In the fast moving, rapidly changing financial services landscape of Bangladesh, where the regulators are holding all institutions to a world standard of risk mitigation and transparency, a highly unlikely event happened this week.
The top leaders of many of the largest financial services providers in the country came together under one roof for the first ever Bangladesh Financial Innovation Forum.
There were several notable presenters at the event, designed for a range of perspectives on three critical areas: innovation in financial inclusion; skills development in the financial sector; and the impact of FinTech and InsurTech innovations. What did we learn?
We are going through four transformations: Industrial, organizational, educational and technological. The Central Bank of Bangladesh must continue to stay open to ideas and transformation across these fields. This means that there need to be ‘sandboxes’ for trying out new products and services’ and ways nurture and support innovative cultures and rapid prototyping. Regulators need to be in partnership with financial actors to monitor and manage the risks of innovation, while not loosing the opportunities to more nimble players in other parts of the world.
Bangladesh has been a leader in financing SME sectors of the urban and non-urban economy. To foster growth in next generation SMEs, the financial sector must redouble its efforts to reach more people at a cost and speed that has not yet been achieved. Technology will make it possible to service this largely informal sector. How? Through tech enabled service centers, through more mobile telephone based products and services being encouraged and offered, and by creating closer and cheaper ‘on-the-ground’ interactions that are enabled by regulators. This will mean not only serving the micro-segments at the bottom of the pyramid and the bigger ticket players, but aiming for the mid-level SMEs who are ripe for a next stage of growth. Creating a wider platform of sharing between South Asian financial institutions that are committed to SME growth could accelerate experience and learning.
Technology forces a change in relationships. For leading edge projects, banks and insurers need to work together in pre-competitive dialogue and design. Constructive engagement can only work when all players are working in a holistic way that drives critical new thinking to pick-up the weak signals from across industries. Projects such as the Telenor example show that corporate venturing frees up thinking and fosters an ecosystem of new startups that are linked to the best players in the world. When this happens, connections are made between finance, healthcare, education and industrial development in rapid, non-linear ways. The entrepreneurial culture of Bangladesh has the natural advantages and hunger to take the lead in fostering such innovation, but ‘C’ suite leaders must take expeditions to innovation ‘hot-spot’s in the world to evolve thinking foster partnerships and drive change.
Technological and social innovation need to be linked, to make sure that the gains from what is created can have an impact on both the financial and ‘real’ economies. The learning of the Global Alliance for Banking on Values, where BRAC Bank is a member, adhere to six principles for sustainable banking that can be adopted by any financial innovator: aim for long term resiliency, remain client centered, adopt a triple-bottom line approach (people, planet, prosperity), drive for transparency, generate tangible gains for the real economy and foster cultures in financial institutions that support and enable all of the above.
When developing skills for the current and next generation of financiers, “the purpose of finance should not be overwhelmed by the profession of finance.” In other words, fostering values and a proper ethic cannot be separated from developing professional skills in the financial sector. These values and skills must be built through agenda-setting that defines the curricula of both hard finance skills and soft human engagement qualities. The agenda must be mutually driven, agreed and frequently reviewed and benchmarked with world standards. It must be carried out in partnership between universities and training institutes; financial services; the central bank and regulators, and the industry sectors that will make use of the new skills. This must also be done with an eye to fostering innovative shared and curated incubator spaces that will expose students to design, FinTech, venture investment and collaboration. If done well, it will foster an ethic of transparency, robustness and speed. In short, education, in a disruptive environment is too important to be left to the educational institutions, as we are all practitioners in an emergent environment where ‘search’ becomes as important as ‘research’. Focus on opportunities rather than gaps, as deficiency thinking does not drive and inspire transformational learning.
In summary, the first Bangladesh Financial Innovation Forum has issued a challenge: unleash the power of innovation in the Bangladeshi financial sector to build on its experience and natural advantages and to meet the challenges of tomorrow. Do it in a way that will provide the greatest economic good across all levels of society. Start by working together to invest in, and educate the next generation of financiers while renewing the skills and commitment of the current generation. It has to be a mixed model involving a diversity of players who work ‘top down’, ‘bottom-up’, ‘outside-in’ and ‘inside out’.
Author: Tom Cummings
Tom Cummings is co-author of ‘Leadership Landscapes’ and ‘Nine Visions of Capitalism’. He designs and moderates initiatives that foster innovation and leadership in a world that needs to make sense of social and technological disruptions in the finance, industrial and services sectors.