New technologies are critical to reposition the industry as more customer-centric. But they also offer carriers the opportunity to increase their social and economic impact and reboot themselves as a force for good.

Obviously, this is one of the themes of the digital insurance agenda at ITC DIA Europe, 28-29 June in Barcelona.

Financial institutions are increasingly looking for ways to increase their social and economic impact. Some by planting trees to reduce their carbon footprint, others by already leveraging the sometimes hundreds of billions of euros, pounds or dollars of assets they have under management. Virtually all incumbents realise that all great challenges we are faced with in the coming decades – from climate change, water, waste and energy to providing health care for ageing populations – require solutions in which financial institutions play a key role.

Technology takes away hurdles

New technologies not only lowered the entry barriers for new players. They also take away the hurdles that existed to play that bigger part. We see more and more insurtechs with the mission to tackle important global challenges. Think of how health insurers apply technology and data to improve patient care while decreasing total healthcare costs. Or think of incumbents who apply new technologies that are helping to offset the damage caused by natural catastrophes such as hurricanes and floods.

During ITC DIA Europe, 28-29 June in Barcelona, companies with innovative tech applications will be on stage who can show how to make a more social and economic impact in healthcare, climate and other areas.

Having said that, for some reason, financial inclusion is not top of the agenda at most financial institutions. Which is a shame in view of so many people who could benefit.

Much more than the utility system

The financial system is often presented as the utility system of the economy. Obviously, this does not reflect the sector’s importance. Beyond any doubt, money is the lifeblood of the economy and society. And consequently, the financial system is the cardiovascular system.

This is also true for the role of finance in personal development, as financial services are at the heart of the daily lives of individuals and businesses. An ever-growing part of medical costs is covered by insurance. A vast number of businesses are financed by banks. The use of money is an essential part of daily life. It is a key to protection and to a better future.

Protecting the base of the pyramid

Now, unfortunately, most people do not have access to these kinds of financial services. And they are even completely absent in rural villages, in the slums, or on the streets where low-income people live. The consequences are immense. If you don’t have access to for instance health insurance, it is more difficult to stay healthy. And when one of your family members would get seriously ill, there is a fair chance to be thrown back into poverty. It is these kinds of vicious circles that keep billions (!) of families across the globe from building a better life.

The financial system doesn’t help

The issue is the financial system; the laws and regulations, the written and unwritten rules, the assumptions and industry conventions. Most probably all developed with good intentions, aimed to provide protection. But at the end of the day, the resulting procedures are not geared to the daily lives of low-income people. Consequently, they are working against inclusion, in fact even excluding the majority of the people on our planet.

At ITC DIA Europe, 28-29 June 2023 in Barcelona, we’ll have several speakers on stage who are tackling this challenge, providing protection to already millions and millions of low-income people across the globe, such as BIMA and Asistensi.

BIMA disrupts the traditional insurance industry by bringing affordable insurance to underserved customers in Asia and Africa. They provide people who can’t get specialist care, and who don’t have insurance, with affordable access to high-quality healthcare.

Asistensi offers medical coverage for families in Latin America. They focus on supporting mainly those who have emigrated so that they can continue taking care of their loved ones in their countries of origin regardless of the distances.

At ITC DIA Europe 2023, they are joined by Erlijn Sie, the author of the acclaimed bestseller ‘Reimagining Financial Inclusion’. Erlijn is not just pointing at the flaws in the system; ‘because that won’t fix it’, she argues. Instead, she handpicked 13 social enterprises from across the globe that are giving access to financial services to sometimes millions of customers already; customers previously considered unbankable and uninsurable. Erlijn decoded what makes all of them so successful in creating financial inclusion at scale.

Change the rules

Unconventional enterprises venture to question industry conventions by nature. They did not take the formal system for granted. They realised that you need to change the rules if you want to play the game. They uncovered underlying assumptions and proved them to be false or obsolete. Each of the game changers thought outside the current system to solve or bypass the flaws, creating an alternative and effective pathway to financial inclusion.

Unlock massive new markets

Unlocking the potential of billions of people also unlocks massive new markets for financial institutions – a compelling strategic incentive to give financial inclusion much more emphasis.

The analysis by Erlijn Sie shows that it is possible to reach the base of the pyramid at scale and create a sustainable and profitable business in the process.