April 17, 2019
By Bram Peters
Innovation, and especially digital innovation is a subject that keeps many people busy in their professional lives and I am one of them. In my case it is all about innovation in digital financial services. This ranges from fintech, to biometric authentication, eKYC, mobile enabled credit solutions, sandbox regulations, insurtech and a wide variety of other related topics.
Innovation is often viewed as the result of sudden insight or flash of inspiration. However, the reality is actually more pedestrian and more often than not, has nothing to do with a sudden ‘eureka’ moment. In my humble experience innovation is typically driven by combining existing ideas, concepts, techniques, phenomena or theories to conceive something new.
Early last year, and after having spent a couple of years working in East-Africa I returned to the Pacific to lead the Pacific Financial Inclusion Programme (PFIP), a more than decade old, well established programme focused on driving innovation for financial inclusion in the Pacific. The decision to move from East-Africa, a region with one of the highest rates of mobile money usage in the world and with a very vibrant fintech scene, made many of my colleagues scratch their head. Why on earth would someone be professionally interested in moving back to the Pacific? A region where, according to a recent report by GSMA only 38% of the population subscribed to a mobile phone service as at the end of 2018. Far below the average of 44% for least developing countries and we’re not even talking about mobile money subscribers.
What many of my colleagues didn’t know was that during my three years working for Bank South Pacific in Papua New Guinea, prior to my experience in East-Africa, I had grown a professional ‘soft spot’ for the Pacific. Although not as vibrant as East-Africa, the Pacific presents a unique palette of interesting challenges to overcome when trying to spur innovation in digital financial services;
Although many recent initiatives are promoting and supporting tech startups, such as TechLab in PNG, to a large extent the scene remains emergent at best and only very few Pacific tech entrepreneurs have ventured successfully into the fintech business.
For more than ten years PFIP has been supporting a wide variety of financial services providers in the Pacific to innovate around these challenges. In recent years through applying an ‘Innovation Lab’ approach. This method tries to innovate from within incumbent financial service providers, such as banks, telecom operators and insurance providers by establishing a ‘Lab’ team that operates completely separate from the core business of the partner organization. This team of experts applies human centred design and iterative development techniques to rapidly test a variety of prototypes and solutions around customer adoption and usage, learn from this process and eventually assess if scaling is commercially viable.
This approach in itself can be seen as innovation, whereby we are blending various concepts and techniques into some kind of new approach. As to be expected with trying something new and taking risks, PFIP has seen successes, but also failures with this Innovation Lab approach. What is more important, we realized that this approach does not really spur the development of a fintech start-up scene in the Pacific. With that in mind we decided to try again a new way of programming our interventions.
This time by combining our strong relationships with our partner financial service providers, such as Vodafone Fiji and KINA Bank in Papua New Guinea and link them with fintech entrepreneurs from outside the Pacific, who would otherwise not even consider coming to the Pacific. The primary objective is to attract these fintech companies from countries with a more vibrant tech-scene, such as Singapore, Malaysia, Australia and New Zealand, and introduce them to the Pacific, and with that, boosting the fintech scene in the Pacific region.
After a lot of discussions with a wide variety of stakeholders and tweaking the concept over and over again, PFIP together with their colleagues from UNCDF’s Financial Innovation Lab in Kuala Lumpur launched the Pacific – ASEAN Financial Innovation Challenge in February this year.
Recently we closed the application window and we were really surprised by the level of interest from fintechs from Malaysia and Singapore. We could not have dreamed that so many fintech entrepreneurs from these markets would be interested to move into the Pacific, whilst they could also decide to stay put in their home turf, which most likely offer easier opportunities than the ones we are offering with this Innovation Challenge.
After being back in the Pacific slightly more than a year now I am thankful that we have been able to unlock another chapter of innovation in financial services in the Pacific. Not with a moment of sudden and great revelation, but by simply learning from our previous work and combining these insights with new ideas, hunches that can get us closer to finding affordable solutions for customers in the Pacific.