Innovations to improve financial security and expand economic opportunities

Improve household financial stability and security

Savings are the foundation of financial security. It allows households to cover an emergency, bounce back from failure, and 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 creating wealth. MoCaFi (Mobility Capital Finance), a mobile banking fintech in the United States, helps families build wealth by avoiding interest rates and exorbitant fees from check tellers and payday lenders. In partnership with the City of Birmingham, Alabama, and Mastercard, MoCaFi connects 50,000 underbanked and unbanked residents of Birmingham to high quality, low cost financial services.

In the same way, Green wood, a black-owned mobile banking platform, partners with Mastercard to deliver a new debit card to its clients as well as financial education and planning resources. And Reached, an artificial intelligence-based lending platform, grants credit to people typically excluded by traditional credit scoring measures.

In Washington, DC, the importance of financial security to the economic health and well-being of the country leads elected officials like Sen. Chris Coons (D-Del.) To call for a presidential commission to create a national and interagency strategy for financial inclusion. 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 US CDFI Fund, the Small Business Administration, and the Consumer Financial Protection Bureau dedicate resources to protecting economically disadvantaged communities from unfair and abusive financial practices.

Connecting workers to the opportunities of the digital economy

Affordable financial services are only part of financial security. People also need a good, well-paying job to get by and advance in a changing economy. For years, less educated workers have faced headwinds as two sweeping changes – demographic change and technological acceleration – 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 on the job market. In Asia, the number of young people has more than doubled in the space of 50 years. This “youth explosion” can lead to hardship or opportunity, depending on whether the next generation can acquire the skills necessary to compete in an ever-changing economy.

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

For example, technology platforms like African girls can 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 Grab Academy to help drivers on their hub in Southeast Asia acquire new skills in demand. Now, Mastercard and Grab are joining forces to increase digital development 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 the multigenerational workforce. AARP, in collaboration with 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, like the one launched by Rework America and the Atlanta Federal Reserve, aim for the recovery of two-way employment which starts less educated and low-paid workers behind. The alliance is partnering with local community organizations to put job seekers without a college degree in touch with good jobs.

Redirecting capital to the under-served

Entrepreneurs are the future creators of jobs, 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 have generated globally 10% more income more than five years than their male counterparts.

“We’re still talking about 98 percent of the capital going to the men,” said Jean Case, CEO of Case Impact Network, “so we really have a lot of work to do there. But what inspires me, c “is that I see new capital coming in and a lot of new business. There have been 275 new venture capital funds created by women.

Virtual network and business incubators Hello Alice and Digital undivided strive to help black women and Latino entrepreneurs launch their businesses and attract venture capital. Collaborative Capital, from Camelback Ventures, is helping 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, Beyond a billion, a global consortium of venture capitalists, has announced a new $ 10 billion commitment to fuel high-impact, high-growth innovation by women.

In emerging markets, fintech innovations like Lidya in Nigeria and many others are creating new opportunities for micro and small enterprises 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 percent of credit applications from micro-retailers are rejected.

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

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

Enabling small businesses to go digital

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

Aspire, a small business initiative of the Mastercard Center for Inclusive Growth, creates a $ 1 million innovation fund to create, test and improve solutions that support small business growth. MAINTENANCE Ignite Expands access to digital skills and financial training for women entrepreneurs in Vietnam, Pakistan and Peru through a women-centered design. And in Nigeria, Yellow cowries develops financial literacy through app-based games and peer learning for small and unbanked business owners.

Rethinking public-private partnerships

In a world of ever-increasing complexity and challenges, sustainable solutions will require cross-sector partnerships that pool the unique expertise of each partner to arrive at new answers. Several of these partnerships are already leading 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 investment in infrastructure.

“Equity Re-imagined,” a new $ 11 million partnership between the Aspen Institute and Prudential, will strive to improve the quality of jobs, financial security and amplify wealth creation for historically poor communities served. 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 in making financial security a reality for millions of people, especially as the world of work and business is seemingly changing by the minute. minute. From online training resources to more inclusive financial tools, innovators are striving to bring more people the peace of mind and upward mobility that comes with financial security. By design, next-generation financial systems and support for small businesses will help ensure that the benefits of economic growth flow to everyone, everywhere.

Read part 1 in this series: Solutions to build inclusive and sustainable economies.

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

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