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What is social impact and how can Fintechs embed it within their business model?

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Gihan Hyde is the founder of Communique the ESG communications consultancy. Her and her team help organizations to test the effectiveness of their ESG business strategies and embed it within their communication campaigns. Some of their clients included HSBC, Barclays, BP, and M&S. Their work impacted 200K employees, 150K customers and resulted in investments worth £300M. Follow Gihan on LinkedIn or email her.

Social impact is the ‘S’ in ESG (environmental, social and governance). It is defined as any significant and positive change to our society that addresses or solves social injustice.

Focusing on your social impact can help build strong community links and boost brand loyalty

It is worth noting here that if your priority is on solving environmental problems, this still has a social impact – protecting rainforests also protects the people and animals that live in them, and any action that keeps the warming of our planet below the 1.5º target set by the IPCC is helping humans in the long run.

However, as much as these different aspects of ESG are linked, you might choose to focus more on your social impact. This can have advantages in building strong community links to the people you are directly helping, which can help brand loyalty.

First, it is important to define whether you are aiming to become a social impact tech firm – that is, a tech organisation whose main focus is your social impact and making the world a better place – or whether you are looking to build corporate social responsibility (CSR) into your existing work. Both of these things are valuable in driving change and can have an impact on the individuals and society you choose to help.

Tech organisations have a huge opportunity to make a social impact in a sector that offers the opportunity to challenge traditional financial institutions and promote banking equity, particularly throughout underdeveloped nations where the use of fintech is expanding rapidly. Building social impact into your organisation could also be good for the bottom line – today’s consumers and investors want to buy from and invest in organisations that align with their values.

Take Scrapp for example, an app that aims to make recycling simple, fun and rewarding. Users can scan the barcode of any household item, then Scrapp will show which parts are recyclable or not, according to local recycling rules. Scrapp focuses on education in its mission to protect people and the planet. But the firm also goes one step further by working alongside local authorities to offer recycling challenges for residents in the UK and USA. Residents are able to vote on which charity or cause money raised is donated to – ensuring that small actions turn into big impacts.

I personally use the app and when speaking to one of its founders, Dan Marek, it was clear that the app is still in its data crowdsourcing phase, meaning that it relies on me as the user to help them gather all the information needed to form a comprehensive offering. So in a way, Scrapp is also empowering me while educating me on all things recycling.

Making a social impact in your local community can also help you to build strong relationships and bonds with the community as a whole as well as grow loyalty amongst customers. It is up to you whether you choose to do this or whether you take advantage of our globalised society to make an impact around the world – or a mixture of both!

As long as your social impact policies and actions are promoting equality and addressing social injustice amongst anyone under-privileged while not doing damage elsewhere, you can make an impact anywhere.

We have discussed what social impact is, its importance and who you can affect with it, so now we’ll move on to the fun part: how do you incorporate social impact policy into your business?

Firstly, it’s important to plan your mission.

This is where you look at what your organisation does and think about where you can affect the most change. It makes sense to choose areas of change that are related to your business and fit in with your overall business mission. If you are an investment fintech, could you offer financial education to underprivileged young people? If you are a SaaS fintech, could you work to provide business education and loans or grants to underprivileged communities?

Think not only about what is relevant to your business, but also what you are passionate about and communicate your passion to your staff. It is important to get staff on board and excited about what you are doing so they are actively working toward the same goals.

Secondly, put your mission into action.

To measure the impact you are having with your projects, record everything you do – run before and after surveys amongst the people you are targeting, account for and audit every change that is made and gather both qualitative and quantitative data from every project. It is possible to do this yourself, but if it seems overwhelming, then get an expert in social impact to help with this.

Thirdly, once you have made an impact and have evidence of this, put this evidence to use.

Analyse it and see where you can make improvements and communicate your results – the successes and the challenges. This is where you need to think again about who your audience is and how your results will be communicated, and you might want to communicate in several different ways: in an impact report, in internal communications to your staff, in articles for industry magazines and so on.

The important thing here is to just make sure you let everyone know what you’ve been up to. Make it readable and understandable and put your data to good use – you want to make sure you’re communicating not only how many people your mission has helped, but also how they have been helped, including stats, numbers and graphs but also interviews and surveys.

Whether you’ve decided to make social impact a central part of your business or you’re dipping your toe in and making small changes – congratulations! You are making a genuine difference to your communities and our society.

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