Aiming to back and support FinTech startups focused on the underserved, Accion International and VC Quona Capital raised $141 million in funding.
According to a report, the funding came from multiple institutional investors in support of FinTech startups that focus on those who are shutout of traditional banking systems around the globe. The Accion Frontier Inclusion Fund is setting its sights on emerging markets in Sub-Saharan Africa, Latin America and Asia that have shown the most potential for inclusive FinTech.
“The Fund will support innovators using new technologies to help create a financial system that works for everyone. By focusing on both social impact and financial returns, we believe the Fund shows the importance of harnessing the capital markets to solve society’s most challenging problems,” said Michael Schlein, CEO and president of Accion, in the report.
The report noted that so far the fund has invested in eight startups in a wide array of technologies, such as blockchain mobile payments, data analytics, financing and working capital. The round of fundraising was oversubscribed with investors, including IFC, MasterCard, JPMorgan Chase and AXA, as well as other unnamed investors.
While the unbanked are numerous in Africa and elsewhere in the U.S., their numbers are starting to decline. According to the Federal Deposit Insurance Corp. (FDIC), U.S. households that have zero persons with a checking or savings account, otherwise known as the unbanked, declined to a record low of 7 percent in 2015. The FDIC also said that the percentage of U.S. households that are unbanked declined by 0.7 percentage points compared to 2013 levels, meaning around 9 million households in the U.S. don’t have a checking or savings account.
What’s more, the report found 19.9 percent of households in the U.S. are underbanked, which means they use financial services outside of banks, including money orders, payday loans, check cashing or pawn shops. The underbanked stayed the same compared to 2013 levels.
The agency said one of the reasons for the decline in the unbanked is due to economic conditions that have been improving. Low-income households, the less educated, the disabled, the young, African Americans and Hispanics are more likely to be underbanked or unbanked, according to the FDIC.