The Green Team Speaks to Lesly Goh

The technology and finance expert discusses fintech, sustainability, and leveling the playing field for developing countries and women.

Lesly Goh is a World Bank Senior Technology Advisor

Lesly Goh is a World Bank Senior Technology Advisor and former World Bank Group Chief Technology Officer. She is also a Fellow at Cambridge Centre for Alternative Finance (CCAF) Judge Business School and Senior Fellow at National University of Singapore (NUS) Lee Kuan Yew School of Public Policy. She is newly appointed as Professor of Practice by ZheJiang International Business School (ZIBS). She focuses on operationalizing technology at scale in developing countries and leveraging emerging technology to deliver agile solutions for Sustainability Development Goals at the intersection of technology and policy frameworks. For almost 30 years, her experience on fintech, regtech, govtech spans across both the private and public sectors. She has worked extensively on the practical application of disruptive technology such as blockchain, artificial intelligence (AI), and Internet of Things (IoT).

Lesly’s experience in the private sector covers a broad spectrum ranging from capital markets, retail banking, commercial banking, asset management, development banks and financial data providers. Her personal mission is to empower women and girls to achieve the highest potential with technology as the equalizer.

GFC: Multilateral international organizations like the World Bank are providing some of the momentum to achieve the UN Sustainability Development Goals. Drawing on your previous experience as Chief Technology Officer at the World Bank, how has the organization focused on promoting digital transformation and sustainable development? Are there some specific initiatives that you can highlight?

LESLY: My first mission—MENA Youth and Gender Empowerment for the Digital Economy

The digital economy holds the promise of a new way forward, but it is still in its infancy. 

I have been supporting the World Bank Chief Economist Office for the Middle East and North Africa (MENA) region since 2018. The MENA region possesses all the ingredients needed to leapfrog into the digital future. They have large, well-educated youth populations that have already adopted new digital and mobile technologies on a wide scale. They have a highly educated female population. The combination of a digital savvy, well-educated youth with a highly-educated female population has immense potential to drive future growth and job creation. The question is whether the region can adapt to a new economic reality. For a variety of reasons, many of them cultural, highly-educated women stay home. The female labor participation rate is among the lowest in the world. The digital economy holds the promise of a new way forward, but it is still in its infancy. And young people face obstacles in putting technology to productive use. Although the internet and handheld devices are ubiquitous throughout the region, they are currently used for accessing social media, rather than for launching new enterprises. My first World Bank mission was in Algeria, and I spoke about youth and gender empowerment to leapfrog in the digital economy. Those ideas were published in this  book .

AI for Famine—mindset shift to experiment with emerging tech

In September 2018, a wide range of international organizations, with the support of leading global technology firms, launched the Famine Action Mechanism ( FAM ) at the United Nations General Assembly—the first global mechanism dedicated to preventing future famines. In the past, responses to these devastating events have often come too late, once many lives have already been lost, incurring high assistance costs. The FAM seeks to change this by moving towards famine prevention, preparedness, and early action—interventions that can save more lives and reduce humanitarian costs. The initiative uses the predictive power of data to trigger funding through appropriate financing instruments, working closely with existing systems. This is an example of experimenting with emerging technology for development.

Financial inclusion and Sustainability for SME Financing

As Senior Advisor for  SME Finance Forum , I am working closely with our International Finance Corporation (IFC) colleagues to explore new emerging technology innovations for the future of small-medium enterprises (SME) finance to focus on sustainability and financial inclusion. Created by the G20, the SME Finance Forum is a global network devoted to improving SME financing around the world. Managed by the IFC, we promote shared learning, new business/market partnerships, and high-level dialogue between the industry and important bodies like the G20, the Financial Stability Board and APEC. Throughout the year our members and the wider industry are learning, linking, and leading through both online and physical interactions we catalyze. Every year the SME Finance Forum hosts a flagship physical meeting, the Global SME Finance Forum, which brings hundreds of senior bankers, tech leaders, and policymakers together from around the world for three days of discussion, demonstrations, and investor-entrepreneur marketplace and study visits to innovative and local institutions.

You can get a sense of what this meeting is like by visiting the  site  of October 2019’s Global SME Finance Forum in Amsterdam.

During COVID-19, we have been contributing actively to share learning on SME Financing from around the world. More about these efforts can be found  here .

GFC: You have done much work in a number of developing countries that are in many ways on the cutting edge of leveraging technology to promote sustainability. Could you share with us some of the interesting ideas that these countries are piloting and lessons learned from them?

LESLY: Smart Cities in Asia—Cities are places of opportunity: 80% of global GDP is created in cities, helping hundreds of millions lift themselves out of extreme poverty. Over recent decades, cities have become a magnet for talent, investment, and for youth seeking a prosperous future. Not surprisingly, cities are experiencing unprecedented population growth, particularly in low and middle-income countries. Globally, over 50% of the population lives in urban areas today. By 2030, more than two-thirds of the population will call cities home. Rapid urbanization at this scale will present unparalleled challenges. To meet the needs of this rapidly growing population, we must push the frontier of our current thinking and find ways to revamp our cities and communities so that they function much ‘smarter,’ creating social opportunities at scale. At the forefront of these changes are today’s youth, who are already adept at living in the hyper-connected world of today and shaping the smart cities of tomorrow. For a city to become smart, it must be connected. The underlying digital infrastructure including a network of data-collecting sensors and devices, comprehensive broadband and wireless networks, and platforms on which data can be stored and shared must be in place. Technology reduces the physical and transaction costs of gathering information on usage patterns. With an unprecedented volume of data points in hand, cities can get more out of their existing infrastructure systems.

We must push the frontier of our current thinking and find ways to revamp our cities and communities so that they function much ‘smarter,’ creating social opportunities at scale.

As a Board Member of Singapore GovTech, I would consider the digital transformation journey of Singapore outlined in its  Smart Nation initiative  quite remarkable in harnessing technology innovation to provide digital services for the citizens and business community. In addition, Singapore introduced the  Smart Sustainable Cities  initiative, which focuses on harnessing solutions across industries to ultimately create green, digital, and efficient urban spaces. Another important aspect of this initiative is that the country aims to achieve ‘greening’ 80% of its buildings by 2030 through the S$50 million Green Mark Incentive Scheme. This is the most ambitious target of its kind in the world for a country. Interestingly, the Green Mark label from Singapore has been adopted by 80 cities around the world.

COVID-19 is an unprecedented test of the pragmatic leadership to unite the nation to address the pandemic emergency response for public health and well-being. Senior government leaders engaged the public in real time with a  user-centric solution  adapted on Whatsapp and uses AI translation to provide accurate information with a high level of transparency.

Over the years, Singapore has become a model for countries in the Association of Southeast Asian Nations (ASEAN) to learn about the  Digital Government Blueprint . For instance,  Vietnam’s Ho Chi Min City  engaged international experts for an AI conference in September 2019 for knowledge exchange and collaboration on future sustainable smart cities design.

Technology in Agriculture—Apart from urbanization challenges, many developing countries face pressing needs to transform rural farming communities.  Disruptive technologies in agriculture  consist of digital and technical innovations that enable farmers and agribusiness entrepreneurs to leapfrog current methods to increase their productivity, efficiency, and competitiveness, thereby facilitating access to markets, improving nutritional outcomes and enhancing resilience to climate change. Agri-tech solutions range from mobile apps to solar applications to portable agriculture devices and bio-fortified foods. Kenya is a leading agri-tech hub with approximately 60 scalable disruptive agricultural technologies empowering farmers by accelerating agri-food outcomes by multiple folds (3-5x) and/or by circumventing the conventions of the value chain to achieve the same or better results but with a more efficient agri-food outcome. Mobile payments are also making financing for these innovations more feasible and scalable than before.

GFC: Fintech is roaring ahead at an astonishing speed, which is bringing disruptive changes to the financial system as well as greater room for innovation and financial risk control. How it is harnessed will be key. In your work at the intersection of the technologies application and policy frameworks, can you expound on the possibilities for fintech to change the financial system?

LESLY: Fintech changes the SME Financing Landscape—IFC estimates that the financing gap for formal SMEs in developing countries is approximately $5 trillion, or 1.3 times the current level of SME lending. The financing gap widens by $2.3 trillion to $7.3 trillion when considering informal SMEs. Additionally, there are 131 million, or 41% of, formal SMEs in developing countries which have unmet financing needs. AI and machine learning (ML) can unlock value from the vast amount of data found in the databases of traders, banks, logistics companies, and others that could—in combination with alternative data sources—be algorithmically predictive in guiding risk management to unlock SME finance.

AI and ML also bring significant benefits to companies that adopt their use, and ultimately to the clients they serve. AI and ML for credit scoring has become one of the most popular use cases employed by fintech firms, BigTechs, and financial institutions. By using a mix of traditional data, such as credit bureau, applicant-provided data, and non-traditional data—such as digital payments, mobile call data records, social media, and behavioral analytics—fintech companies have developed highly sophisticated credit risk assessment models to evaluate the customers’ ability and willingness to pay their loans. These alternative credit-scoring models have been highly accurate and continuously update themselves with new data, which allow financial institutions to get more refined assessments of the customers that may default and thus lower the costs of delinquency. The key differentiator is the fast pace of innovation using the amount of real time data that continuously update the AI and ML algorithm, in comparison with the traditional approach using historical data that has long gaps before each update. More importantly, these new models opened the possibility to serve SMEs that have no/limited credit history (e.g., ‘thin file’ customers) and the unbanked, which were not included in the past due to the difficulty of assessing their credit risk.

Data Governance—As the availability and use of alternative data expands, regulatory authorities are faced with the challenge of balancing the need to encourage innovation and competition while ensuring adequate data integrity and consumer protection. Among the most prevalent concerns regarding the use of alternative data is the inadequacy of the existing laws—be it data privacy laws, transparency and disclosure regimes, or regulation and laws on consent. The rapid growth of cybersecurity concerns and its potential impact on global financial systems also need to be dealt with. Addressing these concerns with government regulation, while promoting private sector innovation in risk analysis/management, product development, relationship management, requires collaboration between regulators and the private sector. Possible regulatory solutions include creation of regulatory sandboxes and developing principles for responsible innovation and use of data. Hence, a set of  Investor Guidelines  for Investing in Responsible Digital Financial Services was developed to educate and protect consumers.

Cybersecurity—In the World Economic Forum  2020 Global Risk Report , other than climate-related risks, fragmented cyberspace threatened the most vulnerable population in developing countries because of the dearth of resources to take proactive measures to address cyber risk in digital financial services.

GFC: In the same way that the financial industry is being redefined by fintech, these emerging technologies are also more broadly changing our way of life—the so called Fourth Industrial Revolution by the World Economic Forum. What are your thoughts and ideas on how technology impacts sustainability? 

LESLY: I am analyzing how digital infrastructure such as 5G will provide significant opportunities to address development challenges in a variety of areas including agriculture, energy, transport, and health care. In countries where mobile services are rapidly spreading, they will be able to achieve a different level of development if they are able to optimize the benefits of 5G for leapfrogging to other levels of development, especially for those that are prepared for the migration. The convergence of different technology innovations such as 5G, IoT and sensors, robotics, AI, geospatial imaging, and drones will be a game changer to achieve higher levels of sustainability across the agriculture, transport, and manufacturing value chains. We can also envision that the tokenization of assets, using blockchain smart contracts, will be helpful to track green investments. In addition, IFC-facilitated  Sustainable Banking Network  (SBN) is an example of a unique public-private global platform to catalyze policy actions and measure collective impacts. One of the key challenges of green finance is measurement, with consistent framework and indicators across multiple geographies and different country context. The latest  SBN global progress report  aims to tackle this challenge.

The convergence of different technology innovations such as 5G, IoT and sensors, robotics, AI, geospatial imaging, and drones will be a game changer to achieve higher levels of sustainability across the agriculture, transport, and manufacturing value chains.

Government partnerships with private tech companies could be a way to achieve this convergence for sustainability. Many of the large technology firms are announcing how they plan to harness technology to fight climate change. For instance, Microsoft recently announced  Carbon Negative by 2030 —committing the $1B climate innovation fund to accelerate the global development of carbon reduction, capture, and removal technologies. Jeff Bezos committed $10B for the  Bezos Earth Fund  to fight climate change. Google launched the  AI for Social Good Impact Challenge  to foster innovation on the Developers Launchpad Accelerator Program, including guidance from their non-profit partner, DataKind to jumpstart their work.

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Lesly Goh is a World Bank Senior Technology Advisor