According to the Gates Foundation, about 1.7 billion people across the world are excluded from formal financial services such as payments, savings, insurance, and credit. In developing countries, only 63 percent of adults have an account, and women are disproportionately excluded from beneficial financial systems.
Filling up such gaps of exclusion requires proactive engagement from the government, public and private sector enterprises, and communities at large.
What Good Partnerships Offer?
In partnerships, each sector brings a different set of competencies and values. For example, government backing ensures that getting regulatory approval is not a hassle. On the other hand, the private sector brings state-of-the-art technology and efficiency to ecosystems.
According to the Organisation for Economic Cooperation and Development (OECD), good partnerships offer:
- Mutual confidence and a high level of information sharing between partners
- Strong agreement and outcome sets
- Role clarity among partners
- Use of innovation, models, and frameworks to identify persistent trends and needs
- Professional management among members
- Shared and sufficient resources to maintain and support partnerships
For example, in the year 2020, Mastercard, Lloyds Banking Group, Good Things Foundation, and Clean Slate Training & Employment CIC together launched Nobody in the Dark coalition. The purpose was to provide immediate support to families excluded financially and digitally as a result of the pandemic. Spread in 20 centers across the UK, it was able to skill 80% of attendees digitally, with almost 60% feeling confident handling their money online.
Are Partnerships only a PR Strategy?
Although partnerships are a fascinating tactic for crowd gathering, genuine partnerships differ from mere recognition-oriented ones. Genuine partnerships are a collaboration of like-minded organisations sharing similar brand ethos and vision. They target objectives like finclusion, accessibility, affordability, and availability of services.
How to know if Partnerships are Effective?
Partnerships are not mere PR strategies but are highly effective if they are outcome-oriented and dedicated to their vision. The following factors can help ascertain if partnerships are going to be efficient:
- They support activities to improve planning and cooperation processes among partners
- Encourage deeper involvement of strategic partners through legally established relations
- Use methodologies and working tools such as Performance Management System and Total Quality Management
- Do mapping of socially marginalised communities
- Have well-established communication systems
Can Financial Partnerships Really Help Communities In Need?
According to the World Bank, countries that encourage collaboration of financial regulators, banks, and various ministries have achieved the most progress in finclusion. It further recommends having National Financial Inclusion Strategies (NFIS), that bring in all such stakeholders together.
The ongoing bank-fintech partnerships to support innovation in the financial services industry and new usecases like open banking, Generative AI, BNPL are revolunising the financial innovation.
One good example comes from the US. The US has Community Financial Development Institutions(CDFIs). These are specialised lenders that lend mainly to women, rural, and low income borrowers. Public and Private sector entities partner with CDFIs by investing in them. This investment drives capital for the CDFIs and ultimately helps deprived sections access affordable housing, health, and other creatively financed finclusion projects. This is considered a “win-win” partnership for all.
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