Box 1: The Fintech Landscape To better understand fintech for good, it is helpful to briefly examine the development of fintech itself. Despite its popularity and accessibility since 2018, fintech is not a new phenomenon. Traditional financial innovations, which today we take for granted, have existed for decades; notably including credit cards (1960s), debit cards and automated teller machines (1970s and 1980s), various financial institutional products (1990s) and online banking (2000s) (FSB 2017). However, over the past 10 years, “modern” fintech has experienced dramatic evolutionary shifts resulting broadly from hyperglobalization, changing financial regulations and shifting stakeholder preferences (for example, high-frequency trading, growth in mobile phone ownership and wireless connectivity), and specifically from evolving technology (for example, fifth-generation technology, advancements in AI, blockchain and big data) (Deng, Huang and Cheng 2019; FSB 2017).
(especially by the poorest or most vulnerable)4 into local contexts that vary economically, politically and culturally (Arthur 2009). On the one hand, fintech for good has been utilized to improve the quality of life for developing nations and enable greater access to basic human amenities for their populations. On the other hand, fintech for good is often not regulated by conventional financial regulators and might have negative effects on financial markets or exclude those without access. Historically, innovation has been promoted through public and private mechanisms, operated only by a few developed countries and international bodies (Nelson 1993). These efforts have succeeded, to some degree, in fulfilling global sustainability needs but have fallen short of advancing sustainable development (Juma and Yee-Cheong 2005; InterAcademy Council 2004).5 Addressing these gaps requires effective crosssector partnerships between municipal, federal and international actors and input from end users (recipients and local stakeholders) contributing to
4
All dollar figures in US dollars.
5
See www.hks.harvard.edu/centers/mrcbg/programs/sustsci/activities/ program-initiatives/innovation/projects/innovation-and-access-totechnologies-for-sustainable-development.
The fintech sector today has matured since the GFC, moving past start-up challengers to include central banks, big tech and big banks. In 2019, investment in fintech grew by 16 percent to $140 billion,4 and there were more than 450 unicorn fintech firms (those valued at more than $1 billion) (Cantú and Ulloa 2020). Much of this activity (80 percent) occurred in the United States and Europe, where investment grew by 60 percent and 90 percent, respectively. China, India and Russia have become global leaders in consumer adoption as their markets continue to expand (EY 2019). Three major technological developments have established the maturity of fintech today: big data creation, powerful processing and advanced algorithms. These and other developments have elevated the potential for high-speed internet, cloud computing, AI and blockchain to serve fintech solutions.
the process. Within the global innovation system, the difficulties of utilizing technological innovation for sustainable development have been addressed in a variety of ways, such as through financing, the formation of research networks, setting priorities, international aid and trade agreements, and action research feedback loops connecting end users and innovators.6 To some degree, these interventions have altered institutional norms and configurations over the past few years, yet they are poorly described in the literature. Little is known beyond their respective fields, making it difficult to contribute to enhancing fintech for good in practice and scholarly discourse.
6 Ibid.
Fintech for Good: Governance Mechanisms for Sustainable Development
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