Financial Well-Being
Feature Stories Fintech Fintech for Good World-Region-Country

How Can Fintech Help Improve Financial Well-Being? With Mastercard, Coinweb, DailyPay and More

This August at The Fintech Times, we’re looking to highlight some of the amazing things fintechs are doing around the world. We are always hearing about the “latest groundbreaking innovation doing good for the community”, but are these innovations doing good for those in an already advantageous position, or are they helping make the financial world more accessible?

There are many different facets to the concept of ‘fintech for good’, one of the major benefits is increased financial well-being of consumers. We spoke to several companies in the industry to find out more.

Financial equity

Opening our conversation, Jeanniey Walden, chief innovation and marketing officer at DailyPay, explains how financial equity is being achieved through the applied use of fintech within the workforce.

“Diversity, equity and inclusion are at the forefront of many business leaders’ minds as they strive to create work environments where everyone feels welcome. However, financial equity is an aspect often overlooked. Financial equity and inclusion mean ensuring individuals have equal access to professional opportunities, financial systems, products and services, and ultimately, wealth. At DailyPay, we help…companies improve the financial equity of their workforce by offering on-demand pay to their employees.

“With on-demand pay, employers provide a much-needed lifeline and cash flow to their employees who are often unbanked or underbanked. DailyPay’s technology platform allows employees to transfer their earned pay to any bank account, debit card or payment card at the push of a button.

“Using DailyPay can help employees save an average of $1,205 per year in reduced fees from loans, overdraft fees, and late fees. Research conducted by the Aite-Novarica Group shows that 95 per cent of those who were previously reliant on payday loans in any way either stopped using payday loans or reduced use after using DailyPay. In addition, 97 per cent of those who said they had overdrawn their bank account prior to using DailyPay now rarely or never incur overdraft fees after using DailyPay.

“This helps users improve their credit, build savings and feel more financially capable and independent by reducing the need to rely on payday loans, pay advances or personal loans from family and friends. The mission-driven innovation DailyPay created is an integral part of how we improve people’s lives every day.”

Financial understanding 
Jean-Louis Warnholz, CEO and co-founder of Future
Jean-Louis Warnholz

“Fintechs can help improve the financial well-being of people in many ways, for example by increasing the understanding people have of the financial world,” says Jean-Louis Warnholz, CEO and co-founder of Future.

He said: “Only 57 per cent of adults in the United States are financially literate, according to a survey from the Milken Institute. Fintechs have a role to play in creating greater awareness around the impact our daily choices have, not just on our life today but on our future and the future of generations to come.

“At Future, we focus on the intersection of financial and environmental sustainability, bringing choices to our members that are good for the planet and good for their wallet. More cash and less carbon often go hand in hand.”

Insight into money management

Colby Thames, chief technology officer at Certegy, points to the relationship between the insight fintech tools provide and the financial health of the underserved.

“Fintechs can provide access to consumer data and analytics in new, innovative ways that can help us understand consumer motivations and trends. They are also helping open finance and money management channels to the unbanked and underbanked, helping to lift more consumers into safer financial management positions,” Thames explains.

He continues: “Tools that fintechs can provide like personal budgeting, automated savings, spend analysis, and an aggregated view of finances, all empower consumers with more insight and options than ever before, allowing them to better manage and optimise their financial health.

“Many fintechs provide a broader suite of payment options for consumers in comparison to their traditional banks, allowing them to have flexibility in the way that they pay for things. Additionally, many fintechs also offer more security and fraud protection, giving consumers added peace of mind.”

Open banking
David Jones, head of fintech, UK and Ireland, at Mastercard
David Jones

David Jones, head of fintech at Mastercard UK and Ireland, sees the application of open banking as an enabler of financial well-being.

“Financial wellbeing is fundamentally important to society,” Jones shares. “To drive prosperity, people need to be financially engaged and confident. But financial well-being cannot be made possible without financial inclusion – the availability and equality of opportunity to access financial services.

“Sadly, however, around 7.1 million people in the UK – or 14 per cent of the adult population – currently fall into the definition of being ‘financially excluded’, meaning they could potentially struggle to access affordable and fair financial services. With people locked out of the financial system in this way, there is no hope of achieving financial well-being. And in the current cost of living crisis, this is critical for millions of people across the country.

“Everyone, irrespective of their background, has the right to accessible, high-quality, reliable, and safe financial services and products. Fintech and other new and emerging technologies have an important role to play in adapting products and services to meet the needs of underserved groups.

“In the case of open banking fintechs can build tailored services for specific groups of underserved people, thereby increasing rates of financial wellbeing across the broader population. Open banking data can give fintechs insight on peoples’ financial data, including spending insights. This means that these organisations can build personalised financial products best suited to an individual.

“Lenders, for example, are increasingly recognising open banking’s value in addition to traditional credit data when assessing a person’s affordability. In fact, 70 per cent of lenders are expected to adopt open banking technology by 2023. It is these personalised services, enabled by open banking that can help people manage their money and not get into spiralling debt, ultimately driving financial well-being, particularly during the cost of living crisis.”

Active participation
Sarah Biller, co-founder of FinTech Sandbox and leader at Mass Fintech Hub
Sarah Biller

Sarah Biller, co-founder of FinTech Sandbox and leader at Mass Fintech Hub, describes how the wider adoption of fintech has allowed more people than ever before to engage with financial services; which has ultimately bettered their way of living.

“Fintech has been providing innovation to financial systems going back to cuneiform tablets and Biblical times,” Biller comments. “Its power is to expand financial access to more people through new technologies that can make trade and accounting more efficient. We view fintech as critical to providing financial availability and access, so people can find agency and ultimately take control of their financial lives.

“Fintech provides access to ensure that anyone is able to actively participate in the financial system, by building affordable, accessible financial products and services that engage all communities. It also offers more inclusion by delivering creative solutions that mitigate unequal access, increase affordability and improve quality. The result of inclusion is that communities become more safe, resilient and sustainable, which is the foundation for a strong financial system.

“People need to be able to access technology. It must be made available affordably, at scale and to all communities and people who can benefit from it. Financial access is also irrelevant if there’s not a sustainable earth to live in and ESG reporting is the forcing function for enterprises to finally act and own their responsibility.

“Fintech also requires access to data and collaboration throughout the ecosystem to provide access and agency. Innovation hubs provide opportunities to build ecosystems and foster innovation among emerging fintechs that benefits the financial system and communities.”

A wave of innovation
Toby Gilbert, CEO and co-founder of Coinweb
Toby Gilbert

In concluding our conversation, Toby Gilbert, CEO and co-founder of Coinweb, provides an overview of how fintech’s decades-long evolution and innovation is driving the realisation of a better-connected world.

“Fintech has in actuality been around for well over 20 years. One could argue that PayPal was and is fintech but back in the late 1990s the industry was branded ‘payments’. Regardless of the glossary, the goal is to use technology to advance the existing financial system, which is archaic at best. But as much as a dinosaur as it may be, it’s a powerful one with considerable self-interests at play, interlocked with politics in what could be considered an unhealthy relationship. Thus, any movement to disrupt these cosy relationships is met with staunch resistance, as did PayPal in 2000.”

Gilbert continues: “But as the payment platforms transformed how payments were made using digital wallets then, micropayments piggybacking off telecommunication networks across Africa enabled the likes of M-Pesa to make instant miniature transfers between retail users, literally changing the landscape overnight. Leaving to one side the fact that this acted as a catalyst enabling small businesses to start-ups that were logistically impossible beforehand, it also solved problems in many areas as important as hunger and education by introducing liquidity to the market.

“The second bounce of the ball today is payments powered by blockchain technology, which promises to automate processes today that are unnecessarily slow such as the Swift network. In today’s day and age to think that an international transfer could or should involve some sort of manual process is nothing short of madness and the fact it could take up to two or three days to process, is lunacy. That is unless you have some sort of vested interest to hang onto the capital for a little bit longer!

“For this to happen the institution’s push back on the blockchain has to be overcome when we fully expect them to embrace the technology, at which point in time the world will experience the next wave of fintech benefiting it.”

Author

  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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