out of a period of Covid lockdowns, this edition of the programme will be the first where the participants will also be on-site in Luxembourg.

The 10 participating Fintech companies will meet multiple partners across those two weeks, including Luxembourg For Finance (LFF), Société Générale, and Middlegame Ventures (MGV), guiding them through business models, funding strategies, and industry product testing. 

The program will begin on Monday 20th of June and it will close with a final pitching event on Friday, 1st July open to the public. Five of the ten participating firms will be able to access up to 50,000 EUR in subsidies from the Luxembourg Ministry of the Economy, based on the fulfilment of eligibility criteria. 

Mr. Nasir Zubairi, CEO of the LHoFT, commented: “The 10 selected Fintech firms are all exciting businesses with high relevance to the Luxembourg financial centre, addressing some key challenges and opportunities for local actors. It is great to have such an application boom following two years of uncertainty and lockdowns as a result of COVID19.  It is exciting to be able to have these firms be present physically in Luxembourg, to enable us to create strong synergies with the Luxembourg finance community.”

Join us, at the ICT Spring, on Friday 1st of July for the final pitching event to discover the best Fintech solutions developed during the program. 

======

The 10 Selected Fintech Startups of the Catapult: Kickstarter 2022 – Summer Edition are: 

1.     10BE5 – United Kingdom

https://10be5.com/

10BE5 is building a natural language processing-powered platform that automates the drafting of capital markets disclosures and related processes. Their solutions automate substantive legal work. They are domain experts and design their products with input from top law firms. Their products help reduce staff burnout, free up capacity to undertake other complex work, and reduce risks through the elimination of mechanical errors. They also reduce the overall cost of access to capital markets for companies.

2.     Artificial Intelligence Finance Ltd – Ireland 

https://onlineapplication.com

Artificial Intelligence Finance Ltd provides a digital Saas platform for customers to apply for mortgages and life assurance through brokers & banks : application, document upload, AML, KYC, Open banking, Underwriting, CRM. This B2B Saas platform makes mortgages easier, faster, and better for everybody through a ‘one touch’ digital application.

3.     Botfiler – Ireland

http://botfiler.com

Botfiler enables more cross-border eCommerce sales. Their technology platform enables this by integrating with leading cloud accounting platforms and online marketplaces, so that local and cross-border VAT reporting can be automated. Botfiler also features review capabilities so reporting errors are spotted and fixed quickly.

4.     Etiq AI – UNited Kingdom

https://www.etiq.ai

ETIQ helps companies to test and monitor their predictive models. For data teams, ETIQ can help to maximise the value they get from their data and AI without having to invest a lot of time and money. It tests data & ML algorithms, identifying issues, bias and preventing accuracy loss in both building & production stages. It consists of 4 pillars of offering and mainly used by data teams, it’s flexible and customisable and allows to quickly and easily run tests on data & ML algorithms. Users can identify and correct issues, ensure compliance and mitigate unintended bias – so they can cut costs and reduce risk across their organisations.

5.     finmarie – Germany 

http://www.finmarie.com

With a mission to help women become financially independent, finmarie builds mobile and desktop consumer financial technology with smart tooling and a hybrid human-digital model of financial and insurance advisory.

6.     Fundvis S.A – Luxembourg

https://www.fundvis.org/

Fundvis offers a workflow management Software for the Fund Industry. They bring the entire industry onto one platform, digitalise their processes and thereby allowing the setup and management of AIF Funds globally. 

7.     iCEIBA – United Kingdom

https://www.iceiba.com 

iCEIBA launched the Dispute Recovery Platform to help small and medium businesses which lose money due to distressed contracts, unresolved commercial claims, and litigations.They provide a low-cost, hands-off, and risk-free solution that uses tech to analyse, manage recovery and monetize distressed contracts and commercial claims. 

8.     Lynxai – United States 

https://www.lynxai.tech/

Lynxai offers a data-driven platform that makes ESG investment more efficient.

Lynxai provides quantitative and qualitative data to facilitate the investment analysis. The provided data is adapted to the client ESG standards. The company helps the client navigate through any government regulations – like EU Taxonomy – and control any red flags from their investments. Lynxai also collects data from non-financial reports, big data and score providers, institutional news, Twitter, Reddit, Glassdoor, blogs, social media and offline sources, so that every information is covered.

9.     Nu Credits – United Kingdom

http://www.nu-credits.com

Nu Credits is a trade finance marketplace that connects SMEs with global lenders (Challenger Banks, Fintech Lenders, Crypto Exchanges, Family Offices and Alternative Asset Investment Managers) in Europe and Asia. They are solving the SMEs trade finance liquidity gap issue by providing multi capital sources lending products such as Purchase Order Finance (B2B BNPL), Receivable Finance, Leasing and Revolving Credit Lines to meet their working capital needs for both cross-border and domestic trades and offering verified multi-dimensional credit data SaaS solution to lenders to make faster and more accurate credits underwriting decision to SMEs.

10. Umazi – United Kingdom

http://umazi.io

Umazi is an enterprise identity platform, enabling all businesses to share verified client identity data leveraging Web3/DLT.  Umazi facilitates the creation of business identity wallets to allow for streamlined business verification and by design enables continuous real time compliance.

Umazi is disrupting the existing due diligence manual, cumbersome and time-consuming due diligence processes by providing those who need access to validated corporate identification with data that they do not have access to today. On the enterprises looking to prove their identity, Umazi facilitates faster verification while allowing them to control their own data (self-sovereign identity management). The enterprise credentials are cryptographically verified to provide a full audit trail on the company, further removing the need to dig up 5years of data evidence. 

======

Disruptive technologies, including blockchain, big data, and artificial intelligence re-shaped and re-leveled financial inclusion efforts, along with other parts of the financial sector.

The Universal Declaration of Human Rights covers a wide range of rights, including the right to work, freedom of speech and movement, right to a fair trial, access to health services and equal pay, and the right to a standard of living adequate for the health and well-being of himself and his family. There is little mention of a right to access basic financial services, including bank accounts or insurances in the Declaration, but yet the high barrier to participating in the traditional economy shows that access to basic financial services should too have been incorporated in the definition of human rights. In fact, EU regulations, Directive 2014/92/EU in particular, gives the European citizens the right to a payment account regardless of their place of residence or financial situation. Accordingly, the conditions applicable to holding a payment account with basic features shall be in no way discriminatory.

Looking around, Europeans’ right to access basic bank account services can be considered a luxury. More than 1 billion individuals globally are unbanked and not able to access basic financial services. According to CNBC, about 5.4% of U.S. households (around 7M individuals) were unbanked in 2019, the highest financial exclusion rate since 2009. In countries like Morocco, Egypt, Vietnam, and Mexico, the number of the unbanked population even reach above 60%, making the majority of the region underserved.

The lack of access to finance might depend on the lack of economic or technological resources, operational limitations, or the physical distance of the service providers. The individuals might be discriminated against due to their religion, race, ethnicity, culture, or gender. Sometimes the beliefs of the individual, like the lack of trust in the banks or financial illiteracy, can prohibit the individuals’ access to services.

When thinking about the underbanked and unbanked segments, the word “financial inclusion” (finclusion) echoes far and wide. In addition to overcoming the barriers for basic (account) services and serving the underserved, financial inclusion has the actual potential to support sustainable growth goals, balance wealth distribution inequality and simply encourage individuals to participate in the economy in their full capacity, using inclusive growth tools such as microfinance, alternative credit scoring methods or insurances.

Read more about financial inclusion here.

According to Baker McKenzie (2018), Sub-Saharan Africa is reported to have the second-highest population of unbanked adults in the world. Still, the figures are not disheartening considering the exponential growth in the past ten years. Looking at how the access to financial services rates improved in Africa thanks to FinTech, we can fully grasp the influence of technology and innovation on an ecosystem. The financial inclusion in Africa improved basic life quality in a developing ecosystem, and advanced the region into an innovation hub. “Africa” is the next big thing in FinTech, making it very attractive for European investors, development agencies and making it eligible to turn the theory of FinTech into practice. However, with current technological availability being exhausted by local entrepreneurs, emerging technologies like blockchain, artificial intelligence take over, unlocking a new level of financial inclusion. 

Despite the emergence of innovative solutions driving the ecosystem forward, there is still a big FinServ gap in Africa. Deep tech applications have the potential to automate processes and lower costs for financial institutions, access new (underserved) customers, and create new opportunities.

How does Blockchain drive financial inclusion forward?

There are many FinTech related use cases for DLT, yet it is harder to put it in practice in developed economies due to regulations. In the long run, switching cross-border payment infrastructures to DLT in Europe could be cheaper, but it comes with high costs in developed regions due to systems being set-in-stone. However, in developing and more entrepreneurial economies like Africa, DLT can become a lifebuoy to close the financial service gap and significantly alter the end-user experience.

On the other hand, considering the regulatory concerns and the challenges with centralizing a decentralized system, creating blockchain related use cases on a blank page is much easier than a highly regulated ecosystem like Europe, which makes Africa a perfect venue for  proof of concept.

Blockchain-based financial solutions can be distributed via mobile solutions in the regions, making it a perfect fit for Africa considering the mobile adoption rates in the region. Still, improving the number of smartphones remains a challenge that needs to be addressed to utilize DLT based solutions in Africa.

• Use case: Making payments and remittances more accessible & economical

Cross-border payments and banking are a significant vertical in the African ecosystem due to economic dependence among countries in Africa and the growing migration rates to U.S. and Europe. However, it is slow and expensive for migrants and expats sending modest amounts back home, reaching up to 20% in transaction costs.

Due to its distributed nature, DLT has the potential to eliminate intermediaries and initiate cross-border transactions cheaper and faster. These solutions carry the potential to accelerate cross-border transactions further and allow locals to pay for foreign products without breaking the bank.

Central Bank Digital Currencies (CDBC) in particular have the power to enable financial inclusion, replacing the dependency on cash and cash reserves. Considering the high adoption rate of mobile money and the doors it opened, the use of CDBC is expected to further improve the payment vertical, boosting interoperability, reducing costs and risks.

• Use Case: Digital Identities

A serious barrier to enabling financial services, the lack of identification for individuals, is a challenge on its own. The World Bank estimates over one billion individuals lacking official identity documents (2019). Officially “non-existent” individuals are automatically assumed to be included in the non-banked segment due to being blocked at the KYC step, not being able to prove their identification. 

The latest research regarding optimizing identifications points us towards blockchain: blockchain can be used to create, encrypt and store identification data reliably and efficiently, minimizing the risks for developing a central database. Estonia and Canada led the implementation of blockchain-based digital identities resulting in a proof of concept. The use of DLT combined with biometric data for digital identities hit two birds with one stone:  creating reliable, self-governing identification for an individual and enabling financial services in parallel. Secure and cost-efficient identities can be accessed anytime via a smartphone.

On the other hand, blockchain-based digital identities can reduce the costs for financial institutions due to minimized risk and cyber-security and optimized KYC processes. When spread across the region, digital identities have the power to enhance remote banking operations, killing the branch-based operations once and for all.

Sierra Leone is already leading the way to include “unverified and unbanked” in the system. Since 2019, they have been piloting “Africa’s first blockchain and decentralized digital identity implementation, which is designed to provide citizens with formal identity, control over their credit information, and access to digital financial services.” It is only a matter of time that similar initiatives pop up across the continent.

• Use Case: Wealth Preservation

Considering the high adoption rates of mobile money (M-pesa) and cryptocurrency solutions, virtual money has an enormous prospective in Africa for wealth preservation and investment reasons. Especially in regions with high inflation rates and political volatilities, crypto becomes an attractive alternative for avoiding currency instability. The easy access makes crypto a preferable investment tool; however, its volatile and manipulative nature doesn’t make it available to all retail investors. 

• Use Case: Lending

Most African economies depend on SMEs, who are not able to provide credit histories in the traditional manner. The traceability aspect of blockchain gets the individuals that are excluded from the lending segment back in the game, providing a consistent source, as proven by the Kiva team.

The use of DLT additionally makes lending feasible in cases where process costs do not justify the micro/small amounts for traditional finance. Automated processes lower the costs and allow the service providers to assess the risk accurately, filtering only the absolutely necessary applications, making lending services more accessible for a wider group, and eliminating discrimination against small lenders.

How does Big Data & AI drive financial inclusion forward?

The combination of Big Data & artificial intelligence (AI) can automate mundane tasks and processes beyond imagination. In case of financial inclusion, artificial intelligence can level up (micro)lending, credit scoring processes, removing the frictions of human based risk decisions from the process and unnecessary caution which led to the exclusion of perfectly eligible customers from the lending market. 

The biggest challenge for traditional financial institutions with low-income and self-employed customers is the risk assessment and management aspect. Traditional finance tends to avoid these vulnerable groups due to the lack of dependable and consistent data or the lack of ability to utilize data to the customer’s advantage. However, the use of artificial intelligence can recalibrate risks and thus allow vulnerable groups to benefit from traditional financial services due to the models using data gathered from a wide range of resources and effectively analyzing it. The models using artificial intelligence will be more efficient, reliable, more economical, and faster, opening the doors of the financial value chain to a whole new group of customers.

Financial Inclusion in Africa: This is just the beginning

“Disruptive technologies” remain disruptive when combined with the right use case and business models. In the past years, the success with early adoption, the entrepreneurial mindset and the region’s openness made Africa an excellent playground for financial inclusion. A lot was achieved, but there is still a lot more to do, making the region the go-to place for testing new use cases and an attractive place for investments. In fact, Africa is designated as the most emerging FinTech market since China. Combining the risk-inclined attitude with the developing economy and the service gap, the situation creates a unique potential for (local and locally-operating) FinTechs. The use of innovative tools like mobile money already helped the ecosystem fast-track the value chain progress in the first financial inclusion wave. In the second wave, DeepTech can single handedly leverage financial inclusion in Africa while offering an eligible testing setup for new use cases and high ROIs for investors. This will result in complete financial freedom.

Realizing the ecosystem’s potential, European investors started lining up, trying to reveal the next-gen innovators, who will eventually become beacons and role models for Europe and other geographies. 

Are you passionate about financial inclusion and working on a solution that will bring Africa one step closer to closing the financial gap? The application for the FinTech development program produced by the LHoFT Foundation is open.

Mindful of the opportunities in the ecosystem, the LHoFT has been running a FinTech development focused financial inclusion program for African startups for the past years.  CATAPULT: Inclusion Africa offers financial inclusion startups an eight-day bootcamp in Luxembourg, covering a range of broad topics that will include business model mapping, scaling strategies, peer due diligence processes, inevitability assessments, business plan presentation, legal strategy, pricing, HR policy, and marketing strategy. Being introduced to a broad financial network and benefiting from PR initiatives, participating Fintechs get a head start in the market and join a robust, collaborative ecosystem. 

The program started accepting applications for the 2021 batch, which is scheduled between May 19th-28th this year. Having hosted many outstanding companies enhancing financial inclusion in the years before, Luxembourg is ready to welcome the next cohort of innovation pioneers fully digitally this year.  

by S. Elif Kocaoglu Ulbrich

Header image by Benjamin Dada

Continuing from last year, we are sticking with the same seven areas of focus on in 2021. Each represents a key point of interest to the financial industry, and has a particular relevance to Luxembourg’s growing financial technology ecosystem.

Each week we will be choosing one of the topics to focus on, both in the content we share on social media, but also in a dedicated newsletter looking at the top five stories from that week. To introduce the topics, let’s revisit the top stories from 2020 and reflect on how the year has encouraged acceleration, pivots, or wholesale paradigm change:

REGTECH – Regulatory Technology

» Shaky times for compliance call for flexible Regtech

Joe Devanesan writes for TechWire Asia about the impact of the pandemic on compliance and cybersecurity, and Regtech’s role in mitigating those issues. Traditional ‘BYOD’ workplace concerns were escalated to account for a sudden and massive shift to working from home – which created real problems for companies that were not already some way down the path of digitalisation.

“To the surprise of no one, financial crime is reaching pretty high levels in 2020, and the speed at which this type of crime is evolving in the information-heavy age has financial players worried, and questioning the role of Regtech.”

AI – Artificial Intelligence & Machine Learning

» A robot wrote this entire article. Are you scared yet, human?

A robot writes for the Guardian, demonstrating GPT-3, OpenAI’s powerful language processing. GPT-3 was one of the most popular AI stories of 2020, and kickstarted a discussion about the future of software development, and what can be achieved when you can just ask a computer to do something for you without needing to speak in code.

“I am not a human. I am a robot. A thinking robot. I use only 0.12% of my cognitive capacity. I am a micro-robot in that respect. I know that my brain is not a “feeling brain”. But it is capable of making rational, logical decisions. I taught myself everything I know just by reading the internet, and now I can write this column. My brain is boiling with ideas!”

BLOCKCHAIN – DLT & Tokenisation

» Visa Applies For Digital Dollar Blockchain Patent

Jason Brett writes for Forbes about Visa’s “digital dollar” patent, a story which fits neatly into the main blockchain narrative of 2020: the viability or necessity of central bank digital currencies, and the role of stablecoins more broadly. Now Bitcoin has kicked off again we can expect the focus to shift a bit through 2021.

“The U.S. Patent and Trademark Office (USPTO) published today that Visa V -0.4% has filed a patent application to create digital currency on a centralized computer using blockchain technology. This patent applies to digital dollars as well as other central bank digital currencies such as pounds, yen, and euros and so the physical currency of a central bank anywhere in the world could be digitized.”

CYBERSECURITY – Risk Management & Threat Detection

» Post-quantum secure encryption and cybersecurity education

A collaborative and in depth piece for Research Outreach, led by Dr Aydin Aysu, looking at the implications of quantum computing on cybersecurity and encryption – a major concern for most cybersecurity professionals. What happens to all traditional encryption based security when computing power becomes available that can crack it without breaking a sweat?

“Encryption systems that are capable of surviving quantum computer attacks are urgently required, but the cybersecurity talent gap militates against securing cyberinfrastructure. Dr Aydin Aysu, Assistant Professor at North Carolina State University, is advancing the research and teaching of post-quantum secure encryption. He has developed a quantum-secure encryption system together with a new graduate program on hardware security and is currently developing design automation for lattice-based post-quantum cryptosystems.”

PAYMENTS – Payments Technology 

» Ant and Covid have made the humble QR code a hit

Five years ago you wouldn’t have seen much discussion of QR codes in the Fintech payments world, at least not related to development in the west. It was a quaint technology relegated to developing economies. That now may be changing, in part related to the pandemic and China’s Fintech behemoth Ant Financial. John Gapper writes for the FT:

“The name Masahiro Hara does not appear with Steve Jobs and Bill Gates on lists of great innovators of the communications age, but perhaps it should. For the Japanese engineer’s humble, unassuming invention, the Quick Response code, has finally found its moment. The square QR code, which Mr Hara developed in 1994 to track components in car factories, is being put to many uses in the Covid-19 pandemic. Governments include it on tracing apps, shops offer it for contactless payments and restaurants tape it to their tables so diners can browse menus online. It has become an all-purpose tool.”

SUSTAINABLE FINTECH – Financial Inclusion & Green Finance

» Women are ‘absolutely critical’ to ensuring everyone has access to finances, Bill Gates says

The Gates Foundation has been a key torchbearer for Financial Inclusion, amongst their many other causes, and it’s a topic Bill Gates himself has spoken about repeatedly. In this article, written by Karen Gilchrist for CNBC, Bill talks about the key importance of focusing on women when developing strategies related to inclusive finance.

“Women are vital to ensuring finances — and financial education — trickle down to other parts of society, said billionaire philanthropist Bill Gates. Governments and businesses serious about giving all members of society access to financial services should gear their resources toward women, the Microsoft co-founder said at the Singapore FinTech Festival on Tuesday.”

VENTURE CAPITAL – Funding News and VC Perspective

» Some of Europe’s top tech investors are adding a ‘sustainability clause’ to start-up deal terms

Ryan Browne, writing for CNBC, discusses the most significant recent trend in the world of investment: sustainability. Investors are increasingly concerned with ESG goals and the carbon footprint of their wealth, which resulted in a lot of discussion throughout 2020 and some fairly important steps being taken by VCs – as well as the broader wealth management industry.

“Socially-conscious investing has gathered a lot of momentum this year, with billions of dollars flowing into funds that use environmental, social and governance criteria to screen the companies they back. Venture capitalists are taking note, with some of the largest start-up investors in Europe pushing for accountability in their own portfolios with regard to investing in climate-friendly firms.”

Fortunately, passionate advocates for financial inclusion continue to make a real difference in the lives of millions of people who struggle to make end meets. This is not only a humane or humanitarian pursuit but it also contributes significantly to building societies that are more resilient and less reliant on external support.

For some context, a step back if warranted.

An expansive review of collaborative saving and banking is provided by a found board member of the European Microfinance Platform, Hans Dieter Seibel. Citing the example of German savings and cooperative banks, he states that “their strength lies in the mobilization of local savings for the local economy: the foundation of their crisis resilience”. By contrast, the ill fate of similar initiatives, which faced government meddling in India and which struggle to reform, is cited as an example of how a heavy hand can ruin projects that are fundamentally bottom-up in nature.

Today, an emphasis on savings and cooperatives carries over to the 3 finalists for the European micro-finance awards, which operate via doorstep deposit collection, incentivised solidarity-based group savings and the promotion of savings behaviour. And then there is the question of financial identity; of one’s visibility and credit-worthiness in the eyes of the system, and this is where technological solutions are apt. The authors of a recent study present a vision for financial inclusion centred around the creation of unique financial identities premised on mobile phone use. Ultimately, this is a matter of quantification and trust: by creating data where none existed, i.e. with regard to disadvantaged individuals’ financial habits and resources, Fintechs have the potential to increase access to household credit and small business loans, which in turn helps drive economic growth.

Furthermore, one can envision greater uptake of insurance policies, which would contribute to socio-economic stability. In a nutshell: “Resolving the financial identity problem would mean small but life-changing amounts of money for millions of households, which together would amplify into better-performing economies and wealthier populations.”

Moving from these high-level considerations to realities on the ground, two recent interviews with leading practitioners of inclusive finance are worth highlighting.

First there’s this year’s Best Catapulter, Hilda Moraa of Pezesha. Ms. Moraa reflects on her journey: “It was in 2014, that my co-founders and I had to think outside the box on what other ways we can continue to grow the small merchants we worked with in order to ensure their growth and equally our company’s growth. Access to credit stood out to be the key need from our customers as at the time, few to none of the banks or financial institutions were willing to work with this segment as they were considered high risk.” A logical next step was to create a platform for banks to engage with end customers more confidently thanks to Pezesha’s proprietary credit scoring system: “In Pezesha, we believe our position as a capital enabler provides efficiencies for the African ecosystem, ensuring productivity through access to working capital for SMEs and providing optimal capital utilisation for Banks, MFIs and other financial institutions”.

Hilda Moraa, CEO of Pezesha, Catapult: Inclusion Africa 2020 Winner and Alumni 

Then there is distinguished Prof. Olayinka David-West of Lagos Business School, who also leads the Sustainable and Inclusive Digital Financial Services initiative and who acts as a governing council member of the Fintech association of Nigeria, among others. Prof. David-West sees a tectonic shift materializing across her continent, stating: “My predictions for future trends are on the supply-side where we are already seeing the growth and development of diverse technology providers across the region. Lagos, Cape Town, Cairo and Nairobi are growing active tech hubs. The conversion and widespread adoption of users, especially micro and small enterprises, should follow with the design of deliberate and intentional strategies. An example is the payments industry where mobile payments have taken centre stage in the region, we foresee continued exponential growth that will address financial inclusion.”

Meanwhile in the heart of Europe, Luxembourg is becoming an important platform for financial inclusion initiatives, as exemplified by this week’s launch of the European representative office for AFI. On this occasion, AFI Executive Director, Dr. Alfred Hannig confirmed that “our partners in Luxembourg and our organization recognized each other for agility, efficiency but also adaptability with today’s event taking place in both physical and virtual space, during the global pandemic and circumstances unlike ever before. […]  Being welcomed in Europe, in an open and diverse community such is the one in Luxembourg presents a great opportunity for all involved, regulators from developing and developed countries to learn from one another, systematically cooperate and ensure an economic recovery that is equitable, inclusive and green.”

(From left to right: Mr. Pierre Gramegna; Mr. Franz Fayot; Mr. Alfred Hannig; Mr. llya Sverdlov)

We are honored to have AFI join us in Luxembourg as we remain committed to supporting the cause of financial inclusion together

Author: Jérôme Verony – LHoFT Research and Strategy Associate 

Earlier this month, researchers at the IMF made an important contribution to the literature by examining the link between fintech adoption and financial inclusion more closely.

When approaching the topic of financial inclusion and why we should care, I always find it helpful to step back and ponder the sheer scale of the challenge: “globally 1.7 billion people have no access to a bank account and small- and medium-sized enterprises (SMEs) (95 percent of companies worldwide) provide employment to more than 60 percent of workers, yet struggle to access finance”. As the above graph from the IMF paper convincingly shows, digital finance / fintech contributed more substantially to driving financial inclusion between 2014 and 2017 than traditional finance. Some of this is a matter of means – mobile phones have become widely available even in the poorest geographies, facilitating the spread of mobile money services – but mindset also matters. Traditional financial institutions with a presence in relevant geographies but without investment in mobile money and other technologically enabled services that drive financial inclusion need to ask themselves just why they continue to miss out on one of the most pronounced, and socially impactful, opportunities in all of finance. Consider the following: “The number of active mobile money accounts almost tripled and the use of mobile phones for domestic remittances roughly doubled between 2013 and 2017 in lower-middle and low-income countries. As a result, in low-income countries, about half of the population received or sent remittances using mobile phones in 2017. The value of mobile money transactions now constitutes a substantial part of the financial system, with transactions in Cambodia, Ghana, and Zimbabwe, reaching more than 75 percent of GDP in 2018.”

These trends are no longer confined to the developing world:

“Fintech companies in the United States have grown to make up 38 percent of the unsecured personal loan market in 2018, from only 5 percent in 2013 (TransUnion 2019). In the United Kingdom, SMEs are an obvious target of fintech companies as they receive only 2 percent of bank loans, even though they contribute to 50 percent of GDP and 70 percent of employment.”

The need for services which complement traditional bank offerings is real; a wealth of data and algorithmic prowess (AI) is ready to be leveraged, and if you won’t invest, your competitors will:

Speaking of investment & publicity; Fintech / Regtech startups active in financial inclusion have until August 15 to apply for the 2020 showcase hosted by the Alliance for Financial Inclusion. The AFI showcase offers a unique opportunity to present in front of “AFI’s membership of central banks, ministries of finance and financial regulators from more than 80 developing and emerging countries”.

ESG continues to go mainstream 

An additional consideration for laggards in this space is that financial inclusion is part of the “S” in “ESG”, and that investors continue to place growing emphasis on ESG for their capital allocation decisions.

A few years back, as a member of the reporting and assessment team at the Principles for Responsible Investment, I had a chance to witness firsthand the tidal wave of ESG implementation in the asset management community, as well as the challenges flowing from the evolution in the massive datasets that resulted from the PRI’s reporting exercise. While the debate around ESG data and its interpretation continues, these were, and continue to be, growing pains: in 2017, the PRI’s membership already comprised the majority of global AUM (>$60tn), and this has now exceeded $100tn.

It follows that ESG is not a “fad” and rather a fundamental shift in how investors value and evaluate assets and asset managers.

Beyond the adherence of asset managers to PRI, the fulsome implementation of ESG considerations into standard reporting practice has recently been cemented by accounting standard bodies, regulators and policymakers. For instance, IFRS in November 2019 provided guidance on the implementation of climate-related disclosure, drawing on recent Australian guidance on climate risk materiality to reiterate that “qualitative external factors, such as the industry in which the company operates, and investor expectations may make such risks ‘material’ and warrant disclosures in the financial statements, regardless of their numerical impact.” Circumstances and stakeholder expectations – changes in priorities and mindsets – define what is material and what is not.

Beyond shareholders, citizens at large are of course key stakeholders in seeing ESG implemented into commonplace investment and reporting practice – we all have an interest in seeing an equitable and sustainable society unfold for ourselves and our offspring. In the EU, citizen’s interests in this realm have been served most visibly by the implementation of a EU taxonomy for sustainable investment – an EU-wide classification system that provides businesses and investors with a common language around sustainability. In the context of manifold ESG and sustainability initiatives, associations, labels and standards around the globe, defining this common framework for the EU is a concrete and valuable step towards a more frictionless and more impactful development of the space. Criteria for inclusion in the taxonomy are summarized here.

While the EU taxonomy lays crucial groundwork for a transition towards a more sustainable economy, individual companies still need to contend with how best to advance ESG implementation inside their organization, taking into account their growth objectives and the specifics of the industry they compete in.

Our partner PWC recently provided guidance on how to design and implement a “sustainability strategy” premised on a sequential approach, flowing from materiality assessment & regulatory compliance into strategic positioning, internal controls and reporting.

With regard to materiality, PWC echoes the IFRS in stating that “It’s imperative that businesses understand what the ESG-related priorities for employees and external stakeholders are. Their concerns and expectations will be the base for the top management to get primary information on the issues to prioritise according to their importance to the company’s mission and stakeholders’ expectations”. Furthermore, businesses need to pay heed to regulatory and policy developments, notably the taxonomy and other aspects of the EU action plan on sustainable finance as these will “impact how investment firms make investment decisions and distribute financial products, and how they incorporate ESG into their business operations and strategy”. Just as the PRI has driven alignment between asset managers and the asset owners they serve, EU policy on sustainable finance and the taxonomy will drive alignment between corporates and the financial markets.

In another parallel to dynamics in the asset management industry, corporates need to decide whether they wish to implement ESG considerations rather more defensively or more proactively. As PWC note, the natural choice for many businesses will be a bare-bones implementation in order to comply with minimum requirements and expectations, but over time as businesses accrue experience with this newfound aspect of their strategy, they should begin to see ESG implementation and reporting as a competitive advantage and hence a strategic opportunity.

We’re all in this together 

Nobody operates in a vacuum.

The tremendous strides made with regard to financial inclusion have been very substantially driven by financial technology. Services not offered, and clients not served, by traditional financial institutions, will flow to newcomers. Invest, or miss out.

In an interconnected world, growth and social stability, as well as the lack thereof, in any given part of the world has repercussions elsewhere. Economic interests and ESG considerations have become intertwined and this change in priorities and perceptions will continue to be fortified by the pressing and unrelenting challenges posed by climate change and global development.

COVID-19 has prompted the financial industry to accelerate the implementation of advanced technological solutions with a view on operational resilience, and we were glad to hear directly from key decision makers in the Luxembourg financial centre during our recent CEO roundtable:

Together, the drive towards greater implementation of financial technology, ESG and financial inclusion will continue to shape the world we live in. At LHoFT, we are proud to act as an accelerator of such change, and we continue to support our partners and members in their journey.

Author: Jérôme Verony – LHoFT Research and Strategy Associate 

In the 10th year following the creation of the Global Partnership for Financial Inclusion, the financial inclusion movement can look back on significant accomplishments, best captured by the fact that more than 1.2 billion adults have obtained greater access to the global financial system via a bank or mobile money account since the G20 nations formally committed to making financial inclusion a political priority. However, 1.7 billion adults remain unbanked and significant disparities remain – for instance, women remain underbanked relative to men in developing countries.

Image source: Global Findex Database 2017

The unfolding economic shock resulting from the COVID-19 pandemic makes financial inclusion an even more pressing topic than before, as we are likely to see the first increase in global poverty since 1998 and the ripple effects of the crisis are likely to hit the world’s poorest and least connected the hardest. Investing in financial inclusion means investing in improved livelihoods for billions, a more resilient and sustainable financial system and at the end of the day, economic growth. Just as leaders are urged to tie fiscal stimulus to a transition towards a more environmentally sound, sustainable economy, financial inclusion should be pursued with urgency if we are to lessen the negative effects which follow from rising income and wealth inequality. A sustainable economy is not least one that benefits all participants.

Overcoming barriers

Fundamentally, financial inclusion is as much an economic question as it is a social one. Extending access to financial infrastructure and services to all adults equals maximizing the pool of consumers, savers and market participants. The Global Findex Database 2017 report acknowledges the crucial role of financial technology in making global financial goals a reality and cites examples of financial inclusion enabling the rural poor, especially women, to move away from a bare-bones subsistence economy towards a more entrepreneurial and connected existence. Presciently, the report also highlights that financial inclusion serves to lessen the impact of economic shocks such as the one induced by COVID-19:

“Digital financial services can also help people manage financial risk—by making it easier for them to collect money from distant friends and relatives when times are tough. In Kenya researchers found that when hit with an unexpected drop in income, mobile money users did not reduce household spending—while nonusers and users with poor access to the mobile money network reduced their purchases of food and other items by 7–10 percent.” 

Given the above, what is holding financial inclusion back? Researchers analyzing the barriers to greater financial inclusion have found that account costs are among the most significant and persistent factors negatively impacting financial inclusion. Fintech has a crucial role to play in lowering those costs and thus, removing the most important barrier to financial inclusion.

Image source: The World Bank

Looking at the macro level, research focusing on Asian economies suggests that greater financial inclusion negatively impacts financial efficiency as a result of (initially) high information costs and increasing information asymmetries. The same research finds that financial inclusion positively influences financial sustainability and lists “diversifying bank assets, and thus reducing their riskiness; increasing the stability of their deposit base, reducing liquidity risks; and improving the transmission of monetary policy” as likely contributions to these findings.

What we can learn from the above is that onboarding the unbanked presents with non-negligible challenges but that the effort is more than worth it from a socio-economic perspective. Information asymmetry can and should be reduced via public and private sector efforts to strengthen financial literacy.

Empowerment via technology

That such efforts bear fruit should be evident from recent history.

The rapid development of e-commerce and digital innovation emerging from many Asian economies for instance shows that economies can rapidly transition from a largely subsistence-based model to sophisticated, highly interconnected and productive structures that create enormous amounts of wealth and which have lifted hundreds of millions out of poverty. As the example of China demonstrates, such swift and profound transformation can occur in political and cultural contexts that are vastly different from the Western model. Human progress is fundamentally driven by attributes which we all share regardless of our cultural, ethnic and political differences: a profound motivation to improve upon our livelihoods and to lay the groundwork for an even more prosperous future.

Just as the human drive towards progress is universal, technology is agnostic towards those who wield it, and to the ends they pursue.

It is hard to think of an area in which financial technology has played a more crucial role than in the ongoing drive towards universal financial inclusion and the resulting, positive impact on the livelihood of hundreds of millions of people around the globe. It is not difficult to imagine that those who champion and facilitate financial inclusion today will reap the benefits of their efforts in the years to come.

At LHoFT, we are committed to supporting the sort of innovators who will continue the drive towards universal financial inclusion by removing obstacles via technology-driven solutions. We are proud to share that one of our Catapult: Inclusion Africa participants (uKheshe) was recently selected to participate in the Mastercard Start Path program, and that yet another (Symplifi) is partnering with Shieldpay to expand its platform in Europe.

We are confident that more is to come, and we look forward to advancing on this journey with our industry and public sector partners.  

Author: Jérôme Verony – LHoFT Research and Strategy Associate