Putting on a new lens: Exploiting mainstream innovations with a financial inclusion focus Today, financial innovations have penetrated, and continue to permeate almost every aspect of financial activity. This has been driven by faster computing speed, lower cost of storage and faster problem-solving capabilities. BIS central bankers’ speeches  1  Technology is being used by financial institutions to improve operations – from improving customer experience to constructing better models to manage risks more efficiently and effectively. In many cases, strategic partnerships with fintech companies have been established to achieve similar outcomes. The advent of robo-advisers and algorithmic underwriting are some of the examples. These developments have largely evolved within the mainstream customer segments and have proven to be effective. Clearly, opportunities exist to leverage on capabilities that are already in place to create specific applications for financial inclusion. With proven application, the prospects for achieving greater scalability, faster time to market and increased take-up are correspondingly greater. For years, financial institutions have invested heavily in technology that has helped improve the collection and mining of financial and non-financial data to gain richer insights into customer preferences and behaviours. These same capabilities create immediate opportunities to identify specific barriers to financial inclusion for different target groups whose needs are shaped by very different priorities, experiences, values and norms. For example, cultural biases can be an important factor that is not fully appreciated and understood as a factor that limits higher levels of financial inclusion among women.
Figure 12 The effect of an amortisation requirement on household indebtedness according to current proposals Per cent 220  220 Scenario without measures Amortisation requirements  210  210  200  200  190  190  180  180  170  170  160  160  150  150  140  140  130  130 05  10  15  20  25  Note. Broken red line shows an estimate of developments over the next 10 years without further measures. Shaded area indicates a feasible lower limit for when the risks are elevated in the economy. Broken yellow line shows an estimate of the effect of an amortisation requirement according to current proposals. Sources: Statistics Sweden and the Riksbank. A change to tax relief on mortgage interest could lead to a faster and more direct effect on household indebtedness, as it affects all borrowers. However, as a reduction in tax relief initially raises mortgage costs, it is likely that existing mortgage borrowers do not pay down their loans immediately. The effect on the total debt-to-income ratio therefore occurs gradually, even in the case of changes to tax relief. According to these calculations, it is only  19  A borrower with medium indebtedness in Sweden taking out a new mortgage, or increasing existing loans, only amortises at a rate which leads to the new loan being repaid in 56 years.