Smart Financial Inclusion

Young people

New technologies to propel Smart Cities development, fostering a new "smarter" society.

No one doubts the influence of new concepts, sharing and creative economy in developing Smart Cities. Since the eighties the American economist and social scientist Richard Florida explores the role of the creative class in the urban development and wealth. According to him, the Creative Class is one of the key driving forces for economic development of post-industrial cities in the United States. And he was completely right! Somehow this social diversity based on some of the new groups of creative people, including also artists and bohemians was one of the key points for the raise and boom of the new tech-paradises in USA. If we combine the social diversity proposed by Florida with the new reality of the millennials, the new generation that is now reaching the working and consumption market, we have pure energy, a rich fuel to drive the development of our smart cities. This prolific scenario, and the amazing opportunities that can arise from this exchange of knowledge and culture might be threatened, however, due to issues that point out to the opposite direction: bureaucracy and difficulties of official authorities in dealing with such diversity may really compromise the ability of cities to embrace innovation.


Researches suggest that by 2020 the “millennial” generation will be roughly 50% of the USA workforce


The world was never as globalized as it is now. People’s mobility beyond boundaries is a reality, not only in markets where the frontiers were opened such as Europe, but also in new fresh territories such as Asia, Latin America and also Africa. In my 7 years’ experience living in Beijing, China, I was able to have a normal western-style life thanks to the astonishing number of 300.000  foreigners living there. The same situation of cultural and social diversity can be also found in other  big metropolis such as Tokyo, Singapore, Lagos, Mumbai, New York, London and São Paulo. Among other reasons, it is definitely due to their ability to benefit from all of that multicultural and creative scenario that makes them flourish as vibrant ecosystems for innovation and for new startups. 


From China to Italy 

I have had a fantastic time in China, you can bet; but I never felt 100% integrated. Although I was formally working, and consequently helping the local and amazing quick development and paying  all my regular and compulsory taxes, as any other "beijinger", at the end of the day I was neither a citizen nor somebody fully absorbed by the local environment. No voice to discuss or suggest about “my" city management and no credit offer, even having a local bank account. One should be thinking: “Well, it is China! It is a very peculiar institutional landscape over there!.” If you are one of those, just think about the reality of your city. I live now in Italy, and even though it is a country fully integrated into the European Union I face the same sort of issues that I used to face in China. We can also see similar scenarios in almost all of the big cities around the world, in which diversity is always followed by significant challenges in terms of promoting the integration of those individuals, both in terms of public policies as well as to access to products and services available locally.  Back to Florida’s insight, social diversity may be the key point for an outstanding creative class, but it will not be productive if there is not enough integration as the basis for it to flourish. 


Young people working


That is why this article will explore new solutions that are emerging to promote a full and deep social inclusion in smart cities of the future. Social integration can be addressed through several points of reference, and We will look at it through the economic point of view. In a very elementary analysis, social inclusion will definitely reflect on individual access to products, services and goods, from the basic needs to high-end ones. No doubts, in this sense, that a considerable proportion of our purchase power depends on the level of credit that is available within a certain market. If in the past my grandfather had to save money during 20 years to buy his first car -when he was almost 40 years old- nowadays my son would be able to buy his first one even before getting his driving license and keep paying it for the next 20 years. But He “would be able”, I said. If, on the one hand, the perspectives and need for credit have changed drastically, on the other our finance and banking systems are still very traditional, and not unusually significantly facing new regulations that are a threat to the current speed and mobility seen on other areas of the global market. They can even be following the digitalization trend that offers 24/7 on line services, but in terms of credit analysis most of them are still doing as it was 50 years ago. To get access to credit you need to have a credit record, a real guarantee or at least some sort of sponsor or guarantor. As a consequence, we are keeping out of this credit market not only non-residents and foreigners, but also a big amount of the new generation workers, the millennials, and a wide range of individuals whose profile fall out of the traditional credit risk assessment. This generation doesn't have a credit record now, mainly because they are fresh in the market, and its intrinsic dynamism will probably not allow them to have a traditional one in the near future. They are known as the job-hopping generation, with global mobility. Several researches suggest that by 2020 they will be roughly 50% of the USA workforce and 75% of the global workforce by 2030, so it was about time to start developing smart credit solutions to meet the demands of these new global citizens.


“A conscious management of personal credit is the key point for a wealthier economy” (Renato Araújo)


Smart credit is a concept that is becoming widespread in newly industrialized countries such as Brazil, Mexico and India. These are large, populous countries with young populations. Though they are all huge economies in terms of GDP, credit is not only a local need, it is also an important economic tool to promote economic development and social inclusion. One of the most successful cases in this held is a spin-off called SalaryFits, based in London. They have combined two traditional financial tools to develop the product they call ZmartCredit: salary deduction loans and big data deep integration, powered by a cutting-edge business intelligence platform. The basic solution proposed by SalaryFits is a Business Intelligence (BI) tool to quickly and efficiently integrate the credit offered by local providers into the payroll systems of organizations, regardless of whether the users are public administrations or private companies. SalaryFits will process this information and allow the credit providers to better access the credit prole of the employees of those entities. This technology helps reduce credit risk and enables employees to get interest rates lower than with other modalities. It works well with all stakeholders involved: the local financial institutions and other providers, companies and employees (citizens), who can get access to cost-effective, convenient credit lines, with the possibility of comparing costs and doing simulations online, in the same way that they currently do when searching for air tickets and hotel rooms on Kayak or TripAdvisor. Once the individuals decide what the best offer is, they can easily get the credit from the institution chosen and the installment/repayment will be automatically deducted each month from their salary. It means that it does not matter if you are a citizen or not or whether you have a previous credit record or even a good credit rating, you can get good, fair credit offer whenever you need it. This is process that until now has been totally connected to your social status is becoming smarter and tailored to our new “Smart Citizens” profile.


A top secret project 

SalaryFits has a top secret project, that will be started in the near future, will be even more innovative by applying new concepts of IoT to credit management in a personal level. They already manage more than 4.5 million accounts around the world, so you can imagine the disruption that initiatives like this can produce. Another important issue for them is promoting Financial education, which they have been doing in Brazil since 2012. According to Mr. Renato Araújo, a conscious management of personal credit is the key point for a wealthier economy.


The more we innovate and integrate, the more we are going to live in an inclusive and wealthy society


This type of solution, that is truly committed with sustainability, can also be a key element to foster financial inclusion, both of the unbanked as well as the underbanked. Through their work within markets such as Portugal, Spain and Italy, for example, Salaryfits is talking to a couple of financial providers in order to offer a better set of financial products for those who have never had access to financial institutions before, or to those that cannot, due to some reason, have access to their products. Besides their usual credit solution, they are partnering with providers that will be able to offer from short term loans to products such as insurance and health care. Those employees will, through this solution, have access to those services, and pay for them on a monthly basis, all in a very secure and convenient transaction. The best part of it is that they can have access to those without the need to go through painful, demanding and bureaucratic KYC’s procedures. 

As the concept is still in development, all the potential applications have still not been fully released. Considering, for example, the great challenge Europe is facing with the refugees, technologies like this could facilitate better management. This technology could be used to help governments to better manage the huge and intense use of financial resources. With just one tech solution we could distribute the money to the people in need (refugees) and better manage it, promote the local economy and bring full transparency to the whole process, avoiding traditional problems such as corruption and the misuse of resources.

It is definitely through smart and technological solutions like these that we can help our cities to improve the environment within which we are going to live, and no doubt that the more we innovate and integrate, the more we are going to live in an inclusive and wealthy society.



Member of the global advisory board of Leading Cities, Boston, and International Advisor for The World e-Governments Organization of Cities and Local Governments (WEGO), Seoul. Founder, board member and Senior consultant at Baumann Consultancy Network for Smart Cities projects and internationalization strategies, Italy

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