Innovations to Improve Financial Security and Expand Economic Opportunity

Improve household financial stability and security

Savings are the foundation of financial security. It allows households to cover an emergency, to bounce back from a setback, and it creates the peace of mind that allows families to focus on the longer term horizon. But many American households need help overcoming the barriers that prevent them from building wealth. MoCaFi (Mobility Capital Finance), a mobile banking fintech in the United States, helps families build wealth by avoiding the exorbitant interest rates and fees of check cashers and payday lenders. In partnership with the City of Birmingham, Alabama, and Mastercard, MoCaFi connects 50,000 underbanked and unbanked Birmingham residents to high-quality, low-cost financial services.

Likewise, Green wooda black-owned mobile banking platform, partners with Mastercard to offer a new debit card to its clients as well as financial education and planning resources. And Reachedan artificial intelligence-powered lending platform, extends credit to people typically excluded by traditional credit reporting metrics.

In Washington, DC, the importance of financial security to the economic health and well-being of the country is leading elected officials like Sen. Chris Coons (D-Del.) to call for a presidential commission to create a national inter- financial inclusion agencies. The Mastercard Center for Inclusive Growth and the Aspen Institute joined Coons in the call to action. Thirty-five countries have implemented national financial inclusion strategies.

In addition, the United States CDFI Fund, the Small Business Administration, and the Consumer Financial Protection Bureau devote resources to protecting economically disadvantaged communities from unfair and abusive financial practices.

Connecting workers to opportunities in the digital economy

Affordable financial services are only one element of financial security. People also need a good, well-paid job to get by and get ahead in a changing economy. For years, less-educated workers have faced headwinds as two back-to-back shifts – demographic change and technological acceleration – have reshaped labor markets.

In the not too distant future, millions of young people around the world will be looking for jobs in a rapidly changing economy. By 2030 in Africa alone, 375 million young people will be in the labor market. In Asia, the number of young people has more than doubled in just 50 years. This “youth bulge” can lead to hardship or opportunity, depending on whether the next generation can acquire the skills needed to compete in an ever-changing economy.

One thing is certain: millions of people will need training and new skills to keep up. While face-to-face training remains valuable for its highly tactile approach, online training can reach millions of people at scale and build networks of mentors and connectors at a lower cost.

For example, technology platforms like African girls know how to code creates virtual Silicon Valleys for girls across the continent to learn coding and other computer skills. Grab, a super app in Southeast Asia that combines carpooling, delivery and other services, has started Enter the Academy to help drivers on their platform in Southeast Asia learn new in-demand skills. Now, Mastercard and Grab will join forces to increase digital upskilling and financial inclusion opportunities for the millions of workers and small businesses on the Grab platform.

In developed economies, longevity creates new challenges in meeting the needs of a multigenerational workforce. AARP, the Organization for Economic Co-operation and Development (OECD), and the World Economic Forum, identify inclusive workforce practices to help employers better support workers who live, learn, and earn longer.

Other alliances, such as the one launched by Rework America and the Federal Reserve Bank of Atlantalet’s aim for the double recovery of employment that is going away less educated and lower paid workers behind. The alliance partners with local community organizations to connect job seekers without a college degree to good jobs.

Redirect capital to the underserved

Entrepreneurs are the future job creators, but to grow their business, they need capital. Yet today the vast majority of startup money goes to men, despite the fact that female-owned startups generate globally. 10% more revenue more than five years than their male counterparts.

“We’re still talking about 98% of the capital going to men,” said Jean Case, CEO of Case Impact Network, “so we really have a lot of work to do there. But what encourages me is that I see new capital flowing in and many new activities. There were 275 new venture capital funds launched by women.

Virtual network and business incubators Hello Alice and Numerical undivided work to help black women and Latino entrepreneurs launch their businesses and attract venture capital. Collaborative capital, from Camelback Ventures, helps philanthropy and impact investors deepen their commitment to racial equity by funding more women and entrepreneurs of color. Having already invested $1 billion in women founders, over a billiona global consortium of venture capital firms, announced a new $10 billion commitment to fuel high-impact, high-growth innovation by women.

In emerging markets, fintech innovations like Lydia in Nigeria and many others are creating new opportunities for micro and small businesses to access finance to grow. New supply chain finance partnerships like the one between Mastercard, CocaCola and IFC provide working capital to micro-retailers, many of whom are women, while encouraging them to digitize payment histories to better assess their creditworthiness. Currently, 45% of credit applications from micro-retailers are rejected.

Ultimately, it will take a cross-sectoral effort to build a more inclusive financial system for small businesses.

“We all have a very big problem to solve [in closing the financial services gap], and it will take us all working together to solve it,” said Tunde Kahinde, co-founder and co-CEO of Lidya. “So it will be us, plus banks, plus regulators, plus policymakers to … deliver a world where every great business owner has access to fair and timely funding, without bias.”

Enabling small businesses to go digital

Digital transformation isn’t just reshaping how small businesses can access capital, it’s fundamentally reshaping how companies do business. As buying, selling, dining and learning evolve online, micro and small businesses need help to navigate the future.

aspirea small business initiative of the Mastercard Center for Inclusive Growth, is creating a $1 million innovation fund to create, test and improve solutions that support small business growth. CARE Turn on expands access to digital skills and financial education for female entrepreneurs in Vietnam, Pakistan and Peru through female-centered design. And in Nigeria, yellow cowries builds financial literacy through app-based games and peer-to-peer learning for small and unbanked business owners.

Rethinking public-private partnerships

In a world of growing complexity and challenges, lasting solutions will require cross-sector partnerships that pool each partner’s unique expertise to arrive at new answers. Several such partnerships are already paving the way.

Under One Roof: Be Bold Initiative mobilizes communities’ collective vision for a more equitable and prosperous future in California’s Pajaro Valley by focusing on public-private partnerships, system redesign, and infrastructure investment.

“Equity Re-imagined,” a new $11 million partnership between the Aspen Institute and Prudential, will work to improve job quality, financial security, and amplify wealth creation for historically underserved communities. Partnerships with trusted members of the community, such as the Black Church, will be essential.

A more financially secure future for all

These 20 innovations and breakthroughs unveiled at the second annual Inclusive Growth Summit are important steps towards making financial security a reality for millions, especially as the world of work and business is seemingly changing by the minute. minute. From online education resources to more inclusive financial tools, innovators are working to bring more people the peace of mind and upward mobility that comes with financial security. Inclusive next-generation financial systems and supports for small businesses will help ensure that the benefits of economic growth reach everyone, everywhere.

Read part 1 in this series: Solutions for Building Inclusive and Sustainable Economies.

Barbara Ray is a Chicago-based writer who writes about social policy and research. Avni Patel is director of content for the Mastercard Center for Inclusive Growth.

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Sarah J. Greer