Fintech for Good: Five Signs a Fintech Company Cares About More Than Profits

Fintech for Good: Five Signs a Fintech Company Cares About More Than Profits

Fintech for Good: Five Signs a Fintech Company Cares About More Than Profits

Erin M. Sarris

Erin M. Sarris

Erin M. Sarris is the managing editor of n>genuity journal. With more than 10 years of experience in payments, she oversees all aspects of the publication to ensure it covers a variety of topics related to financial services.

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If you ask the question, "Who does fintech serve anyway?" chances are the answer will fall into one of two camps.

The first is the viewpoint that fintech is for millennials or affluent consumers who are looking for frictionless shopping, social networking or dating. It's this type of fintech that helps millennials split a tab or high-income earners to rack up loyalty points via their Starbucks app. When it's aimed at this group, fintech is seen as a shiny new object short on social impact.

On the other end of the spectrum is fintech for remote and developing countries, such as M-Pesa and RaiseNow. This technology hinges on money transfers, rounding up the change or fundraising for charities that support people in very vulnerable situations.

Yet, somewhere in between is a group of consumers that can often be overlooked. They may use a bank, or may manage their money without one, relying on a couple of unconventional solutions to patch together their financial support system. They live in developed nations with a higher standard of living, globally speaking, but are chronically on the edge of financial ruin from an unexpected medical expense or car repair. They live paycheck to paycheck and often have short-term liquidity issues or struggle keeping track of their monthly bills. They may be a single-family household without family support or might get assistance from food stamps to make ends meet.

It's a diverse group of consumers, but the opportunity to serve them is real. As a result, more and more companies are making social responsibility a key part of their business model and offering fintech solutions targeted toward this group. 

Five indicators a company is focused on more: 1) Value-based ethos 2) Transparency beyond the standard 3) Guardrails that eliminate traps 4) Awareness of the communities they serve 5) Bonus features

Here are five indicators a company is focused on more than simply making a buck:

A value-based ethos: There are many examples of companies with a strong sense of social responsibility to the customers and communities they serve. Think Airbnb introducing an anti-discrimination commitment or Salesforce's '1-1-1 model' where one percent of the company's equity is set aside, respectively, for community grants, non-profit donations and employee volunteer time. These ethical initiatives are examples where social responsibility is clearly built into the very fabric of the corporate identity.

Transparency beyond the standard: When it comes to fees, there's virtually no tolerance for unexpected surprises among consumers. Gone are the days of hidden charges and sneaky overages — Twitter and Facebook have given consumers a mouthpiece to fight back against that. After the baseline expectation of fee transparency is met, the next step toward greater ethical conduct is contacting consumers proactively (before they've incurred additional fees). This usually means sending alerts via texts or emails when a customer is in the danger zone so there are no surprises.

Guardrails that eliminate traps: If not used carefully, extra wiggle room can be a debt trap. Implementing guardrails that limit, for example, the number of times a consumer can borrow a small loan, can help things stay more safeguarded. This way, fintech providers can offer necessities like money transfers or short-term liquidity products without enabling a cycle of repeat borrowing. These guardrails also mean offering consumers multiple plans with the flexibility and features that they need (but no more).

An acute awareness of the communities they serve: Not everyone has the option to swipe a credit card for emergencies. And many don't have family support for a short-term loan. Recent regulation has jeopardized many of the technologies that helped lower-income wage earners cobble together a solution, leaving them with more unsavory options like title loans and pawn shops. Ethical fintech companies empathize with what's in their consumers' 'toolboxes' — overdraft, borrowing from friends, coupons, or whatever suits the time and urgency of the situation. The goal is not to reduce the number of tools available, but to make them even better and provide more choice.

Bonus features: Rewards and incentives certainly aren't a necessity, but they do give a glimpse into just how much a company is centered around its customers. These perks can include things like cash-back, personalized offers, referral rewards, help with saving and more. For example, certain prepaid providers have noticed this and started offering purchase cushions where they'll loan customers up to $10 if they get off track.

This new class of alternative fintech providers has emerged to help make life easier for consumers living close to the margin. Read more about fintech that works toward the greater good and how it's becoming part of our everyday lives. 

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Erin

Erin M. Sarris

Erin M. Sarris is the managing editor of n>genuity journal. With more than 10 years of experience in payments, she oversees all aspects of the publication to ensure it covers a variety of topics related to financial services, including mobile, B2B and emerging technology.

Erin has written for publications of The Chicago Tribune, RedEye and Metromix.com, as well as The Washington Post's Retirement Living, TV Guide, Washington Spaces, Columbus Valley Parent and The Peoria Journal Star. She graduated from Bradley University with a bachelor of science in political science and communication, and from Columbus State University with a master’s in business administration.

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