Long reads

Ukraine: How fintech can prove itself to be a force for good

Paige McNamee

Paige McNamee

Senior Reporter, Finextra

As the entire world watches on, trying to assist the plight of the Ukrainian people in whatever way they can, we’re also seeing industries adapt and tailor services to reach those most in need. Fintech is no exception.

Speaking with fintechs including the NEAR Foundation, Griffin, GC Partners, Skymind, Banked, and Azimo, we have compiled their perspectives on the ways fintech can and is currently working to deliver vital fintech tools to Ukrainian citizens in dire need of financial assistance.

Why is fintech well placed to assist people in times of crisis?

Fintech’s size and speed are valuable strengths when it comes to deploying assets and resources in times of crisis, according to Marieke Flament, CEO of NEAR Foundation. She explains that fintech and crypto leaders can make decisions quickly, avoiding typically labyrinthine hierarchies to get approval.

“Fintechs are also more adept at measuring and harnessing customer sentiment. This translates to a more direct and engaged relationship with audiences, particularly on social media, providing real time data on customer expectations. These customers want fintech and crypto companies to help them shape and influence their world for the better, and these projects have that capability.”

Flament notes that this is best typified with initiatives like the Unchain Fund, where within 72 hours of the conflict beginning, a group of fintech and crypto founders banded together to provide a direct path for donors to help fund NGO efforts on the ground in Ukraine. As of 7th March, the fund has raised just over $4 million for the humanitarian aid in Ukraine.

Miroslava Betinova, head of fintech at Griffin, adds to Flament’s point on speed, explaining that the global fintech ecosystem itself is built on agile technology with the ability to scale and pivot at breakneck speed.

“Adaptability is what makes the space perfectly suitable to help during a crisis - when time is of the essence. Fintechs have the ideal distribution model, using mobile technology to distribute funds and leveraging social media to raise an immediate awareness of the changes that have been implemented and the support that is available.”

Additionally, the fintech community can also help rebuild in the aftermath of a crisis by moving money across borders instantly and cheaply. It can also ensure that people in refugee camps have access to urgently needed funds for instance.

Because financial services are already firmly embedded in consumers’ daily lives, Betinova continues, fintech companies have the potential to be a force for good. “Fintechs can champion financial inclusion by making these crucial services available to everyone. This not only helps in times of acute crisis but can make communities more resilient to disasters in the long-term.  At its best, fintech is a force for global institutional change.”

Dr Ruth Wandhöfer, chief innovation officer of FX for GC Partners, believes that providing alternative channels and instruments to enable for example payments or information on financial data means fintechs can be a source for good. Remittances is a key area where this plays a role.

Dr Goh Shu Wei, COO, of AI ecosystem builder Skymind believes that the fintech ecosystem is very robust, well-funded and collaborative, and “during a time of crisis you see firms coming together to take action to support people at a time of need. The crisis in Ukraine is a good example of this, where you saw remittance companies cancelling fees and crowdfunding platforms raising donations to help refugees.”

Fintech can also work to ensure that aid isn’t encumbered by additional fees. 100% of donations should be reaching their destination, and charities shouldn't be losing funds to payment providers, believes Banked’s CMO Lisa Scott.

“This is especially true during an emergency - such as the one created by the conflict in Ukraine,” notes Scott.

Through their experience working with charities, Banked has seen a tremendous opportunity to create partnerships between companies and charities through its technology and competitive rates to allow a solution to give back at the checkout. “The cost of this is built into the transaction fee paid by the merchant, and not as an add on feature to the consumer.”

Scott explains that Banked is able to facilitate this due to low fees, for example, if a merchant choses to give back an extra 0.5% to a chosen charity, they could still be saving anywhere up to 2.4% in fees by using Banked.

“In doing it this way, the consumer can support worthy causes just by checking out using Pay by Bank, without having to 'round up' their transaction which is becoming more commonplace in checkout experiences.”

What financial tools do Ukrainian citizens need, and how can fintechs deliver them?

Acknowledging that this is a complex and nuanced question, Flament states that in the short term, Ukrainians need robust financial infrastructure to help buy and access food, supplies and transport to leave conflict zones. This pressure is particularly acute because Ukraine’s banking sector has cyber-attacks from Russian forces looking to cripple the country.

“There is also a mistrust of the banking sector in Ukraine, with many citizens choosing to hold cash instead of keeping money in banks.”

Flament adds that crypto infrastructure has remained robust during this time, giving citizens “an invaluable avenue to access and use funds. We’ve seen this response on local exchanges, with hundreds of thousands of citizens using crypto.”

From a long-term perspective, Flament explains that Ukrainian citizens will need a stable money supply, both in terms of value and access to help with the eventual rebuilding of the country. This is why Ukrainian citizens are buying up stablecoins in record numbers as a way of safeguarding their savings from inflation and tumbling currency prices.

Betinova argues that the emphasis should be maintaining the fast and free movement of funds, which Ukrainians who remain in the country will need.

“Many Ukranians are fleeing to neighbouring countries with very limited funds in their local currency. Fellow fintech champions such as Monese have already enabled free movement of funds and waived all the onboarding and transaction fees for anyone who signs up with a Ukrainian ID. They have also waived transaction fees for existing Ukrainian Monese account holders, so they can share funds with their loved ones,” says Betinova.

“Fintechs are well placed to quickly pull down these barriers to access, which can make a huge difference to displaced people who are suddenly alone in a strange country with limited resources.”

How can large financial institutions and fintechs join forces to assist the situation in Ukraine?

Betinova argues that large financial institutions, be they banks, licensed EMIs, schemes providing the licensing, or mobile payment providers such as Apple and Google Pay who connect their services to the fintech ecosystem - need to align on the technology level to deliver solutions for end users.

“Connectivity and correspondence via a standardised set of modern APIs can enable communication between platforms and environments, as well as collaboration rather than competition.”

Wandhöfer notes that a key way to achieve progress is tied to building more openness to partnerships, and “understanding the fintech ecosystem and modus operandi is key.”

This means having an internal partnership function which can help identify fintech solutions that will augment services and provide critical aid can then be more easily onboarded, integrated, and rolled out. “Fintech should not be left to the static and often challengingly complex onboarding and decision-making process of traditional procurement departments.”

Flament explains that fintechs are focused on solving specific problems well, and often have real time data on customer needs and service usage that can be valuable for solution development. She offers the following points of advice to firms hoping to partner with fintech to develop tools and solutions to help those caught in the crisis:

  1. Work with fintechs to establish what pain points you are trying to solve. The more focused the requirement, the better the outcome.
  2. Be prepared to work in a more agile environment. Procurement and other sourcing infrastructure can be overly burdensome when speed and agility are paramount.
  3.  Develop task forces that can represent key stakeholder functions inside businesses to work with fintechs on problem solving. Borrow the Amazon adage: every team should be small enough that it can be fed with two pizzas.

Dr Goh Shu Wei highlights the role that AI can play in times of crisis, noting that it can be very useful for fintechs in helping to speed up KYC for transfers with facial recognition technology and biometrics.

“It's also useful for those who have no financial history but want to be approved for credit or a loan.”

Dr Wei furthers that until recently, the only way banks could provide someone with credit was to review one's credit score – “but what happens if that's not available? What if you are in transit and can't provide the documentation or information you need to get liquidity?”

Artificial intelligence allows lenders to leverage other data sources, such as information on a person’s phone that might be shared for the purpose of obtaining credit. “By using AI and data analytics, credit can become available to those with no access to a bank account, payslip or digital financial track record - something that could be happening right now to people fleeing the conflict in Ukraine.”

Importantly, Dr Wei adds, fintech companies which harness AI, have been able to capitalise on the regulatory hurdles that have restricted incumbent banks from lending to those that are most vulnerable and in need. “Digital credit services are now a lifeline for many people in the most difficult of circumstances - and they are here to stay."

How can the fintech community help the plight of Ukrainians both inside Ukraine, and those who have fled the country?

Flament notes that remittances and cross-border payments are more critical than ever, and many avenues for locals to receive funds have been blocked either by Russia or by the fog of war. She urges firms to keep avenues open while ensuring compliance with KYC and AML laws.

“Tell your audiences and communities that you are working to create solutions for users to donate directly to charities and NGOs on the ground, or make moving money more seamless. Invite your customers to be a part of this process - new products often need beta testing before roll out. Invite your community to help accelerate and lower the barrier of entry to making a difference. Your customers and those in Ukraine will thank you for it.”

Dora Ziambra, COO of digital money transfer firm Azimo echoes the point, stating that digital money transfer providers are a lifeline for millions around the world, and have been vitally instrumental in driving down the cost of sending money abroad.

“During a time of crisis, these disruptors have also shown great acts of humanity by either reducing or dropping transaction fees altogether to help those in urgent need. This is the strength of the fintech sector - its ability to act swiftly and to move things forward and make things happen for the customers they've built their technology around.”

“While traditional money agents continue to add fees, fintech firms stand united in offering significantly lower cost options and these savings have a real-world impact on the lives of migrants and their families, which is particularly of benefit to women."

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