Last month, I had the opportunity to participate in the 2024 Responsible Finance Forum in Fortaleza, Brazil (next door to my hometown), which was organized by the Center for Financial Inclusion (CFI) as an official side event of the G20 Brazil.
The event brought together regulators, lawmakers, influencers, and private sector actors from over 22 countries to discuss the theme of “Bridging Inclusion and Innovation to Improve People’s Lives.” With topics from infrastructure and financial wellbeing, to the challenges faced by micro-entrepreneurs in managing debt, it was energizing to be back in Northeast Brazil, a place where I grew up and my family left to pursue the "American dream", to discuss strategies around minimizing risks for historically underserved individuals.
With Brazil being home to one of the world’s most dynamic and growing payment ecosystems, the event provided a rich environment for exploring ways to maximize financial wellbeing.
The main priorities at the event were: 1) Policy options for improving “last mile” access and delivery of services, including Digital Public Infrastructure (DPI) and Consumer Protection objectives; 2) Micro and small entrepreneur access to responsible financing; and 3) Establishing a framework and measurement tools for financial well-being (Brazil’s priority as the host country). The discussion around financial health and well-being is one that we at Flourish Fi fully support because it's not only the right thing to do, but it's also good for business.
A huge shout out to the folks at Mastercard Center of Inclusive Growth, Global Partnership for Financial Inclusion, Brazilian Central Bank, and the CFI team for organizing such an important event and for bringing diverse perspectives into the discussions. I am very grateful for the invitation to the Responsible Finance Forum. Here’s a bit more about my experience:
Day 1 Highlights: The Banco Palmas Model
The forum started with an immersive experience visiting Banco Palmas to interact with local small businesses and learn about the operations of the community and solidarity banking model. A pioneer in solidarity finance, Banco Palmas was founded in an underserved community of Fortaleza, Brazil. It is built on the pillars of community-based loans and a local currency, paired with professional training and capacity building. Banco Palmas integrates entrepreneurs, training programs, and financial services to create a micro-ecosystem that empowers money to stay within the community.
The visit generated insights that permeated throughout the conference by connecting people with a real-world example in the area and demonstrating the importance of financial inclusion at the localized ecosystem level. The use of social currency and e-dinheiro within the community highlights innovative ways to drive usage and accountability through trust and social proof. Overall, this hyper-localized model involves identifying key activities in the community, such as financial needs for entrepreneurial ventures, access to financial services, and a payment system that incentivizes money flow through local businesses.
Joaquin de Melo (Palmas’ founder) shared his vision of social and technological innovation to improve lives, reinforcing the need for a more adaptable role of banking regulators and supervisors in creating competitive and inclusive financial ecosystems. A big shout out to the team at Palmas for their warm and educational reception!
Efforts like PIX (instant payment system) and open finance in Brazil have significantly increased financial inclusion and efficiency, demonstrating the positive impact of regulatory initiatives. The conference delved into system-level topics, including discussions around Digital Public Infrastructure (DPI), data governance, and the responsible delivery of financial services. The talks around DPI focused on three main areas: identity, payment rails, and data-sharing. But it was clear to me that DPI goes beyond these three areas. Just like roads and railways were crucial for economic advancement, in a more connected and digital economy, digital public infrastructure can play a key role in helping people and businesses to flourish.
Other key takeaways included the importance of keeping people at the center of financial innovation and exploring collaborative efforts to empower individuals and the ecosystem. This aligns very well with our mission at Flourish Fi to add value and enhance the financial health of all.
The Global Policy Forum's second plenary meeting focused on access to finance, fair treatment, and transparency. These discussions emphasized the need for economic opportunity and reducing inequality. A session focused on unexpected events, such as the climate disaster in Rio Grande do Sul earlier this year, highlighted the importance of financial resilience and the role of responsible finance in mitigating the economic impacts of disasters.
The number of digital and financial adoptions are off the charts in Brazil with the PIX (instant payment) at its center alongside open banking initiatives. As of early 2023, PIX transactions outnumbered the combined total of credit and debit card transactions, with 8.1 billion transactions in the first quarter alone. The system now accounts for 35% of all transactions, a remarkable increase from 23% the previous year. Nearly 11 million companies utilize PIX, with B2B transactions comprising a third of its volume. Open banking has similarly driven growth, enabling better financial management and personalized services through secure data sharing. Together, these initiatives have brought millions into the digital financial ecosystem, revolutionizing payment methods and fostering a competitive, innovative market.
A notable highlight was the “Aprender Valor” program, implemented in 26 states and 55% of Brazilian municipalities, reaching 5.8 million students. This initiative underscores the importance of financial education in improving financial health.
The Financial Health Index, by FEBRABAN and Central Bank of Brazil, was discussed emphasizing the challenges related to increasing levels of debt and fraud, and the need for finding a better solution for these issues. The topic of measuring financial wellbeing was also touched upon with the Brazilian central bank sharing their work with Febraban on the “Financial Health Index of the Brazilian”. This initiative reminded me of the efforts in the US by the Financial Health Network on evangelizing a framework and publicizing data around the topic with their “The FinHealth Spend Research”.
source: FinHealth Spend Report 2023
A recurring theme throughout the forum was the importance of placing the consumer at the center of financial inclusion policies. Measuring financial wellbeing and continuously seeking diverse perspectives from the ecosystem were emphasized as crucial steps for improvement. The discussions highlighted the need for a multi-stakeholder approach to drive meaningful inclusion and reduce inequality.
The forum also shed light on the strengths of regulators in India and Brazil. Effective regulations act as 'the brakes in the car that allow you to go fast,' ensuring safe and rapid progress. The Responsible Finance Forum plays a vital role in distributing knowledge and leveling the playing field, particularly in reaching the next billion people in need of financial services.
One of the most reinforced messages was the need to build a community focused on capacity building. No single sector can achieve financial inclusion alone; the private sector, philanthropic efforts, and government initiatives must collaborate. The forum underscored the importance of creating an inclusive financial world through commercially sustainable impact and innovative regulations.
I also had the pleasure of presenting Flourish Fi and its mission to a group of regulators, central bankers, and policymakers from over 20 countries. Sharing our vision and the innovative solutions we offer to enhance financial health was a significant moment. It was encouraging to see the interest and engagement from such a diverse and influential audience. This experience reinforced our commitment to making a meaningful impact in the financial sector and provided valuable insights for our continued growth.
The Responsible Finance Forum was a significant milestone in advancing financial inclusion and responsible finance. The insights and discussions from the event will influence our efforts at Flourish Fi as we strive to enhance financial health through innovative solutions. We remain committed to driving positive change in the financial sector, inspired by the lessons learned and the collaborative spirit of the forum.
We invite you (as partner, client or simply allied) to join us in this journey. I welcome your thoughts and ideas on how we can collectively advance beyond financial inclusion and into a more responsible finance ecosystem that looks at an individual's ability to be financially resilient and healthy. #TogetherWeFlourish
