Opinion | How technology can help democratise access to finance
- Market exclusivity makes it all but impossible for many SMEs to get financing, while investors interested in social impact struggle to find projects that relate to their values
- Digital platforms, backed by blockchain, can vastly improve the choices available for ESG investors
No one would claim that global finance is democratic. Markets are networks that tend towards concentration, to an extent never seen before. Google has 4.3 billion users, accounting for over 90 per cent of internet users, with a market value of US$1.7 trillion. Of the US$117.3 trillion in assets held by the world’s top 100 banks at the end of 2021, 62 per cent belonged to the top 30.
The top two stock exchanges (the New York Stock Exchange and Nasdaq) account for 45 per cent of the total market capitalisation. In half of the world’s listed companies, the top three shareholders hold more than 50 per cent of the capital.
The impacts on people are clear: Credit Suisse reports that 2.9 billion people have less than US$10,000 in household wealth, while the top 1.1 per cent of the world’s population holds 45.8 per cent of global household wealth.
The reality is that financial markets, as they are currently structured, make inclusion impossible.
Whether you are one of roughly 2 billion people who are unbanked or one of the 131 million small enterprises on the wrong side of the world’s US$5 trillion MSME (micro, small and medium-sized enterprise) finance gap, you are likely to pay more for financial services or simply do without, affecting your ability to access opportunities.
And since SMEs drive job creation and emissions reduction in many economies, the current reality is affecting growth, wealth and our ability to achieve carbon neutrality on a massive scale.
