Three Takeaways After COVID-19

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With COVID-19 accelerating the digitization trends that were already underway, there are ample opportunities for purpose-driven businesses to make a difference, especially in financial services. Digital service providers have new opportunities to reach households, for example, via the many tech platforms in e-commerce, social media and logistics that have become even more relevant in daily life, such as Amazon and Flipkart, Facebook and WeChat, DoorDash and Grab.

Similarly, there’s more opportunity for digital service providers to meet the needs of small businesses. While the vast majority of micro, small and medium enterprises (MSMEs) in emerging markets continue to operate in some degree of economic informality, their underlying activities are increasingly digitizing. This creates new channels and data flows for innovators to offer new financial services — particularly those involving credit and insurance underwriting — that were simply not feasible until now.

Against this backdrop, Flourish Ventures has accelerated its for-profit investments in new platforms and new products relevant for the post-pandemic world: digital services that help gig-economy workers in Mexico and the U.S., smallholder farmers in Indonesia and Kenya, and corner-store owners in Bangladesh, Brazil and Egypt. These innovations can reach more people with better services at far lower costs than the traditional incumbent industry.

As a sector change-oriented investor, we want our individual portfolio companies to be wildly successful. Otherwise, they don’t prove that better ways of serving customers are feasible and viable. But equally importantly, we hope for — and work toward — undeniable demonstration success beyond our own portfolio, at such a scale that incumbents have japan whatsapp number data to follow suit and improve the functioning and performance of the financial system for all.



2. Change takes more than user-facing services — we need public goods and digital utilities.
While digital disruptors are engines for inclusion, they cannot change sectors without functioning digital infrastructure and modern financial regulation. To build a fairer financial system, our economies need a new alignment among a broader set of stakeholders —including the public, private and development sectors.

Some key elements of a better system, in particular in emerging markets, are likely to be public goods. As the McKinsey research on COVID-19 relief showed, reaching the most vulnerable segments is more efficient in countries with unique digital IDs. Public investments in digital identification, along with regulatory approaches that leverage these investments to meet know-your-customer requirements, can lower costs for everyone.