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Mobile banking and financial services apps like Digit, Albert and WiseBanyan have become integral parts of many Americans’ financial lives.
The next wave of fintech startups are using increasingly sophisticated (and low-cost) technology and social media to target overlooked populations with action-oriented tools, many of them provided by employers as benefits to their workers.
We have been observing the evolution of fintech in our work with the Financial Solutions Lab, launched by CFSI and JPMorgan Chase in 2015 to provide capital, mentorship and other resources critical to early-stage fintech organizations. We have reviewed more than 1,000 applications and supported 26 fintech companies, many of which are experiencing exponential growth. Here are some patterns we've observed:
1. Overlooked populations. Fintech solutions can increasingly address the unique financial needs of overlooked populations. Today’s technology enables the design of targeted products for narrower populations. Social media lets companies go after niche audiences.
2. Action-oriented. Fintech providers are shifting away from services that simply offer information toward ones that incorporate action-oriented tools. Behavioral science teaches us that it is not enough to simply provide people with information and expect them to use that information to make good decisions. Instead, information must be relevant, timely and coupled with an opportunity to put it into practice. Fintech entrepreneurs are incorporating this into the architecture of their solutions.
3. Employer-based. Increasingly, providers are looking beyond the traditional consumer models to help companies better serve their employees and customers. Just as employers have a business reason to care about their employees’ physical and mental health, they also have a reason to care about their financial health.
The digital future of financial services has exciting implications for consumers, but unlocking the potential of technology requires a diverse ecosystem of banks, nonprofits, startups, and investors capitalizing on these trends and ensuring that they continue to benefit everyone.
Read the full article about what was learned from 1,000 fintech companies by Colleen Briggs and Ryan Falvey at ImpactAlpha.