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How best to assess Bhutan fintech? Put people first

Bangkok — Bhutan might not yet be included when shaping a list of major influencers in the area of fintech.  Giant neighbours China and India are more likely to come to mind.

But across Asia, in nations large and small, the benefits of addressing the digital divide and of harnessing the power of fintech should be clear-cut. Taken together, both of these steps can increase the level of access to capital and financial inclusion — critical needs in developing Asia, including Bhutan. 

Yet, from block chain to crypto currencies such as Bitcoin and Ethereum, as well as Initial Coin Offerings or ICOs that allocate “tokens” as a new means of crowd funding capital, the language and disruptions buffeting the mainstream banking and financial services industry can seem overwhelming.

Broadly defined, “fintech” — shorthand for the technologies that are delivering innovations as well as new challenges and opportunities to the once staid banking and finance sectors — is also enabling the rise of new companies and transformative businesses.

That’s certainly a view that was shared and discussed here in Thailand as the Milken Institute co-hosted a “Future of Finance” roundtable with Thailand’s central bank this past month. It will also be a key topic at the 21st annual Milken Institute Global Conference starting in late April in Los Angeles, as we focus on the challenges of “navigating a world in transition.”

A global transformation is under way, disrupting traditional social and economic foundations, and heralding an era of change and challenge. Yet, as Bhutan policy makers seek to shape a better business environment, this transformation should not be feared by established players, particularly in the banking and finance sectors.

Just as businesses and consumers overcame fears and concerns about the advent of disruptions wrought by Automated Teller Machines, or ATMs, fear of technology’s impact on an evolving finance industry should not hold back change. Fintech is a disruption to be embraced.  

This was echoed in comments to us from digital pioneer Taizo Son. 

“We are strong believers in the power of digital transformation evoked by token economies and fintech innovation,” said Son, investor and founder of Mistletoe, a hub for startups and overall entrepreneurial ecosystems. Taizo is the youngest brother of another tech pioneer, Softbank’s Masayoshi Son.

“However, such technologies also hold the potential to promote the already widening income gap in our society,” said Taizo Son. “As entrepreneurs and architects of innovation we need to be aware of the important role we play in building a society that remains empathic and inclusive to all people in this era of increasingly autonomous technology.”

Indeed, at a time of growing inequality, how do we ensure a positive, meaningful impact from fintech on the people of Bhutan and across Asia?

With little to no access to formal banking services, too many people in Asia go without the basic protections of a savings account, and also may well face relatively higher costs for sending or receiving money.  This, in a region where remittances were valued at US$236 billion in 2016, according to the World Bank.

“Having access to basic financial services can reduce hunger, increase education and generally improve the quality of life,” said Queen Máxima of the Netherlands, UN Secretary-General’s Special Advocate for Inclusive Finance for Development, in her speech to attendees at the Singapore Fintech Festival 2017.

“I am convinced that fintech’s greatest achievement will be not just helping the unbanked, but also the underbanked — individuals who have insufficient access to financial services—to live a better life,” adds venture capitalist and fintech influencer Spiros Margaris.

Yet, the sustained benefits of fintech will only be realized if a proper ecosystem is created and maintained – one that addresses concerns of regulators while benefiting innovators and most importantly, consumers. 

Narrowing the digital divide will also continue to be a fundamental need, with increased mobile phone ownership and internet penetration remaining key factors in spurring consumer adoption of mobile financial services. Better access to capital and easier payment systems are critical elements to a better Bhutan business environment. 

Indeed, the true measure of success for fintech in Bhutan and elsewhere should not be deal size or quantity but in expanded horizons. True success is when fintech helps once-poor farming communities access funds to bring their crops to market, or helps small shopkeepers to grow bigger, or provides seed money for a young entrepreneur ready to turn a great idea into a concrete reality.

Beyond the fintech hype and jargon, the human element of financial technology should not be forgotten in Bhutan as this nation too moves forward. Future assessments of fintech must go beyond counting fortunes made and businesses disrupted or created, but also include a measure of everyday Bhutanese being helped. 

Contributed by Curtis S. Chin & Jose B. Collazo

Curtis S. Chin, a former US Ambassador to the Asian Development Bank, is managing director of advisory firm RiverPeak Group, LLC and Asia Fellow at the Milken Institute. 

Jose B. Collazo, a Southeast Asian analyst, is an associate with RiverPeak Group, LLC.  Follow them on Twitter at @CurtisSChin and @JoseBCollazo.

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