Colleen Briggs & Ryan Falvey
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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 is 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.
About 138 million adults—57% of Americans—have difficulty managing their daily financial lives. The latest Financially Underserved Market Size Study by the Center for Financial Services Innovation found that overlooked Americans spent $141 billion in fees and interest just to manage their daily financial lives, illustrating the immense opportunity for companies to leverage technology to better serve those consumers. Globally, fintech investments increased ten-fold between 2010 and 2015 to $12 billion.
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. Our 2017 Challenge focused on startups addressing the needs of overlooked segments that tend to have difficulty managing their daily financial lives.
Among the patterns we observed in our applicant pool over the last three years:
Barriers remain around the design and adoption of technology products targeting the most vulnerable consumers. We have recently partnered with organizations such as the World Institute on Disability™ and IDEO.org® to help our portfolio companies better understand these obstacles and how to address them.
Diversity. Even in 2018, there continues to be a lack of diversity among founders and leadership teams. There are still too few winning applicants from outside of Silicon Valley, too few women, and too few people of color. We continue to believe that the best innovators are the ones who solve problems that they have experienced themselves. The more diverse the pool of innovators, the more diverse—and more effective—the range of possible solutions.
Impact. Similarly, the majority of family and child-focused applications have focused on more affluent families and less impactful use cases, such as streamlining allowances. We would encourage innovators in these areas to focus on use-cases that are more impactful for less affluent families or where the technology is creating opportunities for shared experiences and learning.
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.
We’re not alone in working to pave the way for a new market that competes to improve the financial health of every American. We can’t wait to see the innovation in the Financial Solutions Lab’s next 1,000 fintech applications.
About the Authors:
Colleen Briggs is the Executive Director of Community Innovation for JPMorgan Chase. Ryan Falvey is the Managing Director of Financial Solutions Lab at the Center for Financial Services Innovation.
Learn more about the Financial Solutions Lab.
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