The rapid growth of Fintech has expanded access to financial services for hundreds of millions, but has also created new risks. The lack of reliable data on customer experience hinders informed decision-making for investors, regulators and fintechs themselves. At 60 Decibels, we have identified these issues and developed a tool to empower fintechs and their investors: the Fintech Index. By delivering actionable customer data and benchmarking social impact, our index enables companies to understand their influence on clients, double down on their strengths, and address areas of improvement.
Fintech’s popularity among investors has ballooned in recent years. With 113 new fintech “unicorns” emerging in 2021, the industry has the power to bring 1.4 billion unbanked individuals into the financial mainstream. In 2020, the global fintech market was valued at $110.57 billion. By 2030, the market could reach $698.48 billion. However, while financial access has increased rapidly worldwide, the social impact of digital financial products remains neutral at best. Some products truly transform customers’ lives, while others merely fulfill immediate needs without long-term benefits, leaving individuals worse off.
The exponential growth of fintech has not only expanded financial access but also introduced new risks. The risk is that some fintech models are “old wine in new bottles,” a repackaging of high-interest credit and other offerings that end up hurting customers. Regulators are becoming increasingly concerned about the potential exploitation of low-income customers. As the fintech industry pushes for growth, it must consider the impact of its offerings and mitigate the risk of intense regulatory action or a shift in public sentiment that could result in significant value loss.
In fact, there are already signs of backlash. Google is removing fintech apps from its Google Play store in India for violations of user safety policies; Kenya’s Central Bank obtained formal regulatory authority over fintechs in 2021; multimillion-dollar cases have settled against fintech players for predatory practices in the U.S. These could be the first signs of larger, systemic risk. In turn, decreasing valuations and creating real harm for fintech customers.
To navigate these challenges, fintechs and their investors need detailed, comparable, and customer-based data to understand the true impacts of their products. While some companies already prioritize impact measurement and management, what’s missing is global, comparable data directly from the fintech customers. This data will support healthy growth of the sector, including strengthened consumer protection practices and regulatory compliance, ensuring that the industry moves forward responsibly and sustainably.
This year, 60 Decibels is launching a Fintech Index to address this important gap in the market. This effort will parallel the work we’ve done in microfinance. In 2022, the 60dB Microfinance Index published data on the economic profile, household impact, and financial resilience of microfinance customers. This Index was based off of surveys of nearly 18,000 microfinance clients across 41 countries, reflecting the lived experience of 25 million of the world’s 140 million microfinance customers. The data revealed that the majority of clients considered their lives to have improved thanks to access to microfinance, debunking criticisms. The data also highlighted gaps in consumer protection practices and showed a wide variety of impact from microfinance based on geography. Armed with this evidence, microfinance institutions and investors can confidently advocate for their positive impact and verify their consumer protection practices. 60 Decibels’ 2023 Microfinance Index will build on this success, expanding to 120 MFIs representing more than 72 million customers globally.
Taking inspiration from our successful microfinance analysis, the 60dB Fintech Index will be a comprehensive, global data set of customer experiences in the fintech sector. This index will empower fintech companies and investors to ensure consumer protection, mitigate impending regulatory risk, target product improvements, and understand how their offerings compare to other players in the sector.
By leveraging quick, actionable customer data, companies can inform marketing strategies, enhance product design, troubleshoot customer challenges, and demonstrate their commitment to serving customers effectively.
This work is an expansion of our work in the fintech space. We’re proud to have had strong collaborations with many of the world’s leading fintech investors—including Leapfrog (report), ResponsAbility, and Flourish Ventures (report)—as well as with leading fintech companies such as Tala (report), Addi, MoFi, Payactiv, and Grab. Together, we are driving positive change and championing the responsible growth of the fintech industry.
Interested in taking part in the index? Register your interest for more info here.
