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Better Together: The Future of Finance is Collaboration

An online feature-length thought-leadership piece by Rajesh Agrawal was published on Global Banking & Finance Review in December. It focused on the idea that collaboration is at the heart of fintech, particularly in view of crowd funding, peer-to-peer and pay-want-you-want platforms rising in popularity in 2014. Read the article in full here.


Rajesh Agrawal


As consumer behaviour evolved to include technology, it became a catalyst for innovation. From communications to corporations, it created a paradigm shift that transformed our contemporary world.

Collaboration is at the heart of that transformation. For example, in the last few months, financial services technology (fintech) has increasingly revealed new avenues for creativity and innovation.  Many thrive on the blurred boundaries between business and social worlds, and the fact that the lives of those within them are inextricably intertwined.This is particularly true of popular crowdfunding, peer-to-peer and ‘pay what you want’ (PWYW) businesses.

Crowdfunding exemplifies thephenomenonof technological and social media innovation in business. Allowing a large number of unconnected people to unite one-by-one to offer fiscal support for a project, start-up, or business initiative through collaborating and funding, it relies on the generosity of online backers.

When Kickstarter launched in 2009 with this model it seemed unlikely to succeed, but within months people were funding their passions through the kindness of strangers. Projects thrived on goodwill.

Similarly, peer-to-peer lending sites and now peer-to-peer exchanges have blossomed. The cousin of crowdfunding, it too allows people to finance or support each others projects.

Growing up in Indore, a small town in India, I know that this sort of platform could offer fantastic opportunities for the very poorest people, people who want to start a business and escape poverty, people for whom twenty pounds could make a long-term difference to their quality of life.

Described as ‘democracy in action’, collaborative funding is symptomatic of the metamorphosisof financial services driven by technology. It lets those of us who have breathed in and taken what we need from our environment, to breathe out and give back to the world.

New business models continue to emerge as more fintech entrepreneurs realise everything from launches to long-term business models can be supported through the collaborative efforts of consumers.

The latest trend is in ‘pay what you want’ (PWYW) platforms like that of Aspiration, an online investment firm, and my own project,Xendpay, an online money transfer service that removed all fees for sending bank-to-bank transfers to replace it with a ‘tipping’ option.

PWYP, according to marketing expert Ju-Young Kim and Martin Spann, is a new participative pricing mechanism in which users have complete control over the price they pay.

In other words, if you are happy with the service or confident in the project, platforms like Xendpay and Aspiration let you pay more. However, you do not have to pay much, if anything, in the case where you are unable or uncertain about the service.

For me, PWYP is more than just giving users control. It is a way to return autonomy to those people who have no choice but to send money home to their families, and who for so many years have been exploited by an industry that has been called everything from a ‘super racket’ by Koffi Annan, to an ‘international Wonga’ by Labour MP Tessa Jowell. This is because the remittance industry charges far more than it needs in fees, taking billions from the hands of hard-working migrants who need to send money home for their families despite the fact that money transfer costs mere pennies to send.

Cutting prices by just 5% makes it possible to save up to $16bn a year in the developing world.

And this level of change is a social imperative.

Collaborative fintech therefore gives me the ability to create an ethics-based business capable of making a difference on a personal level, helping people help their families, but also a social level, helping families help their communities and watching that ripple out to help hundreds beyond that.

Acting like an ‘honour box’, PWYW represents the positive changes occurring in incumbent industries as it works to not only run a business but also to help subsidise others who might want, but not be able, to contribute at that time. Despite the risk that some might misuse it, taking without giving back, letting people choose what they give allows everyone from the creator to the consumer to benefit.

Crowdfunding, peer-to-peer and PWYW models embrace contemporary creativity and technological innovation. As partnerships, they create business-to-business as well as business-to-consumer opportunities. As alternative funding methods they create opportunities for start-ups and entrepreneurs, causes and companies, which did not and could not exist thirty years ago.

It reminds us that corporate social responsibility is not really about businesses. It is about people. It becomesshared social responsibility.

Of course there are still issues for collaborative business models, kinks that need to be worked out. Questions constantly arise about how fintech innovators might use relationships to generate profitable and sustainable revenue streams and how they can focus on profitability, competitiveness, and sustainability.

But today my point is this: banking and finance can now be collaborative; it can be about all those involved as a consumer, employee or founder. Social networks have blurred into businesses through fintech, and using these collective, shared platforms, we have the opportunity to revitalize, revolutionize, the world.


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