See full session, here: https://finance.yahoo.com/video/concordia-2021-annual-summit-promoting-204653393.html
Beth Hurvitz, VISA’s SVP Global Head of Social Impact, Michael Schlein, President & CEO of Accion, James Scriven, CEO of IDB Invest, and Yahoo Finance anchor Julie Hyman discuss the importance of digitization in various aspects from he 2021 Concordia Annual Summit.
BRIAN CHEUNG: Welcome back to “Yahoo Finance Live.” Let’s take a peek over at what’s going on in Midtown Manhattan where Yahoo Finance’s Julie Hyman is about to speak with Visa SVP Beth Hurvitz and Accion’s Michael Schlein about the digital gap through the COVID-19 recovery. This is happening at the Concordia Summit. Let’s take a listen in right now.
JULIE HYMAN: Obviously it’s gotten a lot of increased attention over the past 18 months, it’s safe to say. And there was a statistic that Kent Walker talked about earlier in the program. He’s, of course, the senior vice president of global affairs at Google. He spoke earlier in the day. He said, “57% of the global population is unable to access the internet.”
And that sort of encapsulates what is at stake here and what we’re talking about in terms of the sheer numbers. As I say, this topic has gotten a lot of extra attention over the past 18 months. What I want to talk about today is sort of defining it a little bit better and talking about what is actually being done to address it.
Because I think we all sort of have a feel of the scale of the issue here. So let’s talk more about perhaps the steps that are being taken to address this digital gap and to sort of bring everyone up to the same level. Beth, let’s start with you and talk about what you guys are doing at Visa.
BETH HURVITZ: Well, you know, the pandemic has really accelerated the digital transformation. It’s taken about four years of digital transformation and put it into one. And this transformation is here to stay. In fact, at Visa, we’re looking at the numbers, and the numbers show that there’s a significant uptick and significant increase in digital commerce.
And what that means is that businesses that are better equipped to be able to do digital commerce are doing better. They’re more resilient. They’re faring better. And in fact, some of them are even thriving. And in fact, being part of the digital economy is really important now for everybody, not only businesses.
And in fact, you know, in the past, if you had a financial account anywhere, you were considered part of the formal economy, and you were deemed OK. But you know, that’s just not the case anymore. And really, to feel this inclusive growth, you really need to participate in the digital economy. And participation is more than just access. And I know you just talked about access.
But it’s more than just access, because if you have access to something but you don’t know how to use it, what good is it? And so you need to be able to have access and technology. That’s absolutely critical. But you also need to have the education, you need to have the skills, you need to have the trust to really be part of it and to be a part of the digital economy and to participate.
And that’s why we at Visa are really focused on digital equity. And we define digital equity as having every individual and every business to ensuring that they have the opportunity and the skills to participate in, and also fully benefit from, the global financial platforms and the digital economy. And so, you know, we’re very focused on making that happen. And we really want to be part of the solution to bring everyone into the digital economy and to fuel and have technology help fuel a more inclusive and equitable world.
MICHAEL SCHLEIN: And maybe I’ll just pick up on some of Beth’s themes. It’s hard to remember, here we’re in New York, and it’s the financial capital of the world. And James just joined us. Perfect timing. He was here the whole time.
But for 3 billion people, the global financial system fails. They are invisible to it. It is invisible to them. And yet we’re living in a time of enormous technological digital transformation, digital revolution. Literally, data, data analytics, the internet of things, machine-to-machine technology, satellite imagery, blockchain, all of these are changing all of our lives.
But they have an enormous opportunity, we have an enormous opportunity, to use these tools to reach billions of people who have been left out. My organization actually– and this is what we’re dedicated to. We’re a global nonprofit focused on creating a financially inclusive world. We have new tools at our disposal that we’ve never had before. And really, if we can use those tools to reach people that have been left out for so long, that’s digital equity. That’s a very, very powerful concept.
And the pandemic has only exacerbated the gaps, literally on every aspect, whether it’s income or health or wealth or vaccine distribution, I’ve never seen in my lifetime. All those trends had been narrowing, and now they’re going in the wrong direction. Literally, take a step back.
In my lifetime, global poverty has gone down more steeply than any time in human history over the last several decades. And that trend, for the first time, is being reversed by the pandemic. So we’re now moving in the wrong direction. Again, I think Beth mentioned, we’ve seen digital tools and digital payments pick up during the pandemic. So I think we have an opportunity to build a more inclusive economy leveraging these new technologies.
JULIE HYMAN: James is with us now, as we mentioned. James Scriven, the CEO of IDB Invest. We forget that now people are back in the city and that means more cars are back in the city, more traffic is back in the city. James, welcome.
As we talk about this, it seems clear that the various stakeholders here all have an interest in making this happen, whether it is for altruistic reasons or it is for capitalistic reasons, you want new customers. As I said before, there has been a lot more attention on this issue. What are you hearing in terms of the money that’s flowing into it, in terms of the attention that– has it sort of sustained through the pandemic after the initial spike in alarm and concern about the issue of digital equity?
JAMES SCRIVEN: One forgets that before it took 30 seconds to go from one meeting to another on Zoom, and now it takes an hour and a half. I do apologize for that. So let me start by agreeing with what Michael is saying. I mean, first of all, any indicator that we’re seeing in the IDB Group is going the wrong way in the sense that I think it was former President Lagos of Chile said that any indicator that he saw in Chile is going back between 5 and 10 years.
And that is not– and that is not to alarm people. But it means, too, that we need to work together to be able to build back better this world. And that’s the whole view of what we call, within the IDB Group, the Vision 2025 that is investing in Latin America and the Caribbean, with a focus on sustainability and inclusiveness.
That takes me to the point of your question. We are, as an institution, heavily invested in new technologies to be able to accelerate, in our lifetime, those gaps that we’re seeing widening, be it through technology, be it through new innovation, all those areas that are heavily invested. We have two institutions in the IDB Group, one the IDB Lab that invests as a laboratory of innovation in the equity space for technology. And we scale those up. So we have a number of examples of which we are looking into investing in these new technologies to be able to accelerate inclusiveness and sustainability.
JULIE HYMAN: So I think we’re getting a picture from all three of you that this is a big challenge that we’re facing right now. Beth, as you talked about the different aspects of digital equity, which of those is the biggest challenge right now? Where is the biggest gap, whether we’re talking about geographically or in one of those particular areas that you talked about?
BETH HURVITZ: So I think one of the biggest gaps or one of the main areas I’d like to talk about is dealing with small microbusinesses. I think, you know, at the heart of this crisis is millions and millions of small and microbusinesses that have to shut their doors, have had to shut their doors, or are just really struggling to stay afloat. And these businesses are the backbone of global economy.
They’re 90% of the businesses. They’re 50% to 60% of global employment. And they’re disproportionately affected by this pandemic. In fact, one study said 2/3 of small businesses said that their operations were drastically affected by the pandemic. And one of the factors was limited digitization.
In a world of lockdowns, if you can’t do business digitally, in many cases you just can’t do business. And so we at Visa are really focused on digital equity because, as my colleagues have said, the pandemic has really exacerbated this gap. And you know, in building back better, we really want to use technology to be able to be a tool to build a more inclusive and equitable world. And I’d like to highlight four areas where Visa is focused on small and microbusinesses.
The first is back in June of 2020, we committed to digitally enabling 50 million small and microbusinesses. And we’re doing that through using the sort of scale and power of our network, and our infrastructure, and our expertise, et cetera, to connect small and microbusinesses with opportunities to grow their businesses. And I’m happy to say that at the year mark in June of 2021, we digitally enabled 16 million, 30% of our goal that we’re going to do by the end of 2023.
The second one I’d like to highlight is the Visa Foundation. And the Visa Foundation has created this equitable access initiative. And that’s committing $200 million over five years in both grants and impact investing to be able to support small and microbusinesses, as well as with a gender lens to really focus on women’s economic empowerment. And I’m also happy to say that to date, we’ve allocated more than $50 million in grants and impact investing to help small and microbusinesses, and especially those that benefit women.
The third area is really around education. I talked beforehand that financial education and digital skill building is absolutely critical. And recently, we talked about the expansion of financial business skills, which is our digital platform to be able to offer these resources free to small and microbusinesses around the world.
And we have it in multiple languages and many, many more to come. We’ve also focused on– we’ve also created something called the SMB hubs in many different geographies on visa.com to be able to bring market-specific opportunities and resources to make it simpler for small and microbusinesses to actually work digitally, to make it so that it’s easy for them with products and solutions online.
We’ve also, for number three, expanded our Practical Money Skills platform, which is the web educational platform that’s focused on individuals, and households, and communities. And that will also be expanded in helping individuals with their money management skills, because we believe that when you have more financial information and knowledge, you can really help your life and have a better life.
And lastly, we have, from a financial education perspective, not only dealing with people directly, but we’re working with more than 500 partners worldwide to be able to customize these resources so that they can bring it to more individuals and more businesses so that the impact can be exponentially. And number four, very quickly, we created the Visa Economic Empowerment Institute, which is really focused on creating a dialogue around the policy issues around digital equity and digital inclusion in the world today.
JULIE HYMAN: So Michael, looking at it through the nonprofit lens, what do you think people in the business community need to be aware of when they’re attacking these issues? And what role do you think each of the stakeholders needs to play in this?
BETH HURVITZ: Hmm. Really, this is very, very hard. A lot of Accion’s work is in the digital transformation of small banks and microfinance institutions that are trying to serve the base of the pyramid. And generally speaking, they are way too labor intensive, way to paper intensive, and have underinvested in technology. So a lot of our work is helping them invest in technology and figure out how they can basically change their whole operation to be much more efficient in reaching those billions of people who are left out.
JULIE HYMAN: Are they– just sorry to interrupt–
MICHAEL SCHLEIN: Sure.
JULIE HYMAN: Are they open to that?
MICHAEL SCHLEIN: Well, that’s a great question.
JULIE HYMAN: Do you see this sort of– you know, people obviously get very stuck in the way that they have done things, especially over the past year and a half. Are they more open to making these changes?
MICHAEL SCHLEIN: It’s a perfect question. And I would say before the pandemic, this notion of digital transformation of existing institutions was sort of nice to have. Now it’s urgent. So the answer is, yes, they are desperate, because they also realize that you need to be– basically the microfinance and small bank sector in our field is probably going to consolidate, and there will be fewer much larger institutions that are– and the ones that will survive and thrive are the ones that are further invested in technology.
We have to change that calculation. And frankly, if we can make it less labor intensive and less paper intensive and use technology better, we can make it cheaper and cover way more people. So yes, I think there’s an urgency that comes out of the pandemic.
If you had the chance to– we just saw everything accelerate so much. If you had the chance to transact digitally during the pandemic, you did. If you had the chance to sell your goods online, you did. So there’s an awareness that I think is out there that is perhaps one of the few, I hate to say, silver linings of the pandemic.
JULIE HYMAN: Well, it was a question of survival, right–
MICHAEL SCHLEIN: Yep. Exactly.
JULIE HYMAN: –for a lot of– for a lot of businesses. So James, as you listen to that, one of the things that stood out by what you were saying was consolidation, which isn’t always a good thing, right, necessarily for all the folks involved. So I’m wondering how you view that part of the process? If you’re getting digital equity sort of leading to consolidation, are there any pitfalls that you would be watching out for?
JAMES SCRIVEN: Yes, of course. And I would like to also add a few thoughts to my panel members. One is if you see there are certain areas that have today vital access to technology, especially being internet, that is not the same for the rural parts of our countries. And a lot of effort we’ve done at the IDB Group to be able to give access to everybody in regions.
We partner together with Telefonica, and Facebook, and the CAF to be able to do and launch them through what’s called Internet para Todos, Internet for All. It’s an incredible initiative that’s giving good strives to rural Peru. And we’re doing the same moving into Colombia. So that’s an example of providing internet to all people that have accelerate.
To the example that Michael was referring to, we’re partnering with Accion to be able to create an alliance with a number of financial institutions, they, globally, we’re putting pressure for that to move more to Latin America to be able to transform digitally all these institutions. And with Visa is a big effort to be able to accelerate our direct payment systems through Visa.
So I would say we do see significant consolidation in this market is that institutions that have accelerated digitalization are going to be the winners in this context and may be buying or partnering with many institutions that have not. So these are examples of what we’re doing together to be able to accelerate connectivity.
JULIE HYMAN: OK. We’re almost out of time. This flew by. I’m not going to ask you to do one word, like the earlier panel. But if you could just give me one sentence or so, the takeaway for the folks in this audience, what they need to know for action walking away from this today. Michael, let me start with you.
MICHAEL SCHLEIN: The pandemic has been devastating. But I do think it has accelerated digital innovation and digital transformation, which means that I think we can build back a more inclusive world that has digital equity, that treats everyone more fairly.
JULIE HYMAN: An optimistic note. Beth.
BETH HURVITZ: I absolutely agree with Michael. I would also say that partnership is critical from a digital equity perspective. No one in this room can do it alone. Bringing public and private partnerships together to really get at the inclusivity and equity and building back to make it a better world and some of the access problems and everything, we just have to do in partnership.
JAMES SCRIVEN: If I may add also that technology is not an end in itself. But for us in the development space, it’s a means for development. It’s a means to an end. So always when we look at technology, we look at it, what’s the purpose that technology is bringing, and, in our case, building back better our region, our world.
JULIE HYMAN: Thank you so much. Really appreciate it. James, Beth, Michael, again, that conversation flew by. And thank you so much for watching.